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Almost 90 percent of people surveyed in eight countries use the Net as the first source of information for car purchasing purposes. Consultancy Cap Gemini brings us the not-entirely-surprising news, after interviewing 3k people in the US, in Germany, France, the UK and the BRIC haus (Brazil, Russia, India and China). Ten years ago, only eleven percent of car consumers went online for information (BRIC discounted). More revelations. Indian pistonheads are the most avid users of autoblogs and forums. Brazil is home to the highest percentage of people who’d like to buy a car online. Some 17 percent of Chinese resp9ondents expect to be able to afford a luxury car in the future. (Only three percent of Europeans hope to be so lucky, lucky, lucky.) The Chinese are pretty demanding, too; two thirds say they expect a car maker (or dealer) to reply to an email inquiry within four hours. Good luck with that in the West. The death of old media seems to be happening firstest and the mostest in places where the old media was never new. Figures.
18 Comments on “Auto-Internet Uber Alles...”
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When, please when can we buy a car online? That day can not come soon enough. I honestly will never buy a new car again if it involves a visit to a dealer.
–chuck
I imagine any dealer will be willing to sell car on-line. This means list price. I think it is demanding consumer who resents dealers profit that insist on direct negotiations.
IMHO it should be like buying computer parts. List the model, features, and out the price (not the price**** ) and let people cross shop. Turn the dealerships into service centers with maybe a few cars on the floor in case people walk in.
I’d be much more likely to buy new if I could shop around.
Manufacturers still need some sort of brick and mortar presence for the requisite test drive and warranty repair services. Perhaps going forward, dealers will be centered around a service bay with an attached test fleet showroom and some non-commissioned salespeople.
EDIT: Robstar, you beat me to it.
Remember CarPoint? Autonation? When they came on the scene 10 years (yes, that’s 10) ago, auto manufacturers predicted (hoped?) that on-line buying would be the end of dealerships. Turned out, they were just another way to lure people on the lot. Autonation actually morphed into a chain of cinderblock and mortar dealerships.
10 years ago, I dared to quip (as a ghostwriter for a big cheese auto exec:) “Dealers going the way of the do-do? Not unless you can ship and service a car via UPS.”
The internet is important to inform the buyer. A large part of the buyers have already been using the net to support their buying decisions for many, many years. Cap Gemini, hello? A little Dexedrine, perhaps? Look at your own chart, sleepy-heads! Does it need 100% before you see a trend?
Auto enthusiast sites, sites like TTAC, Karesh’s TrueDelta, comparison sites, even dealer’s on-line offerings: all important. And will be more so. But the net killing car dealers? Amazone couldn’t kill book stores, and books are the easiest stuff to ship via UPS. Love ’em or hate ’em: Car dealers are here to stay. Unless GMAC kills them.
Bertel — are car dealers really here to stay?
That’s a question that interests me very much. I’m thinking of writing a piece about this. Some thoughts here:
What are car dealers for?
There’s the mom-and-pop business model: selling cars though local relationships. Such dealerships are pretty effective, is what analysts say. Indeed, I think car sales benefit from an element of personal trust. But something tells me mom-and-pop car sales will at some point go the way of mom-and-pop groceries.
Then there’s the dealership as a place to check out the wares and get a test drive. But I thnk that could be effectively bettered and replaced by the Apple Store (or Toyota Tokyo Superstore) model: a company-owned, pleasant place to get acquainted with product.
Certainly, any serious car maker needs an infrastructure of first-class repair shops. They might even have to be subventioned.
But dealers?
Aren’t buying clubs or services, like Costco, more of a danger to dealerships than the Intertubes?
I too would be more likely to trade cars more often, if the process of buying a car wasn’t such a nightmare. How many products do you buy where “the grind” is a central part of the purchasing process? It’s worse than a Turkish bazaar! Even once you’ve settled on the price, the price isn’t really the price, and you have to start all over again, and the whole process takes hours, days sometimes. The internet could put an end to all this, but it will never happen.
Dealerships hate the internet, because they hate transparency. I believe most dealership owners would rather stick their tongue in a light socket, than compete openly and fairly against other dealerships on the internet. I’ve yet to encounter a dealership that likes information regarding pricing or features being freely available, because generally they hate the free market. Rather than embrace the next century, most dealerships have fought the internet every step of the way, and for many this has been to their own detriment.
If the automotive industry were the least bit interested in digging itself out of the hole it created, purchasing a car would be easier, and more straightforward than purchasing a light bulb. Few, if any dealers, or even the more competent car manufactures, will figure out how to leverage the power of information and use it to their advantage. Instead they will continue to “invest” in flashy graphics, and cool sounds for their websites. Despite their incompetence, the rise of the internet will not be the death of automotive dealerships in general.
Sure, smaller dealers will be squeezed out, but the biggest change will be the death of the car salesperson. Similar to what happened in retail, commissioned sales staff will be replaced with hourly clerks. More profitable dealerships will still extract extra profit from their customers in the finance office, and car buying might be even more opaque than it is now. At the same time manufacturers will be left scratching their heads wondering why many people drive their cars until the wheels fall off.
Herr Schwoerer:
I have 30 years of experience in that matter. Remember the Volkswagen guy in the blue overall? I invented him.
Mom-and-pop dealers consistently produce the happiest and most satisfied car customers. Auto makers know, and ignore that. Auto makers want BIG dealers. Auto makers do everything they can (currently, it doesn’t take much effort) to perform an all-out ethnic cleansing of small and midsized dealers. Large dealers are notorious for having the grumpiest customers. Large dealers don’t make money, because in the car business, money is made with service, and that’s what small and midsized dealers know best. But auto makers have a fetish for BIG.
Company owned stores? I don’t know. In Germany, where you live and where I come from, there are several kinds of company owned stores:
Subsidiary Chains – Mercedes owns most of their dealers in Germany. Did and does work.
Too Big To Fail – Big automakers bought big dealers before they went under. Volkwagen bought so many, they had to start a new company: VRG, Volkswagen Retail Group. Still as bad as before
“Centers” – Volkswagen-Zentrum, Audi-Zentrum, Porsche-Zentrum. Usually co-owned between manufacturer and large dealer. Not doing well.
A first class repair shop doesn’t need financial support. A first class repair shop is a license to print money. Most of all, a repair shop doesn’t have to invest into the silly steel-and-marble showrooms decreed by the auto maker. And they can sell cars on the side. They do well.
When I bought my most recent car I researched eveything on the internet. I went on various car sites like MSN Auto to compare features, reliability and owner reviews of each car I was interested in. I also used the NHTSA website for recall notices and customer complaints for each car. I used Kelley Blue Book’s website to get a rough idea what each car was worth adjusted for options and mileage, and what to expect from private party and dealship prices. I went to Autozone’s website to compare replacement parts for various makes and models. I called up the dealership to find their cost of replacing a timing belt because one car I looked at used a timing belt instead of a chain. I used Tire Rack’s website to see how much replacement tires would cost. I looked for cars on the internet from dealership websites, and also 3rd party websites and the local newspaper’s online classified ads. When I found several of the cars I was interested in on the internet I looked up their title history by the VIN number provided on the dealership websites, to make sure they weren’t previously wrecked, or fleet/rental cars. Then before I went to buy the car I called several local notaries for their prices for title and tags, that saved me money because the dealership tried to screw me over the price of paperwork costs. I showed them the price the notary quoted me and said that’s all I’m paying.
Herr Schmitt — thanks for your impressive reply. And I agree with most of your points (in particular, how auto makers have a fetish for big, even though small often works better).
I wasn’t thinking of the traditional company-owned sales outlet (in German, “Vertriebszentrum”) as a model. The problem with those is that they stick to “MSRP minus incentives” system which aims to reduce price transparency. But reducing price transparency is a strategy that is bound to fail, because the Internet is on the rise.
No, what I am thinking about is internet-based sales via the major car databases (e.g. mobile.de or autoscout24.de). For most car companies (except for the biggest), that should suffice. Where’s the value added in a dealership as opposed to a demonstrator location?
Martin:
A “Vertriebszentrum” was – in VW speak – a wholesale regional distribution center. Supplanted wholesalers. I said ‘was’ because a VZ doesn’t distribute cars anymore. Just parts. And they closing the “VZetten” down.
True, where is the value-add? Big glass and marble with bored sales droids. Only purpose: Ego-massage for car execs. In America, a dealer wants frontage at a road well travelled, so that people see the cars. In Germany, more and more dealers hide in industrial parks. The future is in great service centers with attached sales.
I reckon that VW dealer (especially small aimed at service) will do well. In US as well as in Germany VW is not the most trouble free brand.
srclontz said it best… as if he was typing for me: “How many products do you buy where “the grind” is a central part of the purchasing process? It’s worse than a Turkish bazaar! Even once you’ve settled on the price, the price isn’t really the price, and you have to start all over again, and the whole process takes hours, days sometimes.”
I prefer to enjoy my life. I’d honestly rather get a root canal than wrestle pigs at a dealership. Buying a car is the most unpleasant experience imaginable. I love cars. I love to look at, sit in, photograph, drive, work on, and listen to all manner of cars. But car salesmen, and the sales process literally makes my digestive tract expel all contents. Violently.
I’ll shop for car, and pick it… but then walk out of the building while my wife, the litigator with years of courtroom cross-examination experience, shreds the sales staff to bits. They never know what’s coming when I leave the room. Even she hates it, but as far as I’m concerned they deserve that fate, and any other fate that befalls them.
I’d honestly probably buy more cars if it were not such a damn unpleasant experience. As it is I just hang on to them as long as possible.
–chuck
I gotta agree with Bertel on this one. Dealers are here to stay. In the USA (home of laissez faire?), it’s a matter of law.
Two problems –
One, I never buy a vehicle without driving it first. Without dealers and internet-only shopping, how do you drive the car before you buy it? Unfortunately the trend towards making test drives prohibitively hard to organize is taking hold and a lot of people don’t even try to organize a test drive before deciding.
Two, if you want a good idea of what online-only car shopping would be like, look at eBay. Nuff said.
In a healthier business climate, I would fax an offer to the sales managers at 3 or 4 dealers stipulating exactly the car and equipment I want to buy. I say that if they wish to do business, please call me at my office before 3:00. That way, I’m at least doing my own work on my own schedule while I wait for them.
In a softer time it is the same, except I don’t mention the offer, and say instead that I will buy from the dealer who gives the best price by 3:00.
Then I make an appointment to sign paperwork at lunch time the next day.
This has worked pretty well for me so far.
heh heh, I just go out and find the best 88 528e I can. Saves all the mucking about in show rooms. I bought the last 2 off EBay