General Motors to launch online used car dealership, CarBravo
General Motors Co. said Tuesday it plans to launch CarBravo, a new online used-vehicle marketplace for GM-branded vehicles aimed at competing with online dealerships such as Carvana Co. and CarMax Inc.
The new site is expected to launch in the spring and will include Chevrolet, Buick and GMC dealers offering GM-branded vehicles as well as used vehicles from other automakers. It also will offer used vehicles owned by the automaker, creating a national pool of cars from dealers' lots and GM's inventory.
"We believe our expansive nationwide dealer network will be a key driver for our success. Our dealers are our competitive advantage," said Steve Carlisle, executive vice president and president of GM North America. "With CarBravo, we will harness the power of collectively going to market with our dealers to create a powerful customer experience."
The move reflects the growing pressure on major automakers to compete with digital retailers, which are siphoning sales from dealers as customers increasingly demand the option to buy a car online. Ford Motor Co. also launched an online used-vehicle store last February dubbed Ford Blue Advantage.
Around 70% of vehicle sales are used, Carlisle said, and for the last five years the U.S. used car market has been steadily growing and is less susceptible to market shocks. Used cars are "incredibly important" for bringing customers into the GM brand, he said.
"What drove this was the customers' demands for us in the marketplace," said Dan Ahearn, senior manager for CarBravo.
Dealers have around 400,000 cars in inventory that could be sold through the website, Ahearn said. Around 500,000 used cars are also available annually through GM and GM Financial. Dealers would also retain the first chance at off-lease vehicles from the automaker.
GM's Cadillac is also developing a program "appropriate to the brand" that will be announced in the future, Carlisle said.
While the site will largely facilitate sales to dealers, GM expects to pull in "adjacent revenue" from service business and services such as OnStar and XM Satellite Radio offerings. All vehicles sold through the platform would get trials of such programs, a standard warranty, roadside assistance and more.
"All of the revenue that we get on a new car post-sale, we're expecting to get that revenue through the used cars," Carlisle said. The program eventually will be opened to new car sales but is not expected to be expanded to non-GM dealers.
The National Automobile Dealers Association did not immediately respond to requests for comment.
Jeff Silverberg, general manager and partner of the John Elway Chevrolet dealership in Englewood, Colorado, said he hasn't committed to participating in CarBravo but that he's "very excited" GM is setting up the new platform.
"These venture capitalist-funded, non-brick-and-mortar, no-skin-in-the-game Vrooms and everyone else — I'm a little bitter to them but they've done a great job. They've stolen our used car share," Silverberg said. "It's time that we do something about it, so I applaud GM."
He said the dealers' call with GM Tuesday morning left some questions unanswered — for example, how dealers should get 40% off-brand inventory GM is suggesting they carry on the site.
"We don't have the ability to take those off-lease. I'm just wondering how they're going to acquire those and spread them around," he said. "So, a lot of questions to ask. But I think it's a good wake up call for Vroom and Carvana that the OGs are not going to give up this easy."