eBay and GM make a deal to sell cars online

Starting on Tuesday, General Motors will begin selling cars on eBay (EBAY). The new move, which is part of the automaker's recovery plan, will connect traditional dealerships to a specially designed portal through which users can browse car lots, negotiate prices, and arrange financing. Initially, the program will work with 225 California dealers, but it is expected to quickly move across the country next month.

Car purchases are famous for being stressful, confrontational, and generally unpleasant. For a populace that is increasingly growing accustomed to transacting its business through the blandly friendly face of a computer screen, the idea of dickering for a car online will probably seem completely logical. Rather than trying to deal with a slick professional whose entire career rests on his ability to gain confidence, push product, and seal the deal, eBay car buyers will be able to ask about features, push for a better deal and -- most importantly -- walk away.
In fact, it almost sounds like one of those long-term multiplayer Facebook games. Motor Maven? Auto-didact?

In many ways, this move is hardly surprising. In the almost ten years since eBay motors launched, over three million cars have been sold through the site. These numbers are, admittedly, less than world-changing; however, given that these have been used cars sold by dealers and private sellers, it's easy to imagine how the integration of new cars and the existing sales framework could yield massive rewards for both GM and eBay.

The one group that may find itself hurting from the move is eBay's ranks of already-irritated sellers. The site, which rose to prominence on its promise of cheap peer-to-peer sales, has long since shifted toward more lucrative patrons. With higher listing fees, and PayPal fees, eBay regularly reaps as much as 13 percent of a transaction. These charges can fit within the marketing model of many established retailers, but often are far beyond what private sellers can afford. Moreover, with the company's recent decision to cut fees by 20 percent for top sellers, it will further increase the divide between professionals and part-time auctioneers.

This problem will only continue with the eBay-GM deal. The site's current car sellers will likely find themselves getting squeezed out by eBay's new, gargantuan partner. With a variety of gallery listings, subtitles, and other a la carte items, eBay's large-scale sellers have long been able to price their lower-volume brethren out of the way. This will likely prove doubly true when the site's new power seller in cars is none other than the country's number one car manufacturer.
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