Consumers have become used to buying computers, takeaways, air tickets and more online, with digital adoption soaring during the pandemic. But up until now, many people have hesitated to make larger and more complex purchases via ecommerce apps and websites. This picture is changing fast, and one of the industries that will be most affected is the automotive sector.
We’ve already seen the Internet radically change the car purchase journey. In the past, you would’ve visited several dealers to see what was available and to get advice. Today, however, you can do your research online to narrow down your preferred make and model, as well as find the best deals. Then you can view and test drive the car before making a decision.
In future, we can expect this process to go completely online for a significant portion of car sales. More and more people will not only do their research on the Internet, but also buy the car with a single click. It’s a global trend, with Allied Market Research forecasting that the global online car buying market will grow from $238 billion in 2020 to $723 billion by 2030.
Bringing convenience and transparency to the process
Buying a car online empowers you to search for your ideal car from an endless range of online car dealership sites, marketplaces and private sellers. You can easily gather information on various cars, compare prices and specifications, and pay online before picking up your dream car — or even getting it delivered.
This opens up a world of possibilities. If you live in Cape Town, for instance, you can buy a car from a dealer in Gauteng if it will save you money or if there’s no stock at a local dealer. Plus, you’ll be able to compare prices at a glance, without negotiating with a sales rep who has one eye on their commission. A natural outcome of the shift online is that prices will start to converge and become completely transparent.
By comparison, in the traditional car buying journey, there can be a 25% or more discrepancy in the pricing of a car of the same year, make and model between different dealers. This reflects factors such as accident and service history, mileage and the general condition of the car, as well as the negotiating position of the two parties.
The journey is just beginning
We have certainly come a long way in the online car buying journey. Just about the only thing you still need to do in person is take the vehicle for a test drive — and options such as seven-day returns may make even this unnecessary for most people. Inevitably a portion of consumers will always feel more comfortable with the advice of an in-person dealer, but over time, the portion of cars sold completely online will increase, as car dealers and manufacturers enhance their online capabilities.
There are a few car manufacturers who already sell certain new vehicles completely online in South Africa, one of the best examples being Volvo’s “Build your own” functionality on their XC60 Recharge. WeBuyCars’s online auction service is a good example of second-hand cars being traded completely digitally. Even so, we’re just at the start of the digital transformation of car purchases.
Today, some manufacturers let you configure specs and features to your liking before finalising the order or visiting a dealer. Most car websites can show you high resolution pictures and videos of a car on sale. Soon, we may see AR/VR experiences showcasing cars with immersive experiences that help you get truly comfortable with the car you’re buying.
The next step will be to offer a true one-stop experience. We can expect online dealers, car manufacturers and marketplaces to let you compare financing offers, vehicles and insurance deals in one place. You’ll be able to arrange a loan, buy the car, and get insurance from your laptop or smartphone — with no need to fill in forms or speak to call centre agents.
Digital car insurance is already a game-changer
While we wait for that to happen, you can already seek financing and buy insurance via digital channels, making it quicker and easier to compare offers. An AI-driven digital insurance provider like Naked operates completely online to give you the best value for your insurance premiums. You do not have to spend hours on the phone haggling to get the best deal.
You can get a final quote in 90 seconds and buy cover for your car on the spot without a single phone call. A digital provider sets up its business model in a way that gives its clients the lowest possible insurance premiums. It’s just another example of how digital technology is making life easier for everyone and putting customers in control of their experience.
[ By Ernest North, cofounder of the fully digital insurance platform, Naked]
Also view:
Vehicle Finance, Car Insurance and Road Safety
Buying and Selling a Vehicle – Informed decisions and the Vehicle Retailer
The Online Vehicle Retail Market and Safely Selling Vehicles Online
Buying a Quality Used Car and Safety on the Road