GM to increase Internet focus, provide onboard services

A new business, e-GM, to exploit the Web

August 11, 1999|By BLOOMBERG NEWS

DETROIT -- General Motors Corp. said yesterday that it will unite its online car-buying Web site and onboard information services under a new unit to exploit the Internet and build revenue beyond car sales.

Sun Microsystems Inc. will link and improve GM's Web sites for the new business, called e-GM, and develop a voice-activated Internet system. About 25 percent of U.S. auto revenue may eventually come from onboard services such as GM's OnStar rather than selling and fixing cars, said Sun Chairman and Chief Executive Officer Scott McNealy.

Automakers are using the Internet to lure customers and are creating services such as OnStar, which uses satellites to help drivers navigate or summon help, to keep revenue flowing after selling a car or truck. OnStar will be installed in almost 1 million GM cars and trucks in 18 months, up from 75,000 now.

OnStar and related satellite and Internet services could generate as much as $6 billion annually in new revenue in the next decade, said Ron Zarrella, head of GM's North American operations. GM and Sun Microsystems would not specify their investment.

GM will announce several major partnerships in coming months to expand its Internet activities, said GM President Richard Wagoner.

GM is not the only automaker looking to develop its Internet business.

DaimlerChrysler AG said it hired Organic Inc., a closely held San Francisco-based developer of electronic-commerce sites, to make the automakers' Internet sites easier to use. Organic will employ about 100 workers in the Detroit area in the effort, which is part of DaimlerChrysler's $500 million online technology investment.

Forecasters expect rapid growth for online auto retailing. More than 8 million new-car purchases will be influenced by the Internet by 2003, up from 2 million now, according to estimates by Forrester Research Inc. Independent online auto-shopping companies also are sprouting.

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