Count the auto business as one industry in which the Internet didn't live up to its hype. For almost two years, auto makers, dealers, and a host of dot-coms have tried vainly to revolutionize the car business by reaching consumers online. And so far, nearly everyone buys cars the old-fashioned way -- by going to their local dealer.
Still General Motors, which arguably has the industry's strongest Internet presence, remains undaunted. The world's No. 1 auto maker has placed one of its top executives, Mark T. Hogan, in charge of its e-GM consumer e-commerce unit. And despite dot-coms' meltdown in the past six months, Hogan is pushing to keep GM ahead of its rivals in mining the Internet. GM has been fine-tuning its GM BuyPower Web site and running experiments that allow car buyers to order custom vehicles online. The company is also selling Internet access to motorists using its Onstar in-vehicle communications system.
BusinessWeek's Detroit Correspondent David Welch recently talked to Hogan about his views on where the Internet is now and what it will bring the auto industry. Here are edited excerpts of their conversation:
Q: A year ago, there was a lot of talk about buying cars directly online. What happened?
A: It's a big purchase. The notion of people pulling the trigger and buying cars online isn't coming on as fast as we expected.
Q: So what will the Internet mean to the car-buying process?
A: More and more people are going to the Internet for shopping and information. As people get more secure with the online transaction, they will conclude transactions on the Internet.
Q: What has GM gained from its Web presence?
A: As we've driven more traffic to GM BuyPower, we've gotten a lot more sales leads. We're up to 1,000 sales leads a week. We were at 200 sales leads a week prior to our initiatives.
Q: Has that generated sales GM would not have made without an Internet presence?
A: It's added about 40,000-plus sales.
Q: Has the meltdown of so many dot-coms dampened your hope that the Internet can be a valuable tool?
A: The meltdown has everything to do with business models that were not well thought out. The Internet provides convenience. Consumers will ultimately migrate to the online shopping experience.
Q: What will the Internet deliver to car buyers in the future?
A: The real big delivery in the business-to-consumer space is going to be through telematics [on-board computers and entertainment systems] and mobile commerce. When you pull into a gas station, you'll not only be getting gasoline, you'll be doing e-mail, downloading movies, contacting hotels, and have access to shopping centers.
Q: GM has pilot programs that find a consumer the exact car they want in the combined inventories of dealers in their area. Does that mean ordering a car online and having it custom built in a build-to-order program is no longer necessary?
A: Locating vehicles to order is going and will get more pronounced. But we're testing build-to-order programs. We delivered some vehicles in 10 days. Build-to-order is still the end game because it makes you much more efficient. It takes out a lot of the cost.
Q: What are the barriers?
A: The toughest part is shipping and logistics. The ability to seamlessly order cars online and have them delivered quickly with a high degree of reliability is where we want to be. But logistics is still a big challenge.
Q: What's next from e-GM?
A: We'll test a site selling all makes and all models to see if we can get non-GM intenders into the GM fold. The pilot will run in a select market working with 20 dealers.