Buying Services Helping Car Dealers Close Deals

Twice as many automotive dealers are using independent online buying services to assist with the new-vehicle sales process compared to 1999 results, according to J.D. Power and Associates.

The J.D. Power and Associates 2000 Dealer Satisfaction with Online Buying Services Study found that the average dealer receives leads from three distinct online services. Dealers report that customers who use an online buying service save an average of $490 on their new-vehicle transaction compared to traditional showroom shoppers. In addition, most participating dealers say that customers who are referred through an online buying service are given a discounted price quote up front without having to make an offer. Many dealers provide the option to bring a new vehicle to the customer’s home for a test drive.

“Although the system isn’t perfect, online buying services have improved to the point where it pays for every car shopper to at least try using one of these services,” said Chris Denove, senior director of the retail and distribution practice at J.D. Power and Associates. “The online services are particularly effective for shoppers who feel intimidated by salespeople and want to find a dealer that is willing to give them their best price right up front without a lot of negotiation.”

The survey asked dealers to rate their experience with each of the online buying services. Autobytel.com ranked highest on the online satisfaction index for the third straight year. Autobytel’s success in satisfying dealers results primarily from its continued position as the sales leader. Its dealers receive an average of 84 new-vehicle sales per leads per month, which is significantly more than any of its nearest competitors. In addition to sales leads, retailers praised autobytel.com for its service in areas such as training programs and lead-management systems.

For the second straight year, Microsoft’s CarPoint ranked second to Autobytel.com, with Autoweb.com ranking third. Autoweb.com showed the most improvement from last year’s results. Isuzu’s program ranked fourth overall, but ranked highest among all manufacturer-sponsored services.

The J.D. Power and Associates study is based on 1,262 automotive retailer interviews. Each respondent evaluated up to three different services, which is resulted in a total of 2,144 evaluations.

“If there’s a downside to all this Internet activity it’s that some dealers are so flooded with leads that they are struggling to keep up with the traffic,” Denove said. “As a result, some customers get lost in the shuffle and don’t receive the level of personal service they expect. The Net result is that dealers are able to close only 12 percent of their new-vehicle Internet leads, down from 15 percent in 1999.”

According to research by Cyber Dialogue, 21 million Internet users sought automotive information online in 1999, nearly doubling 1998’s total. Automobile shopping is now the third most common product category sought online, behind only books and travel. Direct online purchases of cars remain rare: of the 8.4 million users who made a car purchase after seeking information on the Internet, only 2 percent did so directly online.

Cyber Dialogue found that comparison shopping sites are the most popular destinations for auto purchasers who used the Internet for product research (63 percent), ahead of both manufacturer sites (47 percent) and local dealer sites (26 percent). While these findings represent a potential threat to the dealer’s role in the selling process and the manufacturer’s control over branding, Cyber Dialogue sees significant opportunities for both entities in the online arena.

Other Cyber Dialogue findings include:

  • New car purchases informed by Internet research accounted for approximately $100 billion in spending; direct online sales of cars accounted for only $5 billion in spending
  • Online users search primarily for price quotes and model specifications, particularly as they relate to new vehicles
  • Automobiles are the product category most likely to have brand opinions shaped by the Internet — among Internet-educated auto purchasers, 55 percent reported a change in their brand opinion.

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