Net Increases Role in Vehicle Shopping

Almost half of the US households that purchased a new vehicle in the six months leading to March of 2000 used the Internet in the buying process, proving the Net has become an essential instrument in the auto-buying modus operandi, according to Gartner Group.

Gartner surveyed 40,000 US households and found that 48 percent of them that purchased a new car from September of 1999 to March 2000 used the Internet in the buying process. The survey also found that 45 percent used the Internet to shop for a car online, and 3 percent actually bought a car online. Two years ago, Gartner found, the percentage of new car buyers that used the Internet in their buying process was less than 25 percent.

“The online buy-to-browse ratio for new vehicles has been relatively low in the past,” said Thilo Koslowski, senior analyst in Gartner’s e-Business Services Group. “However, the fact that virtually half of all new vehicle purchases were influenced by the Internet is simply astonishing. This is a clear message to auto manufacturers and dealers that the current retail process doesn’t satisfy the consumers’ fundamental desire to make an educated purchase decision.”

The study also showed the Internet’s popularity in the consumers’ new car buying process will continue to increase in the near future. When asked how likely they are to use the Internet in their next vehicle purchase, 48 percent of all households said they were “very likely” and 51 percent at least “likely” to shop for their next car online.

This planned Internet usage also shows the Internet to be evolving from a pure shopping tool to an alternative way of buying a new vehicle. Seven percent of the households surveyed by Gartner said they are “very likely” to buy their new vehicle, which is up from the 3 percent that purchased of households that purchased their recent new vehicle online. Twelve percent indicated to be at least “likely” to buy their new car over the Internet.

Gartner’s study also found that finding and comparing prices as well as requesting price quotes will continue to be two of the consumers’ most popular online activities in their next new vehicle purchase. Participation in online auctions or reverse auctions for new vehicles is likely to grow remarkably in the future, while other activities such as reading online auto classifieds are not like to see such dramatic growth.

“The survey underlines our prognosis that by year-end the majority of all consumers will use the Internet in their new car buying process,” Koslowski said. “The fact that online buy-to-browse ratios for new vehicles are very likely to double in the near future is an alarming signal for car manufacturers and dealers, and good news for online new car buying services. Manufacturers are facing the problem that they might lose potential customers to online new car buying services once these companies establish themselves in the market. Dealerships will be confronted with new Internet-based competitors that might degrade them to simple vehicle suppliers.”

According to Koslowski, manufacturers and dealers can prevent such a scenario by radically reforming the traditional retailing model and focusing on building a new, positive buying experience for consumers. While car manufacturers are rethinking their traditional retail methods, online new car buying services must improve their business model as well.

“Online new car buying services that want to increase market share need to address the consumers’ diverse preferences in their online new car buying process and should expand their offerings by incorporating multiple ways of buying a vehicle via the Internet,” Koslowski said.

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