A major revolution is about to begin on the way we choose, order, and pick up our new cars from the car makers and their dealers.
While many independent traders have used the web to source and supply new cars to buyers, the car makers themselves are now using the internet to interest us, inform us and ultimately deliver the cars to us.
BMW and Mercedes have announced plans to sell on line in future, starting with specific models and countries but these are really pilots for a much bigger revolution in sales.
Research this week by trends specialist GfK shows increasing numbers of Britons are happy to use the web when directly buying cars.
GfK reveals how tech-savvy younger Britons are increasingly embracing the idea.
Among the key findings of GfK’s ‘Future Trends’ survey:
• Nearly one third (31%) of under 35-year-olds would buy a new a car directly via the internet. At 28% the figure is only slightly lower for older drivers
• The experience of going to a dealership is changing, with as many as 80% of potential new car buyers having all the information they need on a particular car before stepping into the showroom. People now come to view a car model for reassurance and for a test drive – rather than to be ‘sold at’
• Social networks are playing an increasingly important role in the decision making process. 16% of under 35-year-olds use Facebook for research before buying a new car vs 2% of older drivers
• Manufacturers such as Vauxhall, Nissan and Audi are responding to the role of the internet in car buying by launching virtual showrooms and demonstration centres.
“BMW’s recent decision to make their new i3 electric car available to buy online is a significant event,” observed Damian Long, Divisional Director for GfK Automotive.
“With Mercedes-Benz also announcing plans for online sales in Germany by the end of the year, buying cars directly from manufacturers via the web is only going to gather momentum.”
“Although they’re at different ends of the market, Renault’s Dacia brand is already selling its low-cost cars via the web to defend its leadership of Europe’s buoyant budget vehicle market. And with the world’s biggest search engine set to enter the market, the next place you buy a car may soon be Google.
“The move is set to revolutionise the market, improving transparency and empowering consumers as automotive pricing data becomes increasingly normalised and easily searchable.”
At the start of the Millennium, the automotive industry was confidently forecasting that new car buyers were about to enjoy the benefits of online purchasing. Unfortunately the predictions proved premature. “It’s fair to say that so far both car makers and the public haven’t been able to capitalise on the transactional benefits the internet has offered other sectors,” said Joe Vaughan, Research Manager at GfK Automotive.
“But we’re now at a tipping point where the auto industry is revisiting the principle of leveraging the web as a sales channel. The signs look a lot more promising this time.
“Car manufacturers like Mercedes-Benz are responding to changing attitudes towards car ownership and how the public research and buy their car of choice. But as our research shows, they need to combine online sales opportunities with experiential marketing.
“Demonstration centres like Nissan’s Brand Centre at the O2 Arena, road shows and pop-up dealerships will be essential to give customers that all-important chance to see and try their preferred car in the real world before purchasing in the virtual one.”
In GfK’s survey, while nearly half (45%) of owners agreed that negotiating over the price of a car is something they enjoy doing with a dealer, opening up the internet for car sales will allow buyers to choose the purchase process that suits them best.
A move to easier online purchasing at a fixed price with all the financial information up front is likely to make the journey smoother for those who don’t enjoy negotiation.
The British are among the world’s most enthusiastic digital shoppers, with online retail sales growing at 15% and sales now totaling £660m / week. And from October, changes to the law will make it easier to buy and sell properties over the internet.
This future is backed up by another study out this week, The Future of Auto Retailing 2013-2023 and which points out independent small dealerships face the biggest challenge their business models.
The traditional car showroom has a future but it will be more hi-tech and utilise online and mobile channels, according to the report.
The report finds that customers are not yet ready to fully complete the car buying process online, but to survive and prosper car dealerships in the UK need to become more flexible in their business structures and adapt more rapidly to changing customer expectations.
The report, written and published by Auto Retail Network in conjunction with RBS, envisages a future where dealerships become true multi-channel retailers.
Typically, it is anticipated they will offer digital new and used car presentations to customers, deliver test drives at the office or home and reduce costs by centralising or even sharing certain back-office functions.
This hi-tech, multi-channel business model, driven by changing customer behaviour should reduce fixed costs for retailers. It will help eliminate fears about the current lack of return on investment in an industry which is estimated to be worth around £25bn per annum to the UK economy.
The report finds that adopting these new approaches will lead to greater co-operation between retailers and their car manufacturer partners, with staff in dealerships taking on a more consultative role and helping potential buyers make sense of their online research.
Ultimately, the findings suggest there is a future for the fundamental ‘full-service’ franchised, dealership model – at least for the medium term, if change is embraced.
Richard Hill, head of automotive, RBS Corporate & Institutional Bank, said,
“Everyone who contributed to this report, including those from outside the industry, were in no doubt that key changes will bring about a very different retailing landscape in 2023.
“Given the pace of change across all aspects of the industry, I firmly believe it is vital to establish a forward view if sustainable success is to be achieved for UK auto retailers.” Robin Roberts, Miles Better News Agency
