Frost & Sullivan has recently predicted that 4% of all sales (the equivalent of 4.5million units) of new cars will be online purchases by 2020. This compares to 5,000 new cars sold solely online in 2011. An implication of this, should they wish to avoid a similar fate to the likes of HMV, Jessops and Blockbuster, is that car retailers are going to have to make adjustments to their selling processes in order to avoid showrooms becoming mere browsing opportunities for customers to pick and chose but purchase online. Car retailers should begin thinking about the current leases for their expansive showrooms and whether, should the trend proceed as predicted, less test drives will mean a decline or redundancy of the showroom luxury.
A common cause of business demise is supermarket giants muscling in on their trading territory. Tesco and Sainsburys have already dipped their toes into the world of online car sales, albeit second hand cars. However, Tesco Cars (created after purchasing the existing dealership Carsite) closed its doors in April 2012 after just a year of trading claiming the issue was one of supply of cars, not a lack of customers.
It is, however, not all doom, gloom and panic. There are signs emerging within the OEM sector of healthy change. Ford’s UK division already sells new cars through its website and Renault’s newly released Dacia has launched primarily in the UK market through online sales channels, with dealerships for back up. There is also talk of General Motors providing a “shop-click-drive” website in partnership with Chevrolet.
If online is the way forward, car retailers will have to work hard at enhancing the dimensions of sales consumers will fear are unattainable online – emotional connection and physical touch. However, the initial trends are encouraging and hopefully the remainder of the marketplace can quickly follow suit and learn from the collapsing models of HMV and others.