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Tracey S. Roth

Dot Com Commerce

Managing Editor, C@LL CENTER CRM Solutions

[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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