Totally New, Totally Exciting

Latin Trade, June, 2001 by Thierry Ogier

General Motors fires up e-commerce in Brazil with subcompact wonder Celta.

MARIA CRISTINA CRISCUOLO received an unusual Christmas gift last year. Her husband presented her with the car she had longed for. She was even more impressed, she says, when she found out that he discreetly bought it online.

"Gosh! He is a such a meticulous person. He is anything but gullible ... I was really impressed." she says. Her husband, Ben Hur Criscuolo, 49, was also thrilled by the experience. "This is totally new and exciting!" he says.

A technology consultant with German chemical giant BASF in Sao Paulo, Criscuolo has, like many, bought books and CDs from Brazilian Web sites. But this was a much bigger deal.

"I saw an ad on TV ... It said this model was launched exclusively via Internet, so I logged in," he recalls. "I selected the color and the options. I filled in the form, then I paid 1,000 reais [US$470] as a deposit with my credit card. I got a receipt and a password. Then the system asked me to choose a dealership where the car would be delivered within 10 days." The whole process, he says, took no more than 10 minutes.

Indeed, General Motors has played a pioneering role in Brazilian e-commerce. The world's largest car manufacturer intends to sell up to 80% of its new, subcompact Celta online in 2001. The small, one-liter engine cars are manufactured exclusively at GM'S $650 million plant in the state of Rio Grande do Sal in southern Brazil. The first few months of online promotion show promise: More than 33,500 cars were sold in the six months ending February, 60% of them online, says GM. A Celta goes for about $6,500.

Once off-line, not everything went as smoothly for Criscuolo. When he called the dealer to ask about the car, no one seemed aware of his order. A salesman told him that it was impossible to buy a car online. In a slight panic, Criscuolo went in person to the dealership. A salesman checked with the GM office and confirmed that everything was OK.

The car did arrive on time, and Criscuolo finalized payment with the dealer and got the present to his wife in time for Christmas. Pleased with the experience, Criscuolo nevertheless has doubts: "I am not sure I would have taken the risk to pay the full amount online," he says.

Irineu Motta Cabral had more luck. A truck dealer and insurance broker in the small southern village of Antonio Prado, about 100 miles from the Celta plant, Motto found that buying his new car online was hassle free. "It's actually a ground-breaking technique," says Motta, 48. "I just got tired of the usual salesman crap."

The main advantage for the consumer, apart from the slight discount that GM offers for online sales, now around $90 although it once was nearly $500, is the convenience. Price is not negotiable. Manufacturers get a break, too; cars sold online pay less in sales taxes to federal authorities and are exempt from some other, minor taxes. But GM is taking pains not to alienate dealers. "This e-commerce initiative is not intended to bypass dealers. It would be impossible to do so anyway," says Farid Anabtawi, GM'S e-commerce director in Sao Paulo. "The Internet is a fantastic tool, but it's only one element of a wider strategy." Also important, Anabtawi says, are direct sales from plant to customer (although the buyer has to pick it up at a dealer just the same); single pricing nationwide, freight included; and quick delivery, thanks to five Celta distribution centers.

Not everyone buys their Celta online. Even young professionals working in the New Economy, such as webmaster Ana Lucia Stavale, 28, like to see the car in person before closing any deal. "I had already managed to sell my older car, and I had to buy a new one quickly," she says. "I was in a real hurry."

Too much of a hurry for the Internet? Odd but true, but for GM and other companies exploring the virtual sales floor, this kind of business learning experience can't be bought at any price.