GM, Ford Net Deal Still Blocked At State Level 
LOS ANGELES, CALIFORNIA, U.S.A. (NB) -- By Joseph Giordono, Newsbytes. With alliances between Internet shopping portals and big consumer companies becoming all the rage, two US auto companies appear to be moving toward offering the ultimate point-and-click shopping experience: purchasing a car online and having it delivered to your door days later.

According to the Detroit Free Press, Ford Motor Company [NASDAQ:F] has finalized an Internet alliance with Yahoo Inc. [YHOO] and General Motors Corp. [NASDAQ:GM] and is about to conclude a similar agreement with America Online Inc. [AOL].

Ford declined to confirm the report to Newsbytes today, but GM confirmed to Reuters that it is in talks with AOL. Both carmakers are expected to make official announcements at next week's North American International Auto Show in Detroit.

The Web partnerships would create millions of dollars in advertising revenue for Yahoo and AOL. Visitors to the portals would be able to customize the sites to tell them when their vehicles need servicing, process and update auto loans, receive technical advice and connect to their nearest Ford and GM dealers.

The automakers say that in addition to basic services, they will be able to offer voice-activated Internet connections in their vehicles within the next year.

While these features would undoubtedly be useful to consumers, the ultimate goal of the automobile companies is to create a direct online sales presence, said John Malone, an automotive analyst for Morgan Stanley.

But a morass of state and federal laws prevent consumers from being able to buy and take delivery of cars directly from manufacturers, like they can currently do online with virtually any other consumer product.

According to the National Conference of State Legislatures, several online auto companies, most of which act either as referral services or brokers, are campaigning to amend the laws, especially in California.

"There is quiet lobbying going on everywhere. It's kind of a stealth movement," said Jennifer Grooters, a policy analyst for the NCSL.

In California, as in about two dozen other states, new cars are considered protected products and must be purchased from a licensed dealer.

"You may shop online, you may get prices online, but you may not buy online. Automobiles are protected items and they are things that the state has interest in," said Jay Gorman, executive vice president of the California Motor Car Dealers Association.

According to Gorman, some car dealers and Internet firms already are skirting the law. Car dealers want to create and nurture relations with repeat customers who know what they want, whereas Internet companies are eager to create an new automobile market similar to existing book or clothing sales sites.

Each state has its own set of laws governing automobile sales. Many times, the laws create confusing restrictions and loopholes. Internet firms have been lobbying officials across the country for favorable interpretations of existing laws, and several bills addressing online car sales are expected to be introduced this year, Grooters of the NCSL said.

The manufacturers themselves would also like to see state dealership laws change.

"The Internet is beginning to change the economic model, and we would like to be able to, with our dealers, offer a variety of Internet purchasing opportunities to the consumer, whether they be new or used cars or other services," said John Mecke, Ford's director of legislative affairs.

But a program set up by Ford last month in Houston was shut down by Texas regulators. The program was set up to sell used cars held by Ford dealers, but Texas officials said it violated laws against manufacturers selling cars. Ford has filed suit protesting the decision.

Online car firms have created cooperative arrangements with dealers to conform with current laws. Inc., in Irvine, California, for example, get paid by car dealers for providing leads to car buyers instead of collecting a fee for each car sold.

"Nobody can buy a new car without going through a dealer, so the question becomes one of building a relationship with dealers so you can deliver a consumer experience online," said Melanie Webber, director of public relations for

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15:17 CST Reposted 15:28 CST
(20000107/Contact: Jennifer Grooten, NCSL 303-830-2200, Melanie Webber, 949-862-3023 /WIRES ONLINE, BUSINESS, LEGAL/)