Can Car Buying Ever Go Digital?

auto_portalNew-car sales virtually never take place online, despite growing interest among consumers and manufacturers, according to a new eMarketer report, “Automotive Ecommerce: Late to the Party, Industry Will Adapt.”

Sales of new cars make up roughly 15.8% of all US retail activity, according to US census data. This figure is more than double the total for all ecommerce, which accounts for 7.2% of US retail sales presently, according to Forrester Research and Barclays Research estimates. In September 2012, the most recent month for which data is available, sales at new-car dealerships totaled $54.3 billion, according to US census data. Next to none of it was transacted online.

This is not to say the auto segment has no ecommerce activity. But it is almost entirely limited to used-vehicle sales, mostly via sites like eBay and AutoTrader.com, and to parts sales. Without new-car sales in the mix, the auto sector will never play as large a role in the digital world as it does in the physical world. In fact, eMarketer forecasts that autos and parts will represent a lower percentage of overall ecommerce by 2016 than they do today.

So, is there any chance of a substantial shift occurring in the industry? Or will the sales process remain relatively unchanged, thereby locking out online selling?

In fact, there is good reason to expect change—although not perhaps in eMarketer’s forecast period of four years. Industry officials expect that, within the next decade, manufacturers and dealers ultimately will embrace ecommerce in order to cater to younger buyers and to protect market share.

A growing portion of consumers in the US and abroad say they would consider buying new vehicles online, with 35% of US new-vehicle buyers last year reporting they would be likely or very likely to buy a car online, up from 21% in 2009, according to Capgemini survey data. The worldwide figure overall was even higher at 42%. It is worth noting, too, how open to online selling consumers are in major emerging markets such as Brazil, China and India. Shifts in big foreign markets could force change domestically.

Young buyers, generally more open to ecommerce and alternative transportation options, will need to be wooed by automakers or risk being lost. Millennials represent about 40% of all car buyers, according to a 2011 Deloitte study, and their potential share of the market will grow as the group ages and its income rises.

Source:eMarketer

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