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From: Jared Hamilton
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Sean Reyes

Sean Reyes Chief Marketing Officer

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The Perils of Online Used Car Buying Services

These days, more channels are open for consumers to buy vehicles without leaving their homes. Whether that occurs through dealerships, independents, or online services, it is of concern, from a safety standpoint, that consumers know that their chosen vehicle is safe.

No consumer wants to spend thousands of dollars on a “lemon,” nor a vehicle that requires a lot of mechanical work to get it running properly. This is why most prefer to buy their vehicles from established sellers, rather than a private party. Consumers looking for inexpensive vehicles, which may be cost-prohibitive for a dealership to sell outside of a buy-here, pay-here lot, search through classifieds and marketplaces to find these vehicles. They are rolling the dice -- hoping they can trust the seller when it comes to the vehicle’s condition. Or, if they can afford it, can get the vehicle thoroughly inspected and any mechanical or safety issues repaired.

The “big” two online used car buying platforms are Carvana and Vroom. But another platform, Shift, has been getting some attention lately. According to an article in Automotive News, as it prepares to join its big brothers in the space, Shift has chosen to carve out a niche in that market… namely older and less expensive vehicles. The article states that 75% of Shift’s vehicle listings are 4 years or older and 16% are priced at less than $10,000 (compared to 1% for Carvana and ZERO for Vroom.)

                           

Here’s the problem – most older vehicles have a higher likelihood of having outstanding recalls. These vehicles tend to have third or fourth-generation owners and have passed hands many times. Most franchised car dealerships do not have many of these sub-$10,000 vehicles -- for a reason.

But let’s back up for a moment.

Plenty of consumers need less expensive vehicles, perhaps due to finances or for other reasons. In general, most consumers would rather buy a vehicle from an established dealer than from “Joe on Craigslist,” as it most likely conveys a sense of security and safety in the transaction. EVERY dealer – on or offline – will tell you that they inspect the vehicles. And most do. The reason that many of these less expensive vehicles do not end up on dealer lots is the costs involved in repairing the items found in that inspection.

If you investigate further, you will find that Shift makes it clear that a vehicle any consumer purchases from them may still be under warranty (which is normal). HOWEVER, the buyer not only agrees to but….

DISCLAIMS ALL LIABILITY FOR MANUFACTURER’S RECALLS. (Terms, Section 6)

Is that on any of the friendly “why buy from us” value propositions? No.

Will you have a good buying experience? My guess is that you will.

Will you be able to have a good buying experience and get an inexpensive vehicle that is more likely to be reliable than the one you would buy from “Joe on Craigslist?” Maybe.

Will you have a good buying experience, get an inexpensive vehicle that is more likely to be reliable AND safe to drive? Roll the dice.

The message to consumers is haunting - be careful what you wish for. Be careful of the promises spoken and the disclaimers that are hidden and always remember, buyer, beware. Caveat Emptor.  Inexpensive vehicles should not place the unsuspecting consumer in danger.  The process to clear open recalls can easily fall on the buyer, but full disclosure is necessary.  Sliding a printed disclosure isn’t enough. In fact, in a product liability lawsuit, a written disclosure can serve as evidence that a dealer sold the vehicle with full knowledge that it had a dangerous recall.  That act, my dear friends, isn’t good business for anyone.

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