People trip over Amazon boxes to get inside their homes. Online shopping was big business before the pandemic and is now the go-to for many consumers for most goods with one notable exception: buying cars.
The auto industry is behind the rest of the world when it comes to online purchases, even though buyers consume everything else digitally, TrueCar President and CEO Mike Darrow said during a presentation at the Automotive Press Association in Detroit.
Death, Taxes, and Car Sales
But that will change—and fast. In 2019, a mere 1 percent of auto sales, new and used, were conducted digitally. It grew to 10 percent in 2020, spurred by COVID shutdowns and lockdowns. By 2025, 40 percent of auto purchases in the U.S., about 23 million new and used vehicles, will be conducted completely online, Darrow says, and surveys show 62 percent of people say they would buy online if they could.
It shouldn’t be that hard. The IRS reported that 71 million people filed their U.S. income tax online this year with no help—that’s gotta be harder than buying a car online, Darrow says.
The transition from a century-old way of selling cars by visiting a dealership is also being fueled by new automakers, starting with Tesla which prominently adopted a direct sales strategy that is being followed by other new electric carmakers including Rivian, Lucid, and VinFast.
Ford Wants to Sell EVs Online
Conventional automakers also want the flexibility. Ford CEO Jim Farley recently said he would like to switch to haggle-free pricing and digital sales for EVs, with dealers as service centers for customers who buy their vehicles online.
Darrow sees it as a way for automakers like Ford to stimulate conversation with their retailers and while he sees EVs as a good focus initially, he favors digital sales for all vehicles regardless of age or powertrain. The TrueCar CEO fully expects automakers to develop their own in-house digital sales process that will compete with TrueCar. The difference: Ford will sell to those who already know they want a Ford; TrueCar will offer cross-shopping across multiple brands for the consumer looking at a wider field.
TrueCar has used a leads-based model to date where it helps consumers find a car and passes the lead on to a dealer to complete the transaction. But TrueCar is testing a new model called TrueCar+ in Florida that would be the first new and used car online marketplace, allowing its 8.6 million monthly visitors to conduct the entire car-buying process online, from sourcing and pricing to insurance and financing, before handing it off to the dealer to supply the vehicle.
New ways of doing business are taking over during difficult times for dealers and online shopping sites alike with the scarcity of inventory. TrueCar has about 1 million vehicles listed on its site, half the usual menu. Of those, less than 300,000 are new cars; the site usually has 1 million new cars that dealers are offering up for sale.
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