Swiss Tony hits the Web

Vauxhall appears to have achieved the Holy Grail of ecommerce - it's set up a direct sales operation without alienating its existing channel.

All Original Equipment Manufacturers (OEMs) face the same problems as Vauxhall as the Web becomes an increasingly popular channel to market - they either cannibalise their own market, or watch someone else do it. As Lance Doughty, automotive segment director, Cap Gemini, put it: "They don't have a choice. They have to do it."

Vauxhall achieved this delicate balancing act by consulting its dealers throughout its move onto the Web; it still uses them to fulfil online orders.

In February, Silicon.com wrote a story about Korean car manufacturer, Daewoo, which started selling online in the US. A spokesman for the Retail Motor Industry Federation (RMIF) claimed at the time that the very idea was ludicrous. He said: "A car is the second biggest purchase most people make - I wouldn't buy a pair of jeans on the Web, never mind a car."

He claimed most people use the Internet as a shop window to get information and "arm themselves with the facts" before visiting a showroom.

The RMIF spokesman said he feared people would miss "the excitement, the smell" of the showroom experience. Online car buying "is not a wise thing to do", he added. "What if the seat isn't comfortable?" His comments were greeted by email howls of derision from our readers knowing that by hook or by crook, the Web will revolutionise every area of commerce.

Seven months later, the European car dealers seem to have radically changed their tune. They now welcome the move onto the Web. Phil Jeffreys, a Vauxhall dealer in Wandsworth, London, said: "This is good news and we won't lose out. This is the way industry and society is going."

We spoke to the RMIF again and it too had changed tack since the start of the year. It said the announcement has been welcomed by all the dealers it had spoken to.

So has Vauxhall achieved the impossible, or are the usual fears about ecommerce - that it alienates the other market channels - untrue?

Cap Gemini's Doughty said: "Vauxhall has managed this very carefully and it is not full disintermediation. There are still areas of benefit for the dealers. It is symptomatic of the tightrope all manufacturers are walking. The problem is how to keep the dealers onside, but you have no choice. I don't think there will be big volume but the margins on these sales will be better."

A spokesman for Daewoo still holds a more traditional view. He said: "Europe is not as advanced as the US. The Internet is good for getting information and whittling down your shopping list at which point, armed with the information, people go to the showroom and kick the tyres. A car is the second biggest purchase most people make in their lives so you need to get a feel for the car. The idea of an automated, soulless purchase does not appeal to people." But he did concede that Vauxhall has made a bold move, and may prove Daewoo wrong.

Mike Godliman, a director at retail analysts, Verdict, said: "From a purely retail point of view ecommerce is going to be another channel to market. It is no different to a shop, a catalogue or a home shopping channel on TV."

But he pointed out that car dealers, with their "Swiss Tony" image, have an extra difficulty: "The problem for car dealers is that people do not like walking into salesrooms to buy cars. Look at bookshops which have already had to react to ecommerce - they have changed the stores to make them more appealing - turning them into coffee bars to differentiate themselves from the Web. Car dealers will have to go through a similar process and give themselves a friendlier image."