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New Dealership Marketplace For GM


With its dealership profitability in the cellar, GM urgently needs to help sellers aggregate purchases.

By Steve Konicki
InformationWeek
June 17, 2002 12:00 AM

General Motors believes in the power of aggregating purchases to save money and it hopes its 7,500 dealers do, too. The automaker will launch a new Web marketplace for dealers this month designed to aggregate more than $1 billion in purchases that dealers make each year for gasoline, PCs, tools, office supplies, and forms. GM wants the site to build enough purchasing volume to save the dealers 15% and GM 4%.

The private marketplace, dubbed Dealer Supply Advantage, was disclosed Monday and will go live June 24, says Bill Lovejoy, GM group VP for vehicle sales. Lovejoy says recent National Auto Dealers Association surveys show the dollar value of GM dealerships is "down near the bottom" compared with other auto brands. "The new marketplace will help dealers increase profitability, and if franchises are more profitable they become more valuable," Lovejoy says.

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GM urgently needs to turn that around. Auto Nation and other independents increasingly run dealerships selling multiple brands. But the independents won't invest in GM dealerships in ways that will help them sell more GM cars--if dealer profitability remains low. Making profits worse are GM price cuts credited with keeping its sales volume high despite the economic climate.

GM expects that the companies will use the new site to cut costs for all the brands they sell, not just GM's. For example, a multibrand dealer who used Dealer Supply Advantage to buy gasoline would be able to gas-up GM cars and any other brands it sells. Dealers would access the marketplace through GM's Dealerworld portal, GM's dealer information Web site hosted by auto exchange Covisint.

GM is charging $360 a year for access to the new marketplace. Lovejoy says they can save $500 immediately by using the marketplace to download business forms from a dealer portal run by Reynolds & Reynolds, the software vendor that produces the retail systems used by GM dealers rather than ordering paper forms. Initially, the largest GM dealers, which are responsible for more than 50% of GM's sales, are expected to sign up. Says Lovejoy, "The way it usually goes, a lot of dealers take a wait-and-see attitude about things like this to see what's happening and how it will help them."


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