[February
9, 2000]
Car Shopping Without Pain
If you're like me, the thought of having to shop for a car, whether it
be new or used, makes you break out in hives. I have mental images of
salesmen in bad polyester suits offering me watery coffee in Styrofoam cups.
And that's the good partthe really unpleasant business comes during the
negotiation, when Fred of Fred's Autoland tries to convince you that tires
and windows that open and close cost extra.
Obviously, there are a lot of people that hate this process. More and
more people are going online to do their car shopping, and are even making
purchases from the Internet. A study released during the middle of last
year by J.D. Power And Associates
revealed that 40 percent of new-vehicle shoppers used the Internet to help
them shop during 1999 -- that number is projected to increase to 65
percent by the end of this year. The study also stated that the average
car shopper surfing the Internet visits six automotive Web sites and
spends upwards of four hours researching online. Shoppers are educating
themselves before they even set foot in the dealerships. As the study
surmised, potential car buyers are entering auto dealerships better
educated about the vehicles they want than the dealers themselves. Talk
about eliminating opportunities for Fred the car dealer to hit you with
sales bluster: Many of these dealerships probably haven't quite figured
out what has hit them yet.
Another interesting trend the J.D. Power study pointed out is that the
more time a potential buyer devotes to researching cars on the Web, the
less likely he or she is to buy a domestic car. Domestic manufacturers
possess 70 percent of the market share in the U.S., but among Internet
auto researchers and shoppers, that figure drops to 58 percent. Exactly
why this occurs is open to speculation.
Beyond merely researching automobiles on the Internet, many people have
turned to actually purchasing cars online through sites such as autobytel.com.
This figure, which was a small 1.1 percent in 1998, was estimated at 2.7
percent in 1999. That's still a small number; however, it means that the amount
of consumers purchasing cars online more than doubled in a one-year
period.
Additionally, it's not just new cars. Used car buyers are increasingly
taking to the Web. Another J.D. Power study indicated that in 1999, more
than one-quarter of individuals seeking to buy a used car researched their
purchases on the Internet. Reportedly, 50 percent of online shoppers for
used vehicles spent their time surfing online classified Web sites to
pinpoint the exact vehicle they were seeking at the dealerships in their
areas. Most popular sites in this arena were autobytel.com, Auto
Trader Online, Microsoft CarPoint,
autoweb.com and cars.com.
So what has the response of the U.S. auto industry been to all this
mouse-clicking? Most of them are scrambling for some kind of online
presence. GM recently announced the forging of a business link with AOL,
and Ford has formed a strategic alliance with Yahoo! Common sense dictates
that if an increasing amount of consumers are looking for car information
online, the manufacturers that do not have an online presence will get
left in the dust. Additionally, other business opportunities come into
play here: Buy a car online? Great! Now you need insurance. We just happen
to have an alliance with a good insurance company that offers bargain
ratesclick here. Also, you know you should only put Smiley Petrol brand
gasoline in your car, right? Here's a link to their Web site so you
can see why their gas is best. Headsets for your cell phone (so you can
talk safely while driving)? Click here. Do you hear the sounds of auto
dealers' pens scratching on contracts with peripheral industries getting
louder? I do.
How is this going to affect car manufacturers and dealerships? It will
no doubt cause some major adjustments. Buying a car used to be a painful
process, and if you weren't savvy about cars, you inevitably got
manipulated (take it from a girl who wouldn't shop and negotiate for her
last car without her father present). The rules are different in the
Internet economy. Customer service, as they used to say, is not only king,
a lack of it will shut your business down before the average Web shopper
can log off your site. So how is an industry famous for controlling the
purchasing and selling process going to fit into such a customer-oriented
arena?
Harold Wells, chairman of the National Automobile Dealers Association
(NADA), made a speech recently at the organization's annual convention. In
his speech, he addressed some tactics that must be implemented by U.S.
auto dealers if they plan to remain competitive. He announced an
initiative developed by NADA to accelerate development of dealer Web sites consumers can use to look up
auto information, photos and even locate used cars on the dealership's
lot.
Mr. Wells stated, "Unlike other third-party car buying services,
we can provide not only virtual showrooms online, but also real cars, real
experts and real serviceWhen consumers cruise the 'Net to their local
dealership, they will find the dealer Web site contains the most
up-to-date and reliable information on sales, rebates and
factory-to-dealer incentives."
It's good to know someone in the auto industry has recognized the
changes coming down the pike. You may never see Fred from Fred's Autoland
adding new information to his Web site, but at least you can count on the
fact that over the next few years, buying a car will become increasingly
less painful. And you'll STILL end up with that new-car scent at the end
of the process.
Tracey S. Roth welcomes your comments at troth@tmcnet.com.
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