For some people, buying a car
involves combing the dealerships, shaking hands, and kicking tires while
haggling over prices. For others, it’s a tedious process of research,
comparisons, and test drives. In today's customer-driven economy, car-buying
methods remain as relics from an earlier era. But the Internet may be
changing the way people buy cars.
Web-based car buying is still in its infancy. According to Tony Cohen,
senior research manager for respected industry analyst J. D. Power and
Associates, no cars are currently "bought" through the Internet--that is,
begin with a Net-generated lead and conclude in a sale. And only half of the
shoppers who submit a purchase request to an online buying service
purchase a domestic vehicle. Among new car buyers, Hispanics make up over
3.3 percent of the market.
According to a study by J.D.Power, the percentage of new-vehicle shoppers
using the Internet to help them make purchasing decisions increased to 40
percent, or 5 million shoppers, during the first quarter 1999 from 25
percent in 1998, and is projected to increase to more than 65 percent by the
end of 2000.
While more consumers are using auto buying sites, they’ve been disappointed
by those that promise online buying only to return them to a traditional
dealership. Generally, consumers go to the Internet to avoid
the pressure and frustration of the traditional dealership experience.
Though online car-buying sites are beginning to take shape, there are no
dominant ones. Major sites like
Autobytel.com and
InvoiceDealers.com offer
many benefits. They're packed with reviews, customer comments, information
about crash tests and model recalls, and places where buyers can shop for
financing and insurance.
But their approaches vary. Some emphasize picking the right car, others
focus on getting the right dealer--and none emphasizes saving money. Selling
cars on the Internet may eventually reduce prices, but so far the emphasis
is less on price than on process. As Mountain said, "Customers just want to
buy a car without any hassles from a car salesman.”
In reality, sites point consumers toward actual dealers. A limited number of
dealers in a geographical area sign up with one or more Web services (for a
fee) to obtain sales leads. Since a seller can't pop the vehicle in the mail
like a CD bought on the Net, proximity to the dealer is important.
Though buyers can find most car information in print, they can get it faster
and more easily online. Going to the Net allows for more customized
research, too. A buyer can survey all currently available mid-size sedans or
compare minivans. Manufacturers' sites are another option. Most offer
detailed model information, but only a few—including
GM and BMW--help buyers find a dealer or direct them to showrooms for actual
purchases
All car buying sites work similarly. After buyers choose the make and model
they want from a menu, the site sees whether a dealer in their area offers
that car. Next they fill out a long form. Once buyers finish entering their
information, they receive a reference number, an online case folder, and
phone numbers of real humans. After entering their zip code and the make,
model, year, and style of a car they want, they get a photograph and price.
And after selecting their credit rating for pricing purposes, they see
options for leases, loans, and annual mileage.
Autobytel.com. The father of
online car sites makes a good first stop on a car-buying excursion. It
offers a rich mix of streetwise information from real owners and drivers
and detailed specifications from manufacturers.
InvoiceDealers.com offers a comparison-shopping engine for new
cars in an open-bidding process. It provides multiple, immediate price
quotes and a still-growing nationwide network of more than 800 dealers.
It boasts a no-haggle policy with no hidden charges and provides
referrals from every dealer in the area that's a part of their network.
But buyers should also check sites like J. D.
Power's Initial Quality Survey, which measures the number of problems
reported by 100 owners of each vehicle make and model during the first 90
days of ownership. Ultimately, online research is no substitute for a test
drive.
Most buyers come away feeling that the online process is friendlier than the
real-world experience, but they don’t reap huge savings by going on the
Internet noted Cohen of J.D. Power.
The future of online car sales seems murky. Currently, every sale passes
through a dealer at some point--and that’s unlikely to change in the near
future. Regardless of future developments, Internet-based automobile selling
remains a long way from the computer industry's standard sales model, in
which customers buy directly from the manufacturer. For those looking for a
good deal and trying to buy in a more civilized way, the Web is the best
place to start. But they shouldn’t expect it to make everything better—yet.
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