The online used car market has exploded during the pandemic. Now General Motors Co.
wants to help their dealers get a bigger chunk.
The Detroit automaker is launching a new website called CarBravo that will help US-based GM dealerships market and sell used cars online, in direct competition with Carvana. Co.
and other retailers who have embraced virtual sales in the past two years.
GM dealers would sell both GM and non-GM vehicles on the site.
The move injects new competition into the used car industry, which is already undergoing rapid change from web-driven startups like Carvana and Vroom. Inc.
It is also a change in strategy for GM, which today owns and sells vehicles from its rental operations, but is not involved in marketing them directly to car buyers.
Steve Carlisle, president of GM North America, said the new company would have more used car dealers and inventory than existing competitors. In terms of service capacity, CarBravo is expected to exceed that of used car retailer CarMax as well as Carvana, which sells vehicles only online, he added.
“Our customers will have the ability to choose from the largest number of used car dealers,” said Carlisle. “CarBravo will be more than competitive.”
A spokeswoman for Carvana declined to comment on GM’s plans.
In a statement, CarMax chief marketing officer Jim Lyski said the company is reviewing GM’s announcement. “What they set out to do is difficult,” he said, citing the integration of online functions with dealers. “As we’ve seen at CarMax, it will be rewarding if they accomplish this. CarMax will continue to dominate the industry.
GM began hiring dealers this week to participate in the service, which is expected to go live by the summer, the company said. He expects most of his 3,800 Chevrolet, Buick and GMC dealers to sign up. GM’s fourth brand, Cadillac, is developing its own used vehicle sales tool, the company said.
The used car market was growing even before the pandemic and has continued to grow in recent years as new vehicles have remained scarce. The stronger demand has benefited traditional dealers as well as new startups, like Carvana, which allow car buyers to shop online with a wider selection than the local used car lot. Auto retailers have also moved their businesses more online and expanded their service areas, shipping cars across states to expand their reach and provide more choice.
GM is responding to a strong demand for used vehicles, which Mr. Carlisle said began long before the pandemic but has escalated. Used car prices have skyrocketed over the past 18 months amid disruptions to new vehicle production linked to the continuing global shortage of chips.
Mr. Carlisle said used cars represent a significant and constant market opportunity. About 70% of all vehicles sold in the United States are historically used, and the market is less vulnerable to economic downturns, GM said.
Mr. Carlisle declined to discuss details of GM’s financial arrangements with the dealers. He said he expects CarBravo to generate revenue for GM by increasing demand for parts and services at GM dealerships and by selling subscriptions to OnStar, the automaker’s connected car service.
Used vehicles are among the most important profit centers for dealerships, who typically make more money from their used car operations than from new car sales.
Todd Ingersoll, a GM dealer in Connecticut who worked with the company to develop CarBravo, said he believed the service would help some dealers who have fallen behind in bringing their used car sales online and to extend their reach.
“At any time, you can pool your inventory and increase the amount of organic products [online] research that you have, then that will naturally bring more leads on the internet and generate more business on our channel, ”he said.
GM said its dealer network in the United States has approximately 400,000 used vehicles in inventory. Carvana said last month it had around 55,000 vehicles for sale. GM The automaker already manages about 500,000 used vehicles a year, most of it from lease returns, which GM then sells primarily through auctions or its dealer network. Channeling them through CarBravo would allow dealers to sell more cars and help them expand their customer base, GM said.
As part of the CarBravo service, GM would sell its used vehicles to dealerships for delivery to customers, a company spokesperson said.
Write to Mike Colias at Mike.Colias@wsj.com
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