General Motors Corp. and Ford Motor Co. said on Friday they have told dealers not to sell vehicles to online direct car sellers such as CarOrder.com and CarsDirect.com.
The two automakers, which account for more than 50 percent of all U.S. vehicle sales, said selling vehicles to vehicle brokers who bypass dealerships violates long-standing franchise agreements.
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Other vehicle-selling Web sites such as Autobytel.com Inc. generate sales leads by sending prospective customers into dealerships. But CarsDirect.com and CarOrder.com skip dealerships entirely.
GM spokeswoman Rebecca Harris said companies like CarsDirect.com, which is preparing for an initial public offering, and CarOrder.com fail to provide any after-purchase service for its vehicles.
“Our retailers are our way to get products to our consumers,” Harris said. “They can provide service, they can provide sales consultants, they can provide all the things an online company can’t provide.”
With vehicle prices under pressure because of heavy competition and the ready availability of prices on the Internet, many analysts believe dealerships will have to increase aftermarket services in order to survive.
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By GlobalData“I haven’t seen anybody able to service a vehicle online yet,” said Ford spokeswoman Ann Doyle.
GM sent letters out on Monday, Harris said. Ford notified its dealers in mid-April.
