Can the automobile industry become successful at selling new cars, online on EBay (EBAY), like other successful industries and individuals? The American iconic company General Motors (MTLQQ.PK) is changing its business model to include an online sales venue for new cars. The salespeople or really a web site will be there to help customers, 24/7, but customers won’t be able to kick the tires or take a test drive.
After years of doing things the same, the U.S. car industry is being forced to change their old ways. The American car institution, General Motors (MTLQQ.PK) was the leader in total car sales for years, before going broke in 2009, as a result of the global financial meltdown. The company was bailed out by the U.S. government through the help of the American Taxpayer’s aggregate of 50 billion dollars. The bailout by the government came after the politicians and economic experts deemed the failure of GM as catastrophic to the U.S. and world economies.
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General Motors (MTLQQ.PK) has reached an agreement to start selling its new car lineup on EBay (EBAY) which includes such brands as Chevrolets, Buicks, GMC’s and Pontiacs, beginning in August. The sales will take place initially only in the state of California where their market share is slacking.
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EBay (EBAY), a relatively new company by GM standards started in 1995 and has grown into an American icon like GM. Today EBay (EBAY) has revenues in excess of 7 billion dollars and has hundreds of millions of world wide users. EBay (EBAY) has become as American as apple pie and Chevrolet.
On EBay (EBAY) shoppers can bid on or buy it now, on all kinds of items from collectables to used cars and even services. With the new link; gm.eBay.com shoppers will be able to buy a new GM car, by using the; buy it now option or make an offer to the dealer online. The dealer will set the buy it now price. The buy it now price will be just below sticker price and shoppers will be able to comparison shop for prices easier and faster than beating the concrete. Just like going to the dealership, shoppers will be able to; purchase the vehicle at the fixed price or shoppers can even haggle for a lower price. When shoppers make a purchase online, they will be able to pick the car up at the dealership or have it delivered.
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Many people will use this method online to, not actually purchase the car on EBay (EBAY) but to use the web search as information, to make a purchase at the actual dealership in person. Even so, this will help the customer gain more knowledge about the car buying ordeal without becoming stressed out and will feel less inferior to the almighty car dealership Guru.
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EBay (EBAY) has a very good business model to help all parties involved make a smooth transaction. On their used car buying procedures, EBay (EBAY) has a certain buyer guarantee as long as certain rules are followed, and will most likely apply to all new car sales. Like all other individuals and business on EBay (EBAY), GM will find new markets and customers they never dreamed they would find, and as a result, new ways of doing business will be discovered, and both of these great institutions may prosper as a result.
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The real beneficiary from the GM/eBay alliance appears to be eBay. eBay will benefit the most as it is an avenue for selling new merchandise. General Motors, on the other hand, will find doing business on the Internet to be very difficult with their profit margins significantly impacted as a result.
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A covered call investing strategy for eBay will enable investors to participate in eBay’s upside and also generate monthly income. A covered call investing position for eBay is currently available with a potential return of 3.2% in only 26 days. For option investors wanting to participate in eBay’s upside, but have protection in case it falls, a married put strategy may be the way to go. A married put option position for eBay is currently available with a maximum risk of 8.5%. To enter this married put position, eBay’s stock would be purchased at $22.19 along with an in-the-money JAN 22.5 2010 put option at $2.40.
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[tags] car industry, bailout, Chevrolet, Buick, GMC, Pontiac, California, EBAY, eBay Inc. [/tags]