The market for selling used cars online has exploded during the pandemic. Now,
General Motors Co.
GM 0.64%
wants to help its dealers secure a bigger piece.
The Detroit auto maker is launching a new website called CarBravo that will help U.S.-based GM dealers market and sell used cars online, competing directly with
Carvana Co.
CVNA 1.50%
and other retailers that have embraced virtual sales in the past couple of years.
GM dealers would sell both GM and non-GM vehicles through the site.
The move injects fresh competition into the used-car industry, which already is undergoing rapid change from online-focused startups such as Carvana and
Vroom Inc.
It is also a shift in strategy for GM, which today owns and sells vehicles from its leasing operations but isn’t involved in marketing them directly to car shoppers.
Steve Carlisle,
president of GM North America, said the new business would have more dealerships and used-car inventory than existing competitors. In service-department capacity, CarBravo is expected to exceed that of used-car retailer
CarMax
as well as Carvana, which sells vehicles online only, he added.
“Our customers will have the opportunity to choose from the largest number of used-car dealers,” Mr. Carlisle said. “CarBravo will be more than competitive.”
A Carvana spokeswoman declined to comment on GM’s plans.
Carvana operates vehicle vending machines for customers who order cars over the internet. The U.S. market for selling used cars online has exploded during the pandemic.
Photo:
Jane Hahn for The Wall Street Journal
In a statement, CarMax marketing chief
Jim Lyski
said the company is reviewing GM’s announcement. “What they have set out to do is difficult,” he said, citing integration of online functions with dealerships. “As we’ve seen at CarMax, it will be rewarding if they accomplish it. CarMax will continue to lead the industry.”
GM began signing up dealers this week to participate in the service, which is expected to go live by the summer, the company said. It expects most of its 3,800 Chevrolet, Buick and GMC dealers to sign on. GM’s fourth brand, Cadillac, is developing its own used-vehicle-sales tool, the company said.
The used-car market was gaining momentum even before the pandemic and has continued to surge over the past few years as new vehicles have remained in short supply. The strengthening demand has benefited traditional dealerships along with newer startups, like Carvana, that let car buyers shop online with a broader selection than the local used-car lot. Auto retailers have also been shifting more of their business online and expanding their service areas, shipping cars across state lines to grow their reach and offer more choice.
GM is responding to strong demand for used vehicles, which Mr. Carlisle said began well before the pandemic but has intensified. Used-car prices have soared in the last 18 months amid disruptions to new-vehicle production linked to the continuing global chip shortage.
Mr. Carlisle said used cars represent a large and steady market opportunity. About 70% of all vehicles sold in the U.S. historically are used, and the market is less vulnerable to economic downturns, GM said.
Mr. Carlisle declined to discuss specifics around GM’s financial arrangements with dealers. He said he expects CarBravo to generate revenue for GM by boosting demand for parts and services at GM dealers and through sales of subscriptions for OnStar, the auto maker’s connected-car service.
Used vehicles are among the most important profit centers for dealers, who generally make more money from their pre-owned-car operations than they do on new-car sales.
Todd Ingersoll,
a Connecticut GM dealer who worked with the company to develop CarBravo, said he thinks the service would help some dealers who have lagged behind on moving their used-car sales online as well as expand their reach.
“Any time you can pool your inventory and increase the amount of organic [online] searches that you have, then that naturally is going to bring in more internet leads and drive more business to our channel,” he said.
GM said its U.S. dealershipnetwork has about 400,000 used vehicles in inventory. Carvana said last month that it had about 55,000 vehicles for sale. GMThe auto maker already handles about 500,000 used vehicles annually, much of them from lease returns, that GM it then sells primarily through auctions or its dealer network. Channeling those through CarBravo would funnel dealers more cars to sell and help them broaden their customer base, GM said.
Under the CarBravo service, GM would sell its used vehicles to dealers for delivery to customers, a company spokesman said.
Write to Mike Colias at [email protected]
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