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US suppliers 'struggling to survive'

Internet-based car suppliers in the US are struggling, according to Automotive retailing in the new millennium, a study from the Economist Intelligence Unit (EIU).

The US market has a well-established lead in alternative methods of selling new and used vehicles but e-commerce newcomers found it difficult “to grow fast enough to survive”.

One problem was finding the best formula for linking cars and customers that did not simply add an additional layer of complexity on to the current system.

According to the EIU, strong dealers were likely to use the internet to defend their positions, increase local market reach and “ultimately drive out weaker competitors”.

Internet-driven transparency would at some point make it much easier for consumers to readily identify dealers offering strong propositions, “leaving weaker dealers to die on the vine”.

It remained to be proved, says the report, whether a single extra vehicle had been sold because of the internet.

“Prudent managers will have to do their own homework in assessing some of the claims made by web participants,” it adds. “So far, the emphasis has been on meeting current demand better, not growing demand. “Savings to customers from buying cars on the internet may not be as great in some cases as promised.”

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