Auctioning new cars on eBay is nothing new; dealers have been doing it for years. Now General Motors is experimenting in California with selling new cars on the popular online auction site.
GM is running the risk of letting consumers set retail prices for cars, and the results could be disastrous.
Traditionally, new-car dealers have used eBay to sell low-production, high-performance or special-edition cars, not production vehicles readily available on a showroom floor.
If you want a popular new Chevrolet Camaro, you probably won't find one down at your local Chevy store. But hit eBay Motors and you'll see more than 30 Camaros for sale from Chevy dealers around the country. Most of the muscle cars are selling above sticker price. Because so many millions of people use eBay, the giant auction site tends to set the value for many collectible items.
Car dealers know they can get more for a rare or in-demand car by putting it on eBay.
EBay also is a favorite destination for bargain hunters looking for deals on commodity items. Example: I just bought a new highly regarded and very efficient brush for Jake, my dachshund, for half of what I would have paid in a pet store.
So, take a car such as a nicely equipped Chevrolet Aveo with a price tag of around $14,000. Let's say the minimum amount the dealer will accept on eBay is $12,500. By the time the auction ends, if the highest offer is below that minimum amount -- the reserve price -- the car won't sell.
The new GM vehicles on eBay are listed with a "Buy it Now" price and a "Best Offer" option. Traditionally, when an auction with the "Best Offer" feature is over, all the offers are available for shoppers to peruse. The highest offer becomes public knowledge. If the highest offer is, say, $9,500, then the message is clear: This is what buyers are willing to pay for a brand-new Aveo.
That is a dangerous precedent.
Consumers can point to those auctions with low offers and say to the dealer: "That's all people are willing to pay. Why should I pay more?"
You might argue that consumers and dealers tussle over prices all the time. The difference, of course, is that haggling is done in private. An eBay car auction, where almost everything is transparent, can have an audience of tens of thousands.
It is a bad idea for manufacturers to put their high-volume production cars on eBay, unless the goal is to turn their cars into commodities like toasters, blenders and dog brushes.