Before last month, eBay Motors allowed dealers to pay $40 per vehicle listed on its auction Web site. Although customers prefer to buy their cars locally, dealers like to sell cars online because of the huge potential market. To address this conflict, eBay Motors has begun offering dealers unlimited vehicle listings for $1000 per month, available to consumers within a 100-mile radius of the dealership.This subscription-based site, called “eBay Motors Local Market,” enables consumers to have less risk and minimize transportation costs, because they know the vehicle is local.  Consumers also may opt to browse for vehicles online and then buy the car in person at the dealership.

Car dealerships currently use a variety of advertising means that are far less efficient than the Internet, and eBay hopes to take a share of the money they spend on advertising. As the largest online automobile marketplace, with 12 million unique page views per month, eBay and its new “Local Market” should prompt dealers to speed up the process of moving their advertising dollars to the Internet.

Currently, dealers spend only 9% of their advertising budget on Web-based promotions, meaning there are a lot of advertising dollars available.  Once this trend catches on, buying cars online may become as commonplace as ordering a book online.

Discussion Questions:

1. How is eBay making it easier for customers to purchase vehicles on the Internet?

2. Why do you think car dealerships have resisted moving their advertising dollars to the Internet?

Sharon Terlep, “EBay offers Automobile Dealers New Auction Service,” The Detroit News, February 06, 2007.