Car Buying, Selling Becoming an Online Process

26 Oct 2005
A growing number of new-car buyers are doing a lot more than online research - everything but test-driving and dropping off the payment - and manufacturers and dealers are now making it much easier for buyers to spend tens of thousands of dollars online, writes the New York Times.

Though few buyers complete their transactions entirely online, that number has increased - from an average of 4.9 in June 2002 to 7.5 this June.

According to a NADA survey, 94 percent of dealers in the United States have websites, one-quarter of them having come online in the last three years. Dealers now get nearly 230 monthly online prospects on average - nearly twice the 116 per month in 2004.

Also, other car-related sites are helping customers to better narrow their choices, making the dealers' job easier: Car manufacturers have improved their sites; online car malls like CarsDirect.com, Autobytel.com and Cars.com point prospective buyers toward car dealer sites; and information sites like ConsumerReports .org, Edmunds.com and KelleyBlueBook .com provide massive amounts of information.

Dealers have also adapted by creating internet sales divisions and compensating employees with straight salaries and other incentives, not just commissions; and they have hired people versed in email salesmanship and so reduced lost sales because of employees' attempts to protect commissions.

Online Usage of Car Buyers – 10 Year Survey


Online Usage of Car Buyers – 10 Year Survey

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/09-29-2005/0004134990&EDATE=

WESTLAKE VILLAGE, Calif., Sept. 29 /PRNewswire/ -- Product-relatedinformation has become the primary focus for new-vehicle shoppers who use theInternet to research models, significantly surpassing price information forthe first time, according the J.D. Power and Associates 2005 NewAutoshopper.com Study released today. (Logo: http://www.newscom.com/cgi-bin/prnh/20050527/LAF028LOGO-a )

The study finds that while some shoppers know which vehicle they arelooking for before going online, 79 percent of automotive Internet users areimpacted in their vehicle selection by information found online. Thiscompares to 78 percent who are impacted in how much they paid or offered forthe vehicle they purchased.

"Automotive Internet usage has gone through a tremendous transformation inits 10-year history," said Dennis Galbraith, senior director of onlinemarketing solutions at J.D. Power and Associates. "Initially, the Internetwas primarily thought of as a tool for getting the best price on a vehicle.Today, consumers are even more impacted by the Internet in which vehicle theybuy than how much they pay for it."

Along with this trend, manufacturer Web site visitation continues toincrease among all new-vehicle buyers, while visits to independent sites(sites not controlled by a vehicle dealer or manufacturer) remain flat. Onaverage, buyers say they rely most on manufacturer-sponsored sites for productinformation and on independent sites for price-related information.

While the majority of buyers visit the brand's Web site before theypurchase a model, they typically visit a multitude of sites before finalizingtheir vehicle selection. For every manufacturer, at least 80 percent of theirsite visitors who buy a new vehicle will visit at least one other manufacturersite.

"There is tremendous market share at stake in the battle to turn sitevisitors into buyers," said Galbraith. "Manufacturers will continue to movehundreds of millions of marketing dollars toward their online efforts and willbecome more efficient marketers in the process."

At the same time, consumers are using the Internet to adjust to the factthat there are more models to choose from and more options and accessories tocustomize vehicles.

"A greater emphasis on finding the right vehicle is good for consumers,"said Galbraith. "Vehicle depreciation is so high that the cost of buying thewrong vehicle can be far greater than the cost of paying a few hundred or evena few thousand dollars more than a better negotiator might have paid. Inpractice, most vehicle buyers are minimizing the risk of buyer's remorse byusing the Internet to find both the right vehicle and the right price."

A record high 67 percent of new-vehicle buyers use the Internet in theirvehicle shopping process-up from 64 percent in 2004. Nearly all (89%) ofthese consumers visit a search engine or portal (such as AOL, Google, MSN andYahoo!) as part of their shopping process. Seventy-seven percent of theseconsumers visit at least one independent Web site and typically visit thistype of site first in their vehicle shopping process.

"Independent sites are likely to add robust tools to help shoppersidentify the right vehicle across all brands for their particular preferencesor lifestyle," said Galbraith. "There remains a great deal of contentopportunity for independent sites."

About J.D. Power and Associates Headquartered in Westlake Village, Calif., J.D. Power and Associates is anISO 9001-registered global marketing information services firm operating inkey business sectors including market research, forecasting, consulting,training and customer satisfaction. The firm's quality and satisfactionmeasurements are based on responses from millions of consumers annually. J.D.Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies Founded in 1888, The McGraw-Hill Companies is a leading global informationservices provider meeting worldwide needs in the financial services, educationand business information markets through leading brands such as Standard &Poor's, McGraw-Hill Education and BusinessWeek. The Corporation has more than300 offices in 40 countries. Sales in 2004 were $5.3 billion. Additionalinformation is available at http://www.mcgraw-hill.com.

J.D. Power and Associates Media Relations Contacts: John Tews Michael Greywitt Director, Media Relations Director, Media Relations Troy, Mich. Westlake Village, Calif.
(248) 312-4119
(805) 418-8526 john.tews@jdpa.com michael.greywitt@jdpa.com

No advertising or other promotional use can be made of the information inthis release without the express prior written consent of J.D. Power andAssociates. http://www.jdpower.com