Online car sales could soon be on fast trackPosted on: April 27, 2020, by : Rakesh Sashmal
After years of forecasts that the Internet would revolutionize auto sales, auto industry leaders say dealerships are within a year or two of being able to complete an entire vehicle transaction online. That includes pitching finance and insurance products and getting electronic signatures on key documents. There are even online leasing apps popping up, too.
At some point, millions of consumers will use online sales technology, experts say.
“Once you figure out it’s a good thing, it takes off like crazy,” Cox Automotive COO Mark O’Neil told the Automotive News Retail Forum on Jan. 26. “By the end of 2017, we are going to be leaving that, I’ll call it, “slow growth, bumpy, experiment-with-it phase,’ and we’re going to start with the very rapid part of growth.”
O’Neil predicted nearly 10 percent of vehicle transactions could be online by 2019.
Automakers and dealers are making significant investments in the technology to enable consumers to do most — and someday, all — of a vehicle purchase online. Those dealers who lag behind will have to catch up or face a fate similar to that of independent bookstores in the wake of Amazon, industry experts say.
But they add that catching up will be possible. “You’ll have the pioneers who’ll go out there and draft the technology,” said David Kain, president of Kain Automotive in Lexington, Ky. “What has historically happened is the smaller dealers and the midsize dealers are able to catch up.”
Kain Automotive provides digital marketing, sales training and consulting to dealers. Kain estimated that 10 to 20 percent of dealers have software that enables them to do a car transaction electronically up to delivery, at which point some state laws require certain documents have a wet signature.
Toyota Marin has been using the online shopping portal Express Storefront, from startup Roadster, since last summer. The San Rafael, Calif., store sells around 40 vehicles per month almost completely online through the platform, said Mike Christian, Toyota Marin’s general manager.
Express Storefront is hosted on dealership websites. It enables shoppers to select a vehicle, get approved for credit, sift through F&I options and have the vehicle delivered to them, where they sign documents.
Not everyone agrees this is the future. Some dealers say completing a car transaction online is years away because valuing a trade-in, arranging financing and complying with regulations make it too complex. Others warn that online deals open the door to cybercrime.
There is also worry that F&I profits would decline without a face-to-face pitch. “But the studies we’ve seen show that consumers will actually buy more F&I products using iPads in a dealership on their own than a finance manager can sell them,” Kain said.
Online sales is one approach among many to selling cars, reflecting customers’ varied preferences. Indeed, surveys show consumers are mixed in their views of online sales.
DealerSocket’s 2016 Dealership Action Report found two-thirds of franchised dealers believe consumers would like to complete the entire buying process online, but only one-third of consumers who were surveyed said they’d want to do so.
In a survey of consumers who recently visited a dealership, conducted last month by DealerRater for Automotive News, 80 percent of respondents — excluding those who said they were at the dealership for service — said that “some, but not most” of the purchase process could have been done online.
Still, some automakers and their captive finance arms are developing digital sales technologies.
Ford Motor Credit Co., for example, said last month that it was partnering with financial technologies company AutoFi to enable customers to buy a vehicle straight from a dealership’s website. It’s up to the dealership to decide whether to offer home delivery. A pilot began at Ricart Ford in Groveport, Ohio, in December.
Kain: Stores can catch up.’The future’
Toyota is also “aggressively” working on online transactions, said Ryan Hensley, CFO of Bill Penney Toyota in Huntsville, Ala. Hensley wants that technology but worries about the cost, adding it is “years down the road” before full online transactions are commonplace.
Kain, who has seen some of the automakers’ online sales technology in action, said the industry is “months away” from full digital deals. It hinges on lenders’ willingness to accept electronically signed documents, he said.
Van Horn Automotive Group in Plymouth, Wis., is about half finished designing in-house technology to do a full transaction online, said COO Teresa Van Horn.
“That is going to be the future,” she said. “It’s not completely here yet. There are many customers who still want to come in. But the next generation is used to being able to do transactions almost instantly. They want that convenience.”
Dealer Alex Perdikis, owner of Koons of Silver Spring, in Maryland, said he is increasingly delivering new and used vehicles to customers who never set foot in his dealership. They conduct most of the deal online, often on a mobile phone. A finance manager calls to negotiate terms and pitch insurance products. An employee delivers the car and gets paperwork signed then.
Del Grande Dealer Group, in the heart of Silicon Valley, is building in-house technology to offer the full online car-buying experience with the click of a mouse. That includes price validation, trade-in options, choosing accessories, financing options, F&I product selection and pickup or delivery options, said President Shaun Del Grande. He said that by offering the same high-quality customer experience at the time of delivery as he would if a customer came into the stores, his dealerships can build a relationship with the customer. And in case the lack of a personal connection built during the sale hurts his service business, he’s considering adding valet pickup and delivery for service customers.
Alex Perdikis is increasingly delivering cars to customers who never set foot in his store.Publics’ plans
AutoNation Inc.’s AutoNation Express approach to online car buying is in all of its 260 stores. AutoNation CEO Mike Jackson said about 30 percent of its January new-vehicle sales were transacted online.
Sonic Automotive Inc. will launch Sonic Digital One-Stop this year to enable consumers to shop for a vehicle, get a trade appraisal and complete the purchase online. A Sonic employee delivers the car to the consumer and gets signatures.
In August, Asbury Automotive Group Inc. put online-selling software in about a dozen of its 84 stores. Last year, Penske Automotive Group Inc. put its Preferred Purchase online shopping tool in all 132 of its U.S. stores. Penske also is piloting an F&I product associated with Preferred Purchase in some stores.