The Web is a car-shopper's ally
By Lucy Lazarony • Bankrate.com

New-car shoppers have discovered a formidable ally -- the Internet.

People are using the Internet to decide what car to buy, how much to pay and which lender to borrow from. Car makers and dealers have responded by offering new choices online -- but lay the same old traps for unwary consumers.

Forty percent of new-car shoppers went online in 1999, according to J.D. Power and Associates, a marketing information firm in Agoura Hills, Calif. That figure is expected to jump to 65 percent by the end of 2000.

"It's just coming on like crazy. It's become a key tool for information-hungry consumers," says Tony Cohen, a senior research manager at J.D. Power.

Wealth of info online
From reliability studies to negotiating tips to financing options, it's all online. Auto manufacturers' Web sites aimed at showing off their product lines have added calculators and loan applications as well as personalized pages and special offers for current car owners.

Not surprisingly, the key thing folks are looking for online is the inside scoop on pricing.

"Price is still the No. 1 issue. They want to get a couple of independent, third-party opinions," Cohen says.

CarWizard, Edmund's Automobile Buyers Guide, AutoSite, Autopedia, Kelley Blue Book and CarPrice.com are among the sites serving up timely pricing information.

It's working. People who surf the Internet average 2 percent savings on the purchase price of a car or sports utility vehicle, Cohen says. That's $400 on a $20,000 vehicle.

"The playing field is being leveled and control is moved over a bit to the consumer," Cohen says.

"Ultimately, the more control you can push down to the consumer the better it's going to be."

Auto makers online, too
Auto manufacturers are taking notice. Both Ford and Toyota have pumped up their online services in the past year.

In September, Ford Motor Co. announced a partnership with Microsoft to launch a build-to-order car service that would allow consumers to design and order the cars they want over the Internet. The service is scheduled to go live through the Web sites of MSN Carpoint and Ford Web sites in the first quarter of 2000.

This fall, Ford will launch a program that will allow Ford credit customers to pay their bills online. The site has boasted an online credit application from Ford Credit since May 1998.

"Once they hit 'submit,' about half of the customers we approve are approved within three to five seconds," says Steve Larkin, a communications manager for Ford Credit.

The rest of the applicants hear back in less than hour. Ford credit customers can also access their accounts online. Larkin says consumers have come to expect interactive sites.

"Anything they can do over the telephone or in person they want to be able to do over the Internet," Larkin says.

On Sept. 27, Toyota launched a service that allows customers to check their credit account info online. Toyota also plans a nationwide rollout of its online credit application program in 2000. Right now, the program is limited to customers in Alaska, Washington, Oregon, Idaho, Montana and California. As with so many online innovations, the hook for consumers is convenience.

"They like to be able to do it when they want to do it and to take their time," says Mike Groff, corporate marketing and leasing manager for Toyota Motor Credit Corp. and Lexus Financial Services.

With so many online sites aimed at taking some of the pain out of the auto buying and auto financing process and auto manufacturers bending over backward to please, it's easy for people to start to feel, well, comfortable.

Consumer experts are worried
That has some consumer experts worried. Because despite all that you can do online you still have to sign on the dotted line in person and come face-to-face with a dealer intent on fattening up that profit. It's not a good time to let your guard down.

"You're comfortable. You don't negotiate the cost of your car. You accept their financing," says Remar Sutton, president of the Consumer Task Force for Automotive Issues.

"If you sit back and say, 'That was easy,' then you don't stand up for your rights in other areas. You're not going to argue about the other parts of the transaction."

Those other parts include financing, trade-in value and extended warranties.

"A consumer thinks all the negotiation is done on the Internet. So they take in a $5,000 car and get $3,000. They just lost $2,000," Sutton says.

Let's face it: One of the big appeals of surfing the 'Net for auto information is to minimize your time at the dreaded dealership and help you avoid a drawn-out confrontation with the salesman.

But Sutton says haggling is essential to landing a good auto deal.

"In the real world, if the seller has a smile on his face you're paying too much money," he says.

And consumer experts say you need to be just as skeptical with auto information out there on the Internet. Don't believe everything you read. Take financing, for example.

"Everyone claims they're the cheapest -- that obviously can't be the case," Sutton says.

Visit several sites. Sutton recommends printing out the contract from an online site and comparing it with the contract from a local bank or credit union.

Be sure to visit several auto information sites as well. Compare all information and advice.

"The key is don't assume any deal is the best deal," Sutton says. "Use it for comparison shopping."

-- Posted: Oct. 13, 1999