Why Car Dealership May Soon Become a Thing of the Past


Digitalization of transaction is beginning to hit every industry, even the most traditional and complicated ones like automotive. As the demographic of consumers continue to change and technological advances continue to develop, there are bound to be more convenient ways of buying a car in the near future, ones that eliminates all the previous complications. Current consumers are discontent with the car-buying process and demand a significant change.

A survey from Autotrader shows the discontent surrounding the current car-buying process by revealing that only 17 percent out of 4,002 respondents prefer the current car-buying process. The rest demands significant changes in the way they purchase cars, especially in four major parts, which is test drive, deal structuring, financing paperwork and service phases.

When it comes to deal structuring and financing paperwork, in particular, the preferred solution is to shift the process online. There could be a change to the notoriously lengthy negotiations of the past, as over half of the people surveyed want the opportunity to negotiate online, and 45% would like to remain anonymous until they lock in the deal structure. As for financing paperwork, more than 70% of the people surveyed want to complete the credit application and paperwork online. Besides the benefit of saved time and energy at the dealers, doing paperwork online would also impose less pressure to consumers, the survey revealed.

Moreover, an automotive survey conducted by Accenture shows that most consumers are no longer interested in the classic car dealership transaction. Up to 10,000 people across eight countries were asked about their car-buying experience, and most of them say that they now conduct their own little online research before purchase. Furthermore, 75% of them would consider doing the entire car-buying transaction online. This includes financing, price negotiation, back-office paperwork and home delivery.

This should be no surprise for anyone who has observed how buying experience has changed in the last decade. Everything has become more digitalized, with companies selling fast moving consumer goods and luxury goods, as well as services such as banking and online title loan companies going online to reach and transact with their customers. It is even considered a branding advantage for a store or retail company to provide omni-channel customer experience, a study has shown.

This observation has often been attributed to the rise of the millennial generation. From an auto industry point of view, milllennials have been described as the “game changers”. “They are the next big segment of car buyers, and they’re defining the buying process,” says industry expert Dale Pollak.

Blessed with being exposed to advanced technology and almost free online access throughout their childhood years, millennials want things to happen fast and instantaneously. They want everything in the purchasing process, including ways of transactions, provided to them in a single click. This is in complete contrast to the classic way of buying a car. Now, consumers do not have to suffer from an unreasonably lengthy process of negotiation with the dealer, which is at times both confusing and uncomfortable. They don’t want to be followed around while looking for the right car and deal with lots of pushy salesman telling them about the details. Millenials tend to already have a vehicle in mind when they start looking around for a car. They have in mind a specific vehicle at a specific price, not wanting to negotiate a deal, said Alison Spitzer, vice president of Spitzer Automotive Group. “These buyers aren’t looking for a salesman; they’re looking for a customer advocate,” she said. Millennials want car shopping to come with no surprises, low pressure, and no haggling.

As the case with any other online shopping, the risks of being cheated and ripped off will always be looming simply because the product is not physically there to be seen. There is also always the possibility of products not meeting the consumer’s expectation. Buying cars online is no exception. However, the difference is perhaps the risk is possibly bigger because the money invested in it is much more than a normal online consumer goods. However, DMV.org, the largest driver-related site, stated some specific things that need special attention when it comes to buying cars online.

Firstly, because of the limitless experience online shopping gives, there is a possibility that the specific car wanted is out of the consumer’s state or region. Consumers must bear in mind that buying a car outside of the buyer’s region would mean the car registration and titling process could be more complicated compared to buying a car within the region.

Secondly, online shopping means that the product cannot be tested prior to purchase. As we all know, the test-drive is one of the most essential part when buying a car, as for most people, it is a big decision which could have massive implications to their daily lives for years to come. But if the dealer with the specific car wanted is too far for a trip, the risk of not testing the car is something that should be considered.

There are some tips to avoid getting cheated while car-buying online. Always be wary of suspicious advertisement and also always try to meet the seller and test the car before paying for it. To avoid buying a car that is fake, clones, stolen, or written off, make sure that all of the documents and history of the car is accessible. This is important because if it turns out that the car is either stolen or cloned, then there is a possibility that any outstanding payments associated with the car, including fines, will be passed on the new owner. Should the car be a stolen vehicle, it is likely the police will be after it and may come after its new owners. Lastly, check carefully if there are any modifications done on the car which could merely be an attempt at a quick fix or to paper over some cracks.

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