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CLICKING for car buyers
More automobile dealers use Web sites as a vehicle to drive up their sales
By Mike Brennan
KNIGHT RIDDER NEWSPAPERS
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GEORGE EWING, the Buick and Isuzu sales manager at Tamaroff Automotive Group in Southfield, Mich., is a big believer in the power of the Internet when it comes to auto sales.
Tamaroff (www.tamaroff.com) became an Internet pioneer when it launched a dealership information site four years ago. Tamaroff is working closely with several online buying services to generate sales leads.
"In the past two months, our Dodge dealership has received 406 Internet inquires alone," Ewing said. "We've converted 31 of those into sales."
Thirty-one sales in two months is not spectacular success, but it is a harbinger. Internet car-buying services will transform the way cars and trucks will be sold in the next century, experts contend.
More using Net
Two million cars and trucks were purchased last year by customers who used the Internet in the process, according to a study by Forrester Research Inc., a Cambridge, Mass., Internet research company. By 2003, about 8 million cars are expected to be sold this way.
"We know in 1998, $46 billion worth of car purchases were influenced by the Internet," Forrester senior analyst James McQuivey said. "It could just mean someone looking at the Ford site to see the options on a Taurus. But by 2003, 50 percent of all new cars sold will be sold this way."
By using the Internet in their search, car shoppers can gain access to a wide range of information and services.
Automakers' own sites
There are auto Web sites run by automakers, such as General Motors Buy Power (www.gmbuypower.com), and companies, such as Microsoft's CarPoint, that specialize in collecting auto information. There also are sites run by local auto dealers and regional dealer groups.
Statistics show the four most active national sites are Autobytel (www.autobytel.com), which is financed by GE Capital Services, MediaOne Interactive and others; Microsoft's MSN CarPoint (www. car point.msn.com), the biggest player in the arena; AutoVantage (www.auto vantage.com), owned by Cendant, a major franchiser of real estate brokerages, hotels and car rentals, and Autoweb (www. autoweb.com), founded by private investors in 1994.
On these sites, you can find everything from basic information on vehicles to which nearby dealer will sell you a car the way you want it equipped. Some sites have added links to companies that sell car insurance, extended-service warranties and leasing deals.
Some sites offer customers personalized information on their cars, such as tips on when you should bring your car in for maintenance and how much the service is likely to cost. Many auto Web sites feature calculators to compute monthly car payments.
Until recently, most of these sites have emphasized new cars. But many of these sites now offer information on used cars as well. And for good reason: Forty million used vehicles are sold in the United States each year, compared with about 15 million new cars and trucks. Ford Motor Co. has launched a Web site offering used Ford, Lincoln and Mercury vehicles coming off leases and from rental and company fleets.
"Used-car sales on the Internet have lagged because you have a lot of different concerns when you're picking a used car without seeing it," McQuivey said. "People still need to spend a lot of time in a used car to see if they want to buy it. The other big inhibitor is there isn't enough used-car inventory online yet."
While online car shopping can make things easier, it is not a panacea. The major car-buying sites do a good job of providing shoppers with a wealth of product and pricing information. The problem is many dealers "drop the ball" when an Internet shopper is referred to them, McQuivey said.
"If a dealer doesn't follow up and contact the sales lead within 48 hours, then the prospect connects with another area dealer who gets the sale."
Another shortcoming is a relative lack of comparative shopping at many sites, McQuivey said. The auto sites run by the Detroit automakers, for example, display only their models. Other sites restrict their offerings to vehicles from a handful of dealers with which the sites have negotiated exclusive contracts.
That lack of choice ultimately could backfire.
"In 50 percent of new cars, the buyer is buying the same brand that they already own. I'm willing to go back to the manufacturer if they allow me to do competitive comparisons on their car sites," McQuivey said. "Otherwise, I'll go to CarPoint. So the question Ford must ask is: Are they willing to show me the dealer invoice and keep me in the Ford family or do they want me to go to CarPoint, where they don't care which car I buy?"
Cars.Com, another Internet car-buying site not affiliated with a manufacturer, embraces the idea of comparative shopping. Cars.Com works closely with newspapers to publish their classified auto advertising on-line. The Contra Costa Times partners with Cars.Com, as do the rest of Knight Ridder newspapers.
Cars.Com also provides prices, ownership operating costs, independent automobile reviews, a calculator for determining auto loan payments, vehicle performance data, recall information and even tips on how to negotiate a fair price. Cars.Com is a division of Chicago-based Classified Ventures LLC, a collaborative venture among eight newspaper companies, including Knight Ridder.
"If you look on our site, we have a news section in Cars.Com. Many of the people who produce content are journalists or auto industry folks who are a credible source of information," said Cars.Com President Mitch Golub. "Our service is competitive. We'll have 30 or so dealerships that want to participate so the consumer has a much wider choice of new- and used-car inventory."
Right now few consumers actually can buy vehicles over the Internet.
Consumers primarily use online sites for information to assist them in their purchase. What the Internet does is save the time it would take shopping at a half dozen dealers to get them to haggle over the lowest price.
Auto-buying sites fall into three categories: vehicle information sites, which provide basic information about used-car and new-car pricing; buying-service sites, which let shoppers price cars and options; and those that do both, said Chris Denove, director of consulting operations for J.D. Powers & Associates, the Agoura Hills auto research company.
"The first phase was to sign up dealers and ship as many leads as possible to them," he said. "The second phase, last year, refined the dealer body and improved the sales leads. The next phase this year is to refine the actual products and services offered by the buying services and to train the dealers to better handle Internet-savvy consumers."
Internet auto buyers often have more information on the cars and trucks they're interested in than do the dealers, he said. The traditional hard-sell approach won't work with shoppers who do their homework and already know how much a dealer has paid for a car, Denove said.
If you use the Internet to try to find the best deal, you'll be frustrated if you don't know what you want.
He warns shoppers not to use online auto buying sites until they're sure which car or truck they want.
"If they use these services when they're in the information-gathering phase, it will be a frustrating experience for them," he said. "But once they decide they want to buy a red Honda Accord, they should submit a purchase request to two or three different services. If they will do that, I guarantee they will have the best shopping experience."
Auto-buying sites realize most people only shop for cars every four or five years. So they're coming up with other gimmicks to attract Web surfers.
Microsoft's CarPoint has added a lot of Web pages car owners can personalize to get ongoing information on their vehicles.
If a consumer types in the information about his or her car, for instance, the Microsoft site will tell them if there's been a recall, when they should bring it in for required maintenance and how much it's likely to cost for the labor and parts to fix their cars. About 125,000 people have registered their cars with CarPoint since November, when the new service began, said Robyn Gorman, CarPoint product manager.
Microsoft revised the used-car portion of their site to reflect how people shop for a previously owned vehicle.
The used-car consumer "has a reverse process to a new-car consumer," Gorman said. "The used-car buyer thinks, 'What can I afford? What's available and is it reliable?"' The new-car consumer thinks "'First, what's a good car? What's out there? What can I get?' Prices come last."
The biggest problems for used-car buyers is that there isn't a lot of information about the vehicles they're buying, said Clark Wood, marketing director for AutoConnect, a site run by Manheim Auction of Atlanta, the largest used-car wholesaler in the country.
AutoConnect has 650,000 used cars in its inventory that can be found at 31,000 dealers across the country. The information is sorted by ZIP codes.
"Our goal is not to facilitate the purchase of a car online," Wood said. "Consumers need to look at the car and see the condition before buying. We're not trying to step in between the consumer and dealer either. Hopefully, we'll just help them narrow their long list to a short one." |
