Exploding Growth of Online Car Sales

Retail shops have been on the decline, suffering with falling sales over the last few years. No traditional department store seems able to compete with order-as-you-need-it services from Amazon and the like. We don’t have to go to the store for milk, head for the fitting room to try on clothes, and some of us don’t even have to see a doctor in person anymore. Ordering groceries online is easier than ever, likely offered via a WalMart or other grocery chain near you. Need clothes? Easy online retailer return policies make it simple to buy clothes, try on when you have time, and then return in the mail without a penalty. Think you need to see a doctor for your sinus infection? No more appointments at the local walk-in now that we have the convenience of the virtual and over-the-phone doctors.

Do these situations remind you of some scenes from the movie “Wall-E?” It’s true that users are frequently and quickly abandoning buy-in-person experiences, no matter what the purchase is. While small things like eyeglasses, clothes, or even groceries may seem trivial, the trend is carrying over into bigger ticket items, like the used car market. Buying cars online is gaining popularity, and rapidly. It’s not just “the kids” that are purchasing cars online. In a 2015 study, 75% of all drivers polled said they would consider completing the entire car buying purchase online.

The Online Car Buying Experience

There are a few companies really shaking things up. Whereas a lot of “shop online” car websites are simply providing research and step 1 or 2 of the buying process, companies like Shift, Carvana, Vroom, and others allow consumers to complete the entire process. Yes, everything from test driving vehicles to financing and even assisting with DMV matters is part of their services. In an effort to help consumers avoid any kind of discomfort or inconvenience, the shift to online is definitely driving (no pun intended) used car sales.

What is so great about the Online Car Buying Experience?

Did you know there were so many companies committed to providing this experience? This is big business. The NY Times reports that “In the last three years, online used-car start-ups have grown rapidly, accruing more than $2 billion in funding..” Car buying is a complex process, with many different variables and consumer preferences. But overall we’ve gained that consumers like these features of buying a car online:

No Negotiating

Online car dealers typically have a no-haggle, set price policy based on the appraised value of the vehicle.

Faster Process

Many users cite the value of the car buying process taking minutes instead of hours spent at a local dealership.

Less Distraction

The majority of car buyers spend time researching online before they set foot in a dealership. When buying online, shoppers choose to bypass the dealership and head straight for the model they know they desire.

Avoid Sales Tactics

This may be the most often cited reason for choosing to buy online. While most dealers have taken great lengths to make their processes more user-friendly and focused, consumers are leery.

You may say, “what about financing? the paperwork? selling a trade-in?” These are all available online. Vroom claims that buying and selling a used car is as easy as ordering an Uber. On the home page of their website it seems as easy as shopping for your shampoo at Target, with this three step process: “Find a Car. Add to Cart. Free Delivery.” Carvana will offer cash for vehicles in less than 2 minutes, with no photos or inspection required.

But is buying a car online for everyone? Data may suggest otherwise. Automotive News reports that there’s a sharp divide for online shoppers when it comes to income. In one study, “half of surveyed consumers earning $100,000 to $149,000 annually would like to bypass the dealership and buy vehicles online, DealerSocket said. In contrast, 29 percent of people making $25,000 to $49,000 said they’d like to buy vehicles online.” The local dealer is not obsolete yet.

Would you buy a car online?

If you’re an auto dealer, what are you doing at your dealership to meet the needs or address the concerns that car shoppers may have about completing transactions in person?

Events for Dealers in 2017Is now the best time to buy a car?