When will we be buying cars online?

For all the media talk about the automotive industry being revolutionised, car makers and dealers have been awfully slow in making it happen.

In fact, any change we are seeing is being brought on by tech companies – not the brands we know and love.

Of course, this isn’t unique to automotive. Newer, nimbler companies have shaken up almost every industry – and peeved off most of the incumbents in the process.

But it’s tough to start a new car brand and gain traction in the market. Established names have had a huge head start. Are they about to be overtaken?

Innovation in automotive can manifest itself in two ways – the car itself, and the way it’s bought. A few things are driving the former; planned congestion charge increases, government grants, public charging stations, and – most importantly – the UK, France and India’s plans to phase out petrol cars by 2040.

A bit over 100,000 electric cars are currently registered in the UK. Electric vehicles from almost all big brands are on the market. Some, like the Nissan Leaf or Mitsubishi Outlander PHEV, look, feel and sell like ‘real’ cars. Others still carry the ‘toy’ label.

Autonomous driving and ride-sharing are two more technological advances with big implications. They take the emphasis away from the driver’s experience and focuses on what surrounds it; the booking process or the navigation tech.

So as far as the cars themselves go, we’re making progress. It’s slow, but it’s making the purchase process itself look ancient.

Are consumers ready for change?

75% of car buyers in 2016 said they’d be interested in buying a new car online. Younger consumers are especially ready – which gives this whole issue a bit of urgency. Reevoo research shows that 57% of 18-34-year olds would definitely buy a car online or consider buying a car online.

So why hasn’t it taken off? It’s not like car brands haven’t tried.

Hyundai set up an online store at the beginning of the year and were shortly followed by Peugeot and Smart. They just haven’t really sold all that much. In its first month, the car maker had almost 100,000 visitors to its online store but sold just 23 cars online (of which 93% of customers still interacted with their local dealer).

The problem is that the online customer experience is far too fragmented. There are too many moving parts, most of which have a vested interest in getting you into a showroom and talking to a dealer. The indicator for this is the one brand that is doing it well – Tesla.

As well as having a revolutionary product, Tesla is innovating when it comes to customer service – but in true modern start-up style, the tech is hidden behind the surface.

Tesla still has physical stores (which they own), however the reps are more like educators than the stereotypical salespeople. They spend hours teaching customers how and where they can charge their Tesla and how much they expect to pay vs gas. Then, when someone is ready to purchase, they can build their custom car using the Design Studio on Tesla’s website.

If the rest of the auto manufacturers could work out how to sell online properly they’d make more money and we’d be paying less for our cars. We’d be happier, too – surveys show that car buyers find the experience of visiting dealerships boring, confrontational and bureaucratic.

GET THE FACTS

Why the hold up?

of car buyers

say their main concern about purchasing a car online is not being able to see the car/take it out on a test drive.

Reevoo research, 2017

Brands in other industries, like ASOS, have found clever ways to ease this concern. Car brands need to go the extra mile for online purchasers.

of consumers

state that lack of price negotiation will prevent them from buying cars online.

Capgemi Consulting, 2016

In other industries, the effect of moving online is lower prices. With enough consumer education in this area attitudes will change.

of car buyers

say data security and privacy issues would prevent them from buying a car online.

Capgemi Consulting, 2016

Understandable, considering the size of the purchase. But cars aren’t going to be the only big-ticket item being sold online in future, and we should see a more general change in attitudes and trust in this area.

So, what’s the solution?

If car manufacturers want to sell cars online successfully, they need to find a way to merge both physical and digital channels. To do that, they should look to other industries for inspiration.

Online retailers like ASOS have already shown that it’s possible to sustain a model whereby customers try piles of product and send back what they don’t like. Is it out of the realms of possibility that a new car appears outside your flat after you book a test drive online and maybe put down a safety deposit? Augmented and virtual reality technologies have advanced to the point where virtual test drives could be a satisfactory ‘teaser’.

The issue of price

While the haggle is a source of anxiety for most, its absence is a deal breaker for 37% of consumers.

For sure, a manufacturer will be a lot less likely to be flexible on price than a dealer. This might mean a cultural shift in the way we buy cars and the removal of the haggling process. But the extra flexibility in car customisation could allow a customer to opt to forgo a few luxuries or features for a cheaper price. Dealers who move online can still make negotiations via a phone call or live chat – but both manufacturers and dealers need to be fully transparent to reassure customers they’re getting the best price possible.

However, before they rip out their whole systems, there are things brands can do to capture the feeling of owning a car on their digital assets.

The power of a recommendation

User-generated content (UGC) is a great way to show potential customers what life is like after purchasing a particular car. Reviews from real car owners give prospects the confidence to make the leap and buy. Earlier in the purchase journey, it’s pictures and stories about memorable road trips or moments in the car that might get a curious car buyer’s attention. Asking customers to send in content also solidifies their connection to the brand.

Whatever happens in the future, dealerships and manufacturers need each other – for now at least.

But to avoid the industry being taken over by tech companies, they’ll need to evolve, and evolve fast. Not just for themselves, but for the good of the consumer.