New-car buyers
flocking to Internet By Terry
Jackson • Bankrate.com
The biggest shift in the automobile industry over
the past five years hasn't been America's love affair with the SUV
or, more recently, the arrival of fuel-sipping hybrid gas-electric
vehicles. It isn't even the tons of rebate cash and zero-interest
financing that accompanies almost every new car.
It's the Internet.
It started with Web sites like Edmunds.com,
the Kelley
Blue Book site and others that gave car shoppers solid pricing
information they could use to deal with what they believe are predatory
sales people.
Now the Internet is crossing the last frontier in
the new-car process -- online negotiation and purchase.
JupiterResearch
reported last month that Internet-generated sales leads and requests
for price quotes will account for 22 percent of new-car sales this
year, up from 15 percent in 2002.
"First the Internet gave people information,
leveling the playing field,'' says Mitch Golub, president of Cars.com,
a site that offers consumers research material and then can connect
them to one of its 7,100 participating dealers.
"Now you can choose which car you want and then
decide how you want to interface with the dealer'' to complete the
purchase -- online through e-mail, through phone calls or a traditional
visit to the store.
John Thomas, an industry analyst with the National
Automobile Dealers Association, says increasing numbers of dealers
are reaching out to the Internet consumer by upgrading their Web
sites.
"In the beginning, most dealer sites were pretty
static. You couldn't do much more than send an e-mail to the dealer,''
Thomas says. "In the last four or five years, dealerships and
even manufacturers have upgraded their sites to the point that consumers
can look at what's in a dealer's inventory and see photos of the
actual cars.''
Philip Reed, consumer advice editor at Edmunds.com
and author of Strategies
for Smart Car Buyers, says he sees the sales pendulum swinging
more toward Internet transactions, particularly as younger, more
computer-literate consumers reach the age where they regularly shop
for new cars.
"Slowly and quietly the percentages are tilting
toward online,'' he says, predicting that soon as much as 30 percent
of a new-car dealer's business will come from the Internet.
So what's fueling this trend?
In part, it's a result of our busy lives. Golub points
out that through the Internet a shopper can cover several, even
dozens of, dealerships in just minutes, compared to spending days
driving from one lot to another.
But a much bigger factor is that Internet shopping
can, depending on the site and dealership, eliminate much of the
haggling factor -- the part of new-car shopping that people, especially
woman, say they hate the most.
"A lot of dealerships have set up fleet or Internet
sales departments where the sales person is on salary and gets a
bonus for volume,'' Reed says. "They're not in the business
of trying to gouge you. Many don't even have sales backgrounds.''
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