The days of spending precious time haggling at a car lot may be numbered.
Some companies are going online to win over customers by cutting shopping time in half.
“For some dealers, it’s still a small portion of their sales because most are using the sites for advertising,” said Liz Spear, economic analyst at the National Automobile Dealers Association (NADA) based in McLean, Va.
Still, nearly 53 percent of the nation’s 22,700 franchise dealerships currently have a Web page on the Internet, according to a NADA survey. Another 40 percent are planning to set up a Web site up within six months.
And while advertising dealership products and location are the primary goals of the site, nearly 40 percent of dealerships are exploring additional applications of Internet technology.
Order car, apply for loan
The survey also found that:
- 28 percent of the sites allow customers to schedule sales appointments online.
- 22 percent accept new- and used-car orders online.
- 26 percent allow customers to fill out loan applications.
- Additional services include hot links to manufacturer Web sites and manufacturers’ suggested retail prices.
Incentives include pre-approved financing, free classified ads and comparative pricing.
A number of banks, credit unions and finance companies are offering pre-approved auto loans through Web sites, promoting fast turnaround time and a range of dealerships to choose from.
Some even allow customers to print out vouchers for financing to take to their local dealers when it’s time to talk price.
Online lenders to thrive
In a study released earlier this year, Killen & Associates, a marketing research firm based in Palo Alto, Calif., predicted that financing companies that go online may have a leg up on the competition.
Bob Goodwin, Killen’s senior vice president, said, “Using the Internet, innovative automotive finance companies will capture 20 percent to 30 percent of the total loan business in a few short years.”
Location of the dealership may have a lot to do with the decision to create a Web site, said Spear.
“It [also] depends on who they’re selling to and the type of marketing plans they have in place,” she added.
Who’s already there
Some companies are already there.
CarPoint features a new-car buying service that allows the buyer to select a car, negotiate the price and reduce paperwork before heading to the dealer.
The free service makes all this possible in a matter of two days. CarPoint claims the price quoted will be the most competitive price the dealer can give, cutting down on haggling time. The status of the car — whether it’s on the lot or needs to be ordered — will be clearly communicated to the customer.
CarPoint works with a national network of qualified dealers with standards established by Reynolds and Reynolds, an information solutions provider for automotive and health-care markets.
Price Auto Outlet offers online financing for off-lease cars — vehicles turned back in at the end of a lease and then sold to another customer.
This provider backs all of its cars with a 72-hour money back guarantee, a 6-month, 6,000-mile warranty, an 80-point vehicle inspection and offers 7.9 percent financing for qualified applicants.
A handful of sites offer space for classified ads. With
autoweb.com, sellers can place an ad (and photo, for visual effect) that will run for 30 days for $19.95. The package includes ad placement in
USA Today online and
Car and Driver online.
The industry standby,
Kelley Blue Book can be accessed for free online reports on new and used cars. Both retail and trade-in values are given for those looking to sell their cars at a dealership or to an individual.
Buyers more savvy
With depreciation and interest now accounting for slightly more than half of the cost of owning and operating a car, according to Runzheimer International, a Rochester, Wis.-based management consulting firm, shoppers are becoming more savvy to the buying game.
“When you examine which car to buy,” said Larry Snyder, director of business development at Runzheimer, “it is not enough to compare only sticker prices or even best negotiated deal. To gain a true understanding of how much that car will cost over the life of the vehicle, all the expenses you incur once you drive off the lot such as finance payment, insurance, fuel efficiency, annual depreciation and the cost of repairs and maintenance, should be part of your equation.”
And sales managers may be starting to respect car-smart shoppers who are looking for the best deals they can find.
Common sense should still reign
Despite the convenience of online shopping, consumer advocates advise using common sense when buying or selling a car on the Web.
Sheila Adkins, public affairs manager of the Council of Better Business Bureaus Inc. in Arlington, Va., said that the BBB has received few if any complaints from consumers duped by online car shopping.
“It’s such a new area but that’s not to say that consumers shouldn’t be careful,” she said.
Never provide an Internet car buying/selling service with a credit card number. Most companies will ask for the basics: the year, make and model of the car, and the asking price. A phone number, address and/or e-mail address is often required when advertising online. Ask for the conditions of your Web advertisement in writing.