European Report - Car Sales, Or Lack Of, Over The Internet
31 May 2000
Internet car retailing smoke and mirrors A Reuter’s story about a report published yesterday by the Economist Intelligence Unit (EIU), states that "The Internet's potential to revolutionize car retailing has been exaggerated" The story went on to say that "Car sales over the Internet, far from being the all-conquering idea that would dominate the market and crush traditional dealerships, is set to reach a more prosaic level". "It will be useful for finding information, but not the choice of many for completing deals, it remains to be proved whether a single extra vehicle has yet been sold because of the Internet" the report said. The report said "Internet car retailing web sites have proliferated in the U.S. But they are now struggling to grow fast enough to survive, and to find the best formula that does not simply add an additional layer of complexity." "Automotive researcher J.D.Power-LMC, has said only about four percent of deals in the U.S. in 1999 were done entirely over the Internet, although about 40 percent of prospective customers used on-line computers to trawl for intelligence". "In five years about 80 percent of car buyers would use the Internet in some way to buy a car but only eight to 10 percent would buy entirely from the Internet", J.D.Power-LMC said. The story reported that Ian Robertson, director of the EIU's automotive group, said "until a couple of years ago there was great optimism that the Internet would become the dominant method of selling cars". INTERNET FOR GATHERING INTELLIGENCE ``The projections were that 60 percent of car sales would be over the Internet by 2005. In reality, the report shows people using the Internet to gather information and intelligence on prices, but to conclude the deal they are still searching for the reassurance of that traditional handshake you can't find over the Internet,'' Robertson told Reuters. ``We are looking at a much more sober projections of the Internet opportunity where it will be one of several ways but not the only way in the future,'' Robertson said. Car retailing over the Internet has also been accelerating in Europe with sites like www.oneswoop.com, www.auto3000.com and www.kpn-conslutants.co.uk. Autobytel.com Inc (NasdaqNM:ABTL - news), leading U.S. web car seller, is now active in Europe. The EIU report said car retailing is inefficient and crying out for reform. ``There remain huge inefficiencies in traditional car retailing, where up to 30 percent of the value of a car is expended on sales and marketing and other retail costs,'' the report said. But the acceleration of acquisitions, joint ventures and strategic alliances among Internet players in the U.S. shows that a successful formula has yet to appear. ``The continual tinkering with formats, partners and strategies clearly indicates that Internet auto retailing is both immature and unstable at this point. What is clear is that experimentation will continue; what is not yet clear is which models will win,'' the report said. Publishers Note: It has always been our belief that the Internet is a great tool for those with the desire to control the purchase of their new and used cars. Check out the TACH 4 Car Compar-a-Graph. ---------------------------------------------------------------------------- ----
