Study sees potential for online car sales but work is needed

Germany’s autohaus24.de sells cars online, but most new car sales still take place at the dealership (Photo: autohaus24.de)

More cars would be sold online if dealers and automakers work together to improve the process, according to a study by consultants Arthur D. Little.

Online car sales are important to the industry for several reasons. They reduce sales costs, tap into a younger, more digitally oriented group of potential buyers, and generate a wide array of new customer data.

Also, a look at other industries shows that online sales are growing faster than sales through traditional outlets.

“The sales process is inevitably expanding to the digital world,” the Arthur D. Little report said.

The consultants found that across major markets today only a small percentage of cars are sold online. The Web is mostly used for research.

However, in China, the world’s biggest car market, 86 pc of potential car buyers polled said they were likely or very likely to purchase a car online. In Germany, the percentage was 38 and in the US 42 pc.

The consultants said the outlook for online car buying is improving because people have less time and appreciate the convenience of online shopping.

Arthur D. Little lists six actions automakers should undertake to increase online car sales:

  1. Online sales shouldn’t take business away from traditional channels. Hence the online product portfolio should be aligned with models sold through dealerships.
  2. A Web sales platform should be part of a “digital sales ecosystem” that allows buyers to use a combination of web services, mobile applications and devices, social media platforms and personal customer web sites.
  3. Dealers will continue to be essential points of contact for car owners. Therefore, they need to be part of the online sales process. Dealers could, for example, deliver to customers cars that are sold online.
  4. Online sales outlets should offer “a real benefit.” This could come in the form of an exclusive offer, an improved option package, faster delivery or a better financing rate.
  5. In the runup to a real Web-based sales platform, automakers can already start to familiarize potential car buyers with its workings. The platform could offer accessories and services such as the booking of a test drive. This can boost customers’ confidence in the site.
  6. Any online sales approach should minimize commercial risk to the automaker. Without face-to-face meetings between an online seller and a customer, consumers in most European countries have the right to return any product purchased online within a certain time frame. Arthur D. Little suggests a face-to-face meeting may help avoid this requirement, which would otherwsie add a sizeable cost to the transaction.

Related Articles