General Motors Corp. has cancelled plans for a joint venture with its dealers to boost car sales over the Internet, saying the business was not viable, according to Reuters.
GM had said in February 2001 that it was forming a $50 million company called AutoCentric, which was supposed to set up an Internet car sales business for GM and its dealers. GM planned for the venture to also sell vehicles from other manufacturers.
The auto manufacturer had planned to fund AutoCentric by selling half the company for $25 million to GM's 7,800 dealers and providing another $25 million itself. But in a filing with the U.S. Securities and Exchange Commission on Dec. 18, GM said it was abandoning the entire effort.
The original offer was withdrawn "due to a determination that the business model is not viable at this time," according to GM.
Research indicates that a majority of U.S. car buyers browse the Internet for information. Auto manufacturers have made several attempts at attracting Internet shoppers, including GM's own BuyPower site. But customers have consistently preferred independent, third-party sites, which have long offered invoice prices and more advice on how to get the best deal.
GM had said that by setting up a quasi-independent all-brands site, its dealers would have greater access to those shoppers. Dealers who participated could also commit to offer a specific Internet price for their vehicles. The plan met with some skepticism from GM dealers, many of whom did not relish the prospect of competing against other makes on a Web site for which they themselves would provide capital.
GM's move comes only a few days after Ford Motor Co. told the SEC of its intention to sell a stake in an Internet firm for a loss of about $49 million.
Ford bought its 462,962 shares of Internet Capital Group Inc. for $50 million in December 1999, when the stock was valued at $108 per share. Internet Capital Group's stock was trading at $1.15 on the Nasdaq market on Tuesday.
According to Ford spokesman Todd Nissen, it was not clear whether a $200 million third-quarter charge for reduced values for some of Ford's Internet ventures included the Internet Capital Group stake.