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Kevin  Root

Kevin Root Founder

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86% of Consumers Want This When Buying a Car

Imagine for a moment getting through your holiday shopping without the ability to buy anything online. Hard to fathom, isn’t it? These days, you can order and pay for just about anything on your computer, tablet or phone—and sometimes get it delivered the same day! Buying a car online though? Not so fast.

We all know buying a car is a complex process. Buyers don’t always know what they want or what they can afford and often it takes a physical visit to the dealership to work through the variables and test drives to find the right fit. Then the actual purchase process starts from agreeing to terms, contracting, and F&I. Who could confidently want to do this online? A lot more people than you’d think.

Root & Associates was hired by CDK Global to conduct research to understand consumers’ desire to buy a car online. We surveyed 1,000 consumers who were planning on purchasing or leasing a new car within three months and presented them with realistic and detailed concepts around the purchase process to assess how much they want to conduct digital retailing verses purchasing in the dealership.

We found that 53% of consumers said they were “extremely” or “very” likely to conduct the entire car purchase online. This includes selecting a specific car, negotiating and arriving at a final agreed price, submitting their credit information and getting approved, reviewing final paperwork, and transacting—only going into the dealership to do a final review of the vehicle and drive off with the car.

We also learned that younger consumers signaled they are much more likely to buy a car online if the technology is available than older buyers. This is noteworthy because the desire to transact online will only grow as younger generations, who expect to buy everything online, age and make up a larger percentage of the car buying population.

So why do people want to buy a car online? Most cited reasons of efficiency and convenience. If the process can be transferred to an online environment, they see it as gaining efficiency and winning back time they don’t have to spend waiting around in the dealership. They also like the convenience of conducting most of the process on their own time and away from what is perceived as a high-pressure environment in the dealership.

So, if consumers want it, why isn’t digital retailing widely available today? Some argue the technology isn’t there yet. This isn’t true. Currently, the leading technology companies in the industry offer online transaction solutions for dealerships. Also, Silicon Valley Start-up Drive Motors, which is backed by Y-Combinator and Khosla Ventures, is also in market with their “Buy Now” offering.

We suspect the real reason these solutions are not more widely adopted is in a strong market, dealership management is reluctant to change. Implementing an online buying capability means significant process changes, training, and investment in the dealership. Dealers are fearful of losing control of a sales process that is steeped in tradition and highly managed—especially when they’re making money.

In a follow-up CDK study on this topic, we found that only 35% of dealership management said they were likely or very likely to offer a digital retailing solution on their website. Reasons cited included concerns over losing control of the sales process and not having the customer in person to sell to. Most interesting, however, was when dealership management were told that consumers were very interested in buying a car online, their perspective changed and interest increased to 53%.

Dealers and manufacturers should understand that consumers want to buy online today and the technology is available now. More importantly, car buyers are starting to expect that dealers will be able to transact online. Fifty-nine percent of car buyers said they expect to be able to buy a car online on a dealership website compared to 34% and 32%, respectively, on manufacturer and third-party website. This is good news and means consumers continue to see the dealer as the natural conduit to their new car.

And here’s the clincher: car buyers want this capability so much, 86% said they would choose a dealership with an online buying capability over one without.

Dealers looking for a way to tangibly differentiate themselves from the competition, here is your answer.

Cheers, Kevin

Dealership Executives - Interested in participating in research like this and get paid for it? Learn more about the joining the dealership research panel here.

Jim Dykstra

Kevin,

You couldn't be more right. Consumers of all ages entering the market today expect to buy online. Why? It's 2017. They buy everything online. Moreover, they have seen firsthand how their most complex tasks and purchases - travel, investing, tickets and tax prep - are easier than ever before. There wasn't a dealer in the country who booked their own travel before it moved online. Now most do it themselves because it's easier than inserting an exec assistant or travel agent.  

The key consideration for any dealer about to make move online is transparency. What does that mean? Go buy something from Amazon, click print screen and you have all design insights you need. Launch an online solution that offers "one price" but with no way for consumers to understand your price, and they will flee. Would you buy GM stock online if all you saw was "sale price $48/share" but couldn't see historical trends, trade volume or pricing? Move online and you will forever be compared to Southwest.com, Amazon.com and other great online experiences, not by how you compare to another dealer.  

First movers will win big if they offer the experience consumers find from top sites, but struggle mightily if they try to "pencil" a hybrid solution. It means changing horses, to make it easier to buy (aka great marketing) and resist the urge to demand that we see the whites of their eyes. Seems to have worked out ok for Amazon, ETRADE and more than a few others. 

Kevin  Root

Hi Jim, Thanks for the terrific reply. 

I could not agree more. And yes, I believe change is in the wind! Lots of activity on this topic right now. We have several OEMs that are testing the waters - all with the ability for dealers to maintain control. 

Thanks again 
K

David Ruggles

What could be easier? Ask consumers what they want, then give it to them.  When will the survey takers realize that consumers behave differently in real life than the way they answer survey questions?  What do consumers really want? They want to be guaranteed a win.  And that's largely perception.  In the middle of all of this, we need to make money.  Consumers want us to make money off the next buyer so they can "win."  That's never changed.

Kevin  Root

Thanks for your comment David, 

You are correct that in some cases consumers say one thing and do something different. That is exactly why we have different research techniques used to determine different things (qualitative evaluations vs quantitate evaluations are used differently in part to get past this exact reason). 

What we have learned is that we should not put all consumers in a box and say they all want this or they all want that. In reality, some do want to win at all cost, some want just a fair price and others simply want to avoid confrontation. 

With that in mind, I would respectfully position your comment as "some consumers want to be guaranteed a win". However most consumers, when it comes to a car purchase, simply don't want to loose. For this group its like sitting on a plan and learning the guy next to you purchased his ticket for hundreds less than you did, when you both bought the ticket the same week. 

This is where transparency comes in. That is not something to be feared. Its just different to us who have been doing it the same way for a long time. It does not mean that were going to loose our shirts. These tools allow dealers to maintain control of all the key elements of the gross. Some may be more aggressive than others - just like in the market today. 

Its simply a different way to transact. 

Thanks again for your comment

Kevin 

 

Tarry Shebesta

We've proven with our DriveItNow dealers that when focused on an easy, online self desking solution, they make more front end and back end profits.  As a direct-to-consumer lender, I much prefer to base our products on actual experience and results, not surveys. In a lot of cases surveys are conducted to push a particular product into the marketplace,  making dealers believe they have to have it. Dealers that visited NADA's Modern Dealership Experience exhibit in New Orleans were given a demo of true digital retailing. 

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