2. What sort of problems do you see with this type of auto purchasing system in this and other markets, like the U.S.? GM’s Gravatai Automotive Industrial Complex has revolutionized the global automotive industry through its e-commerce system and direct-sales approach of compact passenger cars, particularly GM’s Celta model. GMBG’s centralized automated purchasing structure allows consumers to select a car configuration of their choice, which are all predetermined at a single price with set freight charges and delivered within the same short time frame, undeterred by the location of which it will be distributed.
Despite the level of satisfaction that consumers receive through the automated convenience, speed, and price incentives, significant values are compromised through the lack of personal interactions in the overall buying experience for all parties involved. The traditional purchasing approach of dealership sales provided customers with a stronger sense of security and understanding of what to expect with their purchase, based on investing time with the salesman to gain critical information about the details of their car configurations and servicing elements. GM has not eliminated the role of its dealerships in the Brazilian market and still provides consumers the option to test and experience their car of interest before committing to an order. However, 70% of sales are placed through GMBG’s website and since dealership services are a mere option to the consumer, it is difficult to determine whether the consumer took part in any of these provided services. As a potential consequence, there is an increased possibility that consumers may not be satisfied with certain aspects of their purchase because they were not properly briefed with the details by the expertise of a sales representative. This is especially problematic in the Brazilian market because a majority of these GMBG car buyers are incoming at an entry-level point and could even be a firm-time buyer lacking the basic knowledge of what they’ll need to know before buying a car. On the side of GMBG, lacking these face-to-face interactions rid the opportunity of developing a stronger lasting relationship that could lead to future sales and referrals for business.
This situation also increases the likelihood of incurring costly expenses in reverse logistics. If a consumer is unsatisfied with the purchase and demands a return, it is considerably expensive to transfer a shipment the size of a car back to the distribution center and process the item back into their inventory. This non-value adding activity could entail a substantial loss if a significant portion of those 70% Internet sales resulted in returns based on the additional time and money allocated to essentially go back to the beginning of the purchasing process. However undesirable this situation may be, reverse logistics are costs of doing business and must be dealt with to maintain good customer relationships. Thus, compromising the total buying experience may lead to these significant hidden expenses if means aren’t taken to reduce the dissatisfaction.
Finally, GMBG’s centralized pricing mechanism may be a deterrent for customers buying in the competitive automotive industry. As of 2007, Brazil has become a central region of growth for automakers based on the substantial increase in car sales in the past decade. This has provided customers with the increased bargaining power to choose scenarios most fitting for their needs; however GMBG’s set pricing eliminates any prospect of negotiation and therefore limits their major leverage in the transaction. GMBG’s competitors then have the potential to utilize their strategies as a benchmark and optimize processes to prevent against these potential issues in their auto purchasing system, ultimately gaining the customer. In order to remain competitive, GMBG would have to ensure that the prices offered on their website is set to be highly economical