Online Auto Sales Are Revving Up - Study shows
25 May 2000
FRAMINGHAM, Mass. - Sales of new automobiles over the Internet have pretty
much been stalled during the last few years, but the market is moving now, and
before long, it will be in the fast lane. According to IDC, U.S. new
automobile sales revenue generated from the Internet will accelerate from $2.1
billion in 1999 to $27.3 billion in 2004.
"Reducing the cost of any good increases the product's consumption, and
there's a lot of room for the Internet to reduce the cost of car buying," said
Jonathan Gaw, research manager with IDC's Consumer eCommerce: Major Purchases
research group. "For auto consumers, costs involve the time and patience it
takes to wade through a complex process made even more so by the artificial
complications introduced by the automobile distribution system. The technology
exists to dilute those complications, and the online auto sales industry has
used those tools more aggressively than ever before over the past year.
Instead of being mere adjuncts to car dealers' marketing, online firms have
begun to change the auto sales process by promoting up-front, no-haggle
pricing."
No major technological barriers exist that would inhibit online car sales.
Instead, the obstacles that have to be overcome are systematic. According to
IDC, automobile dealers, online firms, financing and insurance companies, and
manufacturers need to find a way to co-exist and an appropriate business model
needs to be developed.
Online referral systems, which were popular in the past, are falling out
of favor. Instead, firms that promise online, up-front no-haggle pricing are
increasing in popularity. Manufacturers want to deepen their customer
relationships and might try to turn dealerships into showrooms and delivery
points while they maintain the customer relationship.
"Dealers are wary of online schemes that threaten to cut them out of the
process, and no system of selling new cars will work in the long run without
their participation," Gaw said. "To gain dealer acceptance of and
participation with Internet sales, online firms must create programs that
allow dealers to share in the rewards of revenue associated with new car sales
beyond the sale itself."
For online auto sales to be successful, the sale will have to be as
seamless as buying books online. Warranties, leases, vehicle options,
financing, and insurance decisions will all have to come together.
IDC's new report, Online Auto Sales Market Forecast and Analysis, 1999-
2004 (IDC #B22253), analyzes market opportunities for online auto dealers. The
report forecasts auto sales revenues generated by the Internet through 2004.
Additionally, it describes the different business models of online new
automobile sales, looks at the demographics of typical buyers, and examines
factors driving and inhibiting market growth. To order the report, contact
Demetra Georgakopoulos at 1-800-343-4952 extension 4496 or at
dgeorgakopolous@idc.com.
About IDC
IDC delivers dependable, high-impact insights and advice on the future of
ebusiness, the Internet, and technology to help organizations make sound
business decisions. IDC forecasts worldwide markets and trends and analyzes
business strategies, technologies, and vendors, using a combination of
rigorous primary research and in-depth competitive analysis. IDC provides
global research with local content through more than 500 analysts in 43
countries worldwide. IDC's customers comprise the world's leading IT
suppliers, IT organizations, ebusiness companies, and the financial community.
IDC is a division of IDG, the world's leading IT media, research and
exposition company.
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