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Virtual car sales still a big step away

It was hailed as a world first. From November 1999 Vauxhall offered six specific models – two each from the Corsa, Astra and Vectra ranges – for sale exclusively online.

Website visitors could get a value on their trade-in, arrange finance and have their new purchase – with unique ‘dot com’ badging on the boot – delivered to their door a week later.

Vauxhall’s then managing director Nick Reilly said he was “very excited by the potential” of the internet. It was undoubtedly a pioneering initiative, watched with great interest by the industry. Needless to day, it was quietly dropped some months later after poor take-up. People weren’t ready to buy a new car online.

Use of the web has changed beyond recognition in 13 years. Confidence in purchasing high-value items, including electrical appliances and holidays, has soared. In the automotive sector digital marketing is a boom area, with a website and social media presence seen as the minimum commitment from franchised dealers. But new car retailing still revolves around the physical showroom.

Need to know

 - Consumers more confident in big-ticket FMCG/lifestyle purchases online
- Appetite exists among some consumers for online car deposit payment
- Self-service booking features set to enhance dealer websites

Establishing a relationship

“I think a good 50% of the decision is taken before the customer steps into the dealership, utilising the internet,” said Richard Roberts, MD at Trident Honda in Surrey. “But they still want to touch, feel and drive the car prior to signing on the dotted line.”

He believes the need to have an annual service is also part of the reason the online transaction hasn’t flourished, as face-to-face buying helps establish a relationship. “The difference with electrical items is that, yes, they can go wrong and require support, but it’s not likely to involve the same number of replacement parts. In years to come, when vehicles are propelled by simpler engines which require less maintenance, maybe things will change, but I just don’t see it yet.”

Tim Peake, group strategy director for Trader Media Group, remembers the fanfare when Richard Branson launched the Virgin Cars online operation 12 years ago. He believes that while it flopped as a concept, that was more to do with vehicle supply issues than consumer demand.

“More recently, Autoquake failed due to a lack of value being offered to both fleet companies and consumers, and Tesco Cars was actually little different from Autoquake, given that the model was based on Carsite.”

An inevitable step

Peake argues the inescapable truth is that people are completing an increasingly significant proportion of their retail activity online. “We know 30% of Auto Trader consumers have indicated that they would pay a deposit for their next vehicle online, and 27% would pay for the entire amount online.”

He feels that the step towards buying the car virtually is both natural and inevitable. “The question to focus on is not ‘will it happen’, but ‘when will it happen and what is the right model’.

Developing that will take time, and we are not about to see the wholesale decline in franchised dealers’ physical car operations. The transition to online vehicle purchases will be much slower, not least because of the possible implications it could have on the OEM-franchise-consumer value chain relationship.”

To the outside observer, it seems obvious that dealers are not going to push for the process to move entirely online. It would be like turkeys voting for Christmas and a reduction in the requirement for the current ‘clicks and mortar’ model would put them out of business.

Louise Wallis, head of business development for the National Franchised Dealers Association, doesn’t believe doing a deal in the showroom will disappear any time soon. She said it remained an experience, and one that people are happy to visit a retailer to get.

She added: “There is also still the opportunity for dealers to sell various add-on products, be it the right finance deal, a service package or personalisation options on cars like the Mini. That’s a good old fashioned sales job.”

Adam Palmer is UK marketing manager for ADP, a supplier of dealership computer systems. He agrees with Wallis.

“There is the experience that comes with visiting a car showroom that cannot be replicated online. It’s viewing, smelling the new interior and test-driving one or a number of vehicles that you are interested in. This is despite the introduction of technology that can provide a virtual online showroom with detailed 360° vehicle tours and intuitive configurators.”

Improving the customer experience

Internet research at home is now part of the buying process for the majority of new car buyers. That means the need for dealers to invest in maximising their online presence and driving traffic to their physical showroom has never been greater.

Palmer said: “Dealers need to look at how they can use their internet presence as a way of improving the customer experience by offering self-service features, such as online service booking. This is an area which ADP has been focusing on.”

So if consumers and dealers still aren’t yet ready for the whole sales process to move online, could an element of it do so without affecting the status quo? Tim Peake believes so, and said the more astute dealers are already planning how they can offer a variety of new web-based sales channels for customers wanting to at least place deposits.

Trader Media Group already has experience of this with used car sales through its Auto Trader brand. It’s been testing the concept of online payment of a deposit on a particular vehicle, and believes dealers should see online retailing as an opportunity rather than an issue.

“We are also looking at the implications this has on managing the consumer once they reach the forecourt. Having already sold the car, this will be an odd concept for many dealers,” added Peake.

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