The Modern Way of Buying a Car

I read an interesting article the other day about car buyers and the way in which they now do it. Long gone are the days when you would see an advertisement on TV or in a newspaper or magazine and then go into a showroom. Nowadays with Internet access almost anywhere in the 1st and 2nd worlds, it is becoming more common to do a load of homework before leaving the home.

I remember getting brochures from several dealers, thinking about which ones I liked from a design and specification and then trying to snag a test drive. Believe me, I once went into a dealer and asked to see a particular car and was shown a dirty, damaged one in the car park and told I could possibly drive one later in the week! I bought a competing product.

So today, people will spend time online doing the research and then calling or visiting a dealer to get a feel of the vehicle and pricing. In January a report said that in the US over half of the traffic to dealer web sites and buyer agent sites was from a mobile device: phone or tablet. This was the first time that this had happened and shows how technology is changing they way people are now buying bigger ticket items not just searching for information.

This is important news for the bigger dealers and brokers who shift a lots cars either to corporates or consumers. Several are spending big money to develop apps that enable fast searching, quoting and ultimately purchasing of vehicles on mobile devices. In a nutshell you would use a mobile device to buy a (larger) mobile device!!

Importantly, and this is a key by-product, anyone who uses the app will provide search and quote configuration data back to the developer. This I presume, they will use to go back to the manufacturer and ask for a certain number of vehicles to be built to their specifications so that they can be sold much quicker and at higher margin.

In the US, TrueCar are at the forefront of this concept and expect to spend big bucks to increase their 4% share of new car sales. With low margins on cars through dealers, you can see why TrueCar would like to get more sales without having their own dealer network. They use existing dealers and do most of the sales process themselves. Ultimately the dealer doesn’t do much for the sale and as such shaves some of the margin to pay TrueCar and entice the customer.

Imagine if the whole deal was done through an app? The dealer networks would become simple delivery and service centres and would possibly increase pricing on the regular service schedules to accommodate the loss of money on each sale. No salesmen equals no commission payouts and that reduces the overheads and costs borne by the dealer and manufacturers.

Finally what happens to the redundant people? Will we see a backlash over lost jobs and higher unemployment as computer systems finally start to take jobs away from areas thought to be safe? We have spoken about computers replacing people for decades, firstly in manufacturing and now in retail and other labour intensive markets.

Time will tell what will happen – especially when the autonomous car arrives in a few years and delivers itself!