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One Out of Four New Car Buyers Shop the Internet

15 September 1998

J.D. Power and Associates Reports: One Out of Four New Car Buyers Shop the Internet

      Fundamental Difference Between Internet Users Who Use the Internet
              As a New-Vehicle Shopping Tool and Those Who Don't

    AGOURA HILLS, Calif., Sept. 14 -- Currently, 25 percent of
all new-vehicle buyers use the Internet to arm themselves with vehicle product
and pricing information during the vehicle-shopping process, according to the
inaugural J.D. Power and Associates New Autoshopper.com Study(SM).  The study
reveals that Internet shoppers often know more about the vehicle they want to
purchase than dealership salespeople.
    "Consumers surfing the Internet for information related to an auto
purchase could in one hour become more informed about a particular vehicle
than even the most sophisticated salesperson," said Chris Denove, director,
consulting operations at J.D. Power and Associates.  "Retailers must learn to
sell vehicles in a manner that is acceptable to this new breed of informed
buyers, while at the same time retaining an acceptable gross profit."
    The study shows that an Internet user's attitude about the vehicle
purchase process is key in determining what makes a person with access to the
Internet turn to online sources for vehicle shopping.  New-car buyers with
Internet access who do not go online to shop for a vehicle (29 percent of new-
vehicle buyers) are much less information-hungry, put less effort into getting
the best price and are generally more convenience-oriented.  Automotive
Internet shoppers, who represent 25 percent of all new-vehicle buyers, are
younger, aggressive, more affluent and will put in the time and effort to make
sure they obtain the right vehicle at the right price.
    According to the study, most automotive Internet shoppers log onto the
Internet to find information and services before they visit a dealership and
often before they begin thinking seriously about purchasing a new vehicle.
Manufacturer Web sites are typically the first place Internet-savvy consumers
turn to gather product information.  Currently, 75 percent of automotive
Internet shoppers log onto manufacturer Web sites to find information such as
lists of available models, options, specifications, vehicle photos and list
prices.
    After arming themselves with information from manufacturer Web sites,
automotive Internet shoppers visit consumer guide sites such as Kelley Blue
Book and Edmund's.  Consumer guide sites are perceived as being the most
useful because they typically provide dealer invoice and other information to
help consumers during the negotiation process.
    "Dealer invoice is not only the most sought-after information, it is one
of the most controversial," said Denove.  "Retailers frequently blame
shrinking profit margins on consumer knowledge of dealership cost structure;
but on the other hand, invoice disclosure makes buyers feel more comfortable
with the overall sales process."
    The 1998 New Autoshopper.com Study is funded independently by J.D. Power
and Associates and is part of a series of studies that analyze the role of the
Internet in the vehicle retailing industry.
    J.D. Power and Associates is an international firm best known for its
marketing information services in key business sectors including market
research, forecasting and customer satisfaction.  The firm's quality and
satisfaction measurements are based on actual customer responses from more
than one million consumers annually.
    Headquartered in Agoura Hills, Calif., the company has U.S. offices in
Torrance, Calif., Michigan and Connecticut.  The firm also has international
offices serving Canada the United Kingdom/Europe and the Asia Pacific region.
    J.D. Power and Associates can be accessed through the World Wide Web at
http://www.jdpower.com.  Media e-mail contact: john.pepitone@jdpower.com.  This press
release is provided for editorial use only.  No advertising or other
promotional use can be made of the information in this release or J.D. Power
and Associates survey results without the express prior written consent of
J.D. Power and Associates.