More auto dealers are implementing Amazon-style purchase options, allowing customers to buy their vehicles online and have them delivered to their home or business.
One of the most consistent complaints about car buying is visiting the dealership. Customers dislike the obligatory haggling over price and pushy sales tactics that can sometimes be used to close a purchase. Online selling takes away much of that aggravation, making terms clear for buyers without the hassle, although in most cases they won't get to take their vehicles out for a test drive.
A shift to online sales could allow dealers to expand geographic reach and make it easier for customers to compare prices and shop competitively. For now, used cars are leading the charge in online sales as they don’t need to be sold through franchised car dealers, which allows for more of a free market for buyers and sellers. After customers select a vehicle they like, they can arrange to have them delivered to their home or business in "many markets across the US" according to a recent Wall Street Journal report.
One such company is Carvana, which was founded in 2012, and which delivers cars to 85 United States markets. The company is based in Phoenix and sold about 66,400 vehicles this year through the third quarter, up from about 44,000 vehicles last year.
And as customers become familiar with this type of purchasing, more dealers are jumping on board. Some deliver a car anywhere for free and others can charge by the mile for delivery. Still, statistics on how many cars are being sold online are difficult to find, because the definition of online sales hasn’t been defined across the industry and because the market is so young.
Despite the relative obscurity of the online auto market, it is increasingly finding fans: Brendan Harrington, COO of Penske Motor Group told the Wall Street Journal: “Everyone loves Amazon and it’s pushing us to do more. People now expect the same thing from the car business.”
Two years ago Harrington launched an online store that lets buyers finish most of a purchase transaction online before arranging for home delivery. The buyer then only signs the final paperwork when the car is received. Direct delivery sales, which include online purchases where the buyer never walks into a dealership, account for about 25% of the 2500 cars he sells each month. The delivery service adds on costs, he has said, but he keeps offering the service because LA traffic makes his stores difficult to reach.
But this model isn't always a prime example of efficiency. While the Wall Street Journal article claims that Tesla has had "success" selling directly to customers, auto club forums and social media sites have been flooded with complaints by customers waiting longer than promised for delivery of their vehicles – a problem Elon Musk has referred to as "delivery hell".
However, what Tesla has proven is that people will purchase items costing $75,000 or more online, and that has caught the eye of the industry.
For example, customer Robert Rivers was enticed by how simple it was to order online and embraced Carvana's no questions asked return policy. He ordered a 2017 Kia Forte off of the website, which was dropped off at his home three days later. After he changed his mind and decided he wanted a higher end model, Carvana came by and swapped the car out for him.
“I didn’t have to deal with the sales guys. I filled out everything online,” he proudly proclaimed.
And the internet is familiar territory for car buyers. The average consumer spends about 13 hours researching vehicles online before making a purchase. This compares to about 3 1/2 hours that they would generally spend at a dealership. Another dealership that has implemented online car buying is Earl Stewart Toyota in North Palm Beach, Florida. The general manager has said that he introduced service because he saw that customers wanted to "maintain control throughout the entire transaction".
Still, going to the dealership will likely still be the primary way that cars are sold, due to the expenses associated with delivering them. But it doesn’t mean that in-roads haven’t been made into embracing this potentially new sales model. While Amazon allows people to research vehicles by models and year on its website, people can’t purchase cars directly from the retailer - yet, although it is only a matter of time before the fledgling monopoly changes that.