Car buying online: your next motor could come from an internet dealer

The way we purchase our motors is changing with car buying online becoming increasingly popular. There’s no shock in that. What is perhaps surprising is that the move to buying over the internet is taking such a long time. New figures from the Centre for Economics and Business Research (CEBR) show that figures for web car sales are currently miniscule. But within the decade a fifth of all new cars will be bought online. Here’s all you need to know about the online sales boom.

Surely you can buy cars online now

Indeed you can, but by and large these tend to be from independent broker sites such as Carwow. These websites act as middle men, offering information and various deals. You then decide which to go for and they hook you up directly with the car dealer. As the brokers are doing multiple deals they can negotiate good discounts with the dealers. A portion of these savings are then passed on to the customer.

Why has the ability for car buying online taken manufacturers so long?

Buying a car is far more complex than purchasing a fridge or television. Most car owners have an existing model that they must sell before buying a replacement. The dealer needs to be able to value that trade-in car accurately. Then there’s the finance package; dealers have to run credit checks on potential buyers. And that’s before we’ve considered the buyer choosing the right model for their needs, test driving it and specifying any options they might want.

Which car makers are pioneering it?

The factors above mean building a website that allows you to build a car, finance it and sell your existing model isn’t the work of a moment. Smart, Hyundai, and Peugeot-Citroen-DS are the first to have websites that allow you to purchase online. The French firms are arguably leading the field with a platform that enables you to sell your existing car and put together a finance package.

How popular are these proving?

It’s early days. This year internet sales of cars are expected to be worth a paltry £19m. However, by 2020, the CEBR estimates that figure will amount to £1.5billion. By 2027, it will have grown an astonishing 28 times – to £41.9bn. That means over the next decade, web sales are expected to boom from a miniscule proportion of the industry’s revenue to around a fifth.

What effect will this have on car dealers?

The CEBR concludes that dealers will have to adapt to the changes in buyer behaviour or suffer the consequences. But according to research by Close Brothers Motor Finance, 43 per cent of car buyers go into a dealership for advice. However, 40 per cent do all their research over the internet. They spend nearly double the time (41 days) looking into their new car compared with the 21 days for buyers who visited dealers. James Broadhead, CEO of Close Brothers explained: “The research makes it clear that people still look to dealers for advice and support. The time that people save when searching for a car if they speak to a dealer is stark, and this is a statistic that dealers can use to prove the importance of speaking to someone who knows what they are doing.”

Exploiting the middle ground?

One company has struck a sweet spot between entirely online sales and using dealers. Rockar has outlets for Hyundai and Jaguar Land Rover in some of the country’s biggest shopping centres. These stores are staffed with so-called ‘angels’, salespeople whose rewards are calculated by customer feedback rather than sales figures. Buyers can then do the deal online. Tony Whitehorn, president and CEO of Hyundai UK said: “Our website makes the process of buying a new car easier, simpler and clearer than ever, doing away with haggling through fixed pricing and offering the ability to buy a car online in just five minutes.”