Report: Online Auto Sales Gaining Ground in U.S.

More Americans than ever are using the Internet to shop for and purchase new cars, according to a new survey from research firm GartnerGroup.

The survey shows that from September 1999 to March 2000, 45 percent of the 40,000 households surveyed used the Internet at some point in the car buying process and 3 percent actually bought their cars online. Only two years ago, the percentage of online shoppers that used the Internet for any part of the car buying process was less than 25 percent.

Said Thilo Koslowski, senior analyst in Gartner’s e-Business Services group, “The fact that virtually half of all new vehicle purchases were influenced by the Internet is simply astonishing.”

Evolution of the Internet

The Stamford, Connecticut-based Gartner says the Internet has become an essential instrument in the U.S. consumers’ new car buying process and its use for that purpose will continue to increase in the near future.

When asked to indicate how likely they are to use the Internet in their next new vehicle purchase, 48 percent of households surveyed said that they are “very likely” and 51 percent at least “likely” to shop for their next new car online.

The survey also shows that the Internet is evolving from a pure shopping tool to an alternative way of buying a new vehicle. Twelve percent of surveyed households said they would be at least “likely” to buy their next car online and seven percent they were “very likely” to buy their next vehicle over the Internet.

The survey suggests that the most popular online activities in new car buying will continue to be finding and comparing prices and requesting price quotes. Additionally, participation in online auctions or reverse auctions is likely to grow remarkably in the near future.

However, one online car buying activity that will not expand so drastically is reading online car classifieds.

Message to the Auto Industry

The migration of auto buyers to the Internet is, according to Koslowski, “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.”

Koslowski added, “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.”

Gartner says that in order to prevent such a scenario, manufacturers and dealers need to radically reform the traditional retailing model and focus on building a new and positive buying experience for the consumer.

As for new car buying services, Koslowski said those “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.”