automotive e-commerce online car sales

I went into a car showroom last week and got the usual pressure to take advantage of an offer that was only available that day.  One eye-roll later – there was no way I was going to make a panic purchase decision.  If anything, I found it insulting that the dealer would try that tactic on me and got me wondering why we need dealers at all.

If we can buy fashion direct from brands via e-commerce, why not cars?  Consumers are sophisticated and alert to the psychological mind-games that dealers play in order to push us through the sales funnel.  I can trust a car salesman, said no one ever – so why don’t car manufacturers avoid triggering reactance and seek a direct relationship with consumers based on trust.

Motivations for buying online

This begs the question: do consumers need to try a car before buying?  Many car buyers still want to test drive a car before making a purchase decision.  However, with nearly 60% of US car buyers citing sales-people pressure as a key reason to buy online, franchised car dealers are literally driving buyers away. Consumers are becoming more comfortable with spending on big ticket items, even buying houses online.  Digital native consumers are starting to view cars in the same way as their mobile phone contracts i.e. as a service; where you upgrade your hardware at the end of a contract and take out a new one.  PCP finance is basically a step towards a subscription service.

Tesla

Tesla and Peugeot are the pioneers of automotive e-commerce, with Hyundai click-to-buy following in early 2017.  Car buying in China, the world’s biggest and fastest growing car market, is shifting online with 23% of 18-24 year olds buying cars via online channels (McKinsey 2017).

Tesla seeks a direct relationship with the customer by completely cutting out the dealer, leading to legal battles with dealership lobbies in the US.  On Tesla ’s site you can buy a car, reserve a test drive at their showroom and use a comparison tool to benchmark Tesla against other car makes.

Online market places

With Alibaba teaming up with Ford to sell its cars online in China, surely it is only a matter of time before Amazon enters the automotive e-commerce marketplace. Capgemini terms it the “Amazonification of the auto industry” and the e-commerce giant has already experimented with Fiat on Amazon in Italy.  Rumours are that 2018 will see Amazon enter into this sector in a serious way.

Blog Update 23/05/18 Amazon announces partnership with Volvo.  Customers can book test drives online through Amazon Prime Now and have a Volvo employee deliver a car to their door.

Conclusion

There’s a sense of inevitability about this, much like Uber and Airbnb created disruption in their sectors. Creative destruction of the traditional car dealership model will go the same way as bricks and mortar shops, where consumers go to experience the brand through interactive digital features like virtual vehicles e.g. Beijing’s Audi City or pick up a Ford from an unmanned Car Vending Machine.  Ultimately consumers research their purchase online so it makes sense that they can complete the purchase online with all the transparency and convenience that online shopping offers.

My experience of car dealer pressure definitely put me off, and my female friends too by all accounts, maybe car sales to women will go up as a result too.

About the author

Blog post by Christine Babington Smith, an expert in marketing strategy and marketing communications.  She is the  founder of Torehill, a marketing strategy agency which works with promising tech startups. Torehill’s team includes CIM & MBA trained marketers with between 10–20 years’ experience.  Our backgrounds cover London’s premier advertising agencies, PLCs and high-profile start-ups.  By focusing on understanding the market, customer pain points and competitive environment our consultants help start-ups succeed.  Our consultancy services encompass marketing strategy, branding, marketing communications, campaign planning, website development, digital marketing, PR, SEO and content.

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