Will Car Sales Go Online? The Kicking Tires Factor Says Not Yet.

Jim Motavalli

Jim Motavalli | Apr 24, 2015

The car-buying experience hasn't changed much since the good 'ol days when you could buy a Pontiac with fins. Consumers still dread being taken by slick salesmen. (Roadside Pictures/Flickr)Honk if you love shopping for a car at local dealerships. Pretty quiet, huh? Let’s add up the issues:
  • Women, though they influence a majority of car-buying decisions, are disrespected and treated with condescension;
  • High-pressure tactics end up steering buyers to expensive models they don’t want, with features they don’t need;
  • Trade-ins and servicing are problematic, with one CarMax poll showing that 19 percent of buyers didn’t think they got a fair deal for their old car, and 15 percent saying their salesperson wasn’t trustworthy. Consumer Reports was damning on the servicing thing last January: “Our annual survey of Consumer Reports subscribers found that independents outscored dealership service once again for overall satisfaction, price, quality, courteousness of the staff, and work being completed when promised.”
Given all that, dealerships may be reaping what they sow—and steering buyers toward online car purchases. Twenty-four-year-old Linda Lo told her car-buying story to the New York Times. “The sales employees were either inattentive or cloying, the finances opaque, and the whole process was time consuming and inconvenient,” she reported. At one place, she was asked, "Are you here with your parents?" Lo’s solution was to switch to a new online dealership, Beepi, to buy her used $35,000 2014 Lexus. “The process was spectacular,” she said.

Does this herald a rapid defection to online car buying for millennials? Maybe, but it will be a slow fade for dealerships, not a sudden desertion (as when cassettes were abandoned for CDs).

A happy used car buyer. With an impressive vertical. (Stephanie Wallace/Flickr)The evidence isn’t really there for a wholesale abandonment of dealerships. Jessica Caldwell, an analyst at Edmunds.com. points to the company’s recent research, which shows that "96 percent of millennials said it is important to test drive a car before they buy it, and 64 percent said they prefer face-to-face interaction with a dealer rather than remote communication.” And these are the folks who had cell phones at birth!

“Millions and millions of Americans shop for cars online,” said Jack Nerad, an analyst at Kelley Blue Book, noting that his site and Auto Trader do a brisk business. “That being said, our sense is that most consumers still want to inspect and drive a used car before they buy it. Given the fact that even the least expensive used car represents a large cash outlay and that each used car is an ‘individual,” suggests that inspection before purchase is a wise idea.”

I know many people who’ve bought cars on eBay sight unseen, and a lot of them are happy. But I know more who do all the spade work for both new and used cars online, then make the purchase at an actual dealership. That way they eyeball and drive the thing before committing to what Sam Abuelsamid, an analyst at Navigant Research, points out is the second-biggest purchase we make (after our homes, but should we add paying for college educations?).

“I think most consumers will be reluctant to go completely online for the sales experience,” said Abduelsamid. “Some degree of physical try-out will remain part of the experience for the foreseeable future.”
Tesla's stores don't really sell you the car. But they sure help. (Harry_NL/Flickr)Consider the Tesla showroom. To lessen the insult to traditional dealers, Tesla is careful to say that the actual transaction is online. But actually seeing a Model S is no doubt critical to completing the sale. Apple’s stores are similar—it’s a tactile product, people want to experience it.

But, frankly, even with dealers’ boorish behavior, I’d be reluctant to plop down $34,000 for a car I’d seen only in pictures. Maybe I’m just old-fashioned, though, and the times they are a’ changing. Beepi, which conducts stringent inspections of cars it offers, “is now buying and selling hundreds of cars a month and is on track to book revenue of $100 million over the next year,” the Times reported. And it’s raised $80 million. Carlypso and Carvana are competitors.

This woman is happy with her used car. Either that, or she's really into jumping. (Todd Lappin/Flickr)In truth, when it comes to buying a car, it’s not either/or, but a bit of both. Abuelsamid says that for most consumers, “a hybrid online/virtual/physical experience could be very appealing.” That makes sense to me, too. And if you need a refresher course in badgering salespeople brushing off women customers, here you go:

 

Finally, here's an interesting infographic about women buying cars:


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