While online sales are expected as standard in many other industries, selling cars online directly to customers has not been a top item on the agenda of automotive OEMs until relatively recently. Digital initiatives have existed mostly in regards to brand awareness, seasonal offers, and car configuration, whereas sales models have remained traditional. The online channel is mainly used to gather information during the buying cycle: a customer configures a car online, and then the local dealer picks up the configuration and concludes the sale. There have been a few pilots for online sales (Tesla, Volvo, BMW in the UK and Japan, Mercedes-Benz in Germany, FCA in Italy, SAIC and Changan in China), but on a limited scale. With almost 75% of the customers expressing a willingness to purchase a vehicle online, it is clear that there is a huge untapped interest in a radically different kind of car sale and thus new business models. Responding to this appetite will be a crucial part of the customer offer within a short period of time. Put simply, OEMs must do more to satisfy the expectations of the digitally savvy customer. Everyone knows there are obstacles, but none of them is insuperable. What matters most is how to stimulate this new digital channel for car sales.
"We think the opportunity provided by online sales is big—some of our initial experiments have given impressive results." – Jakob Nyborg, Head of Marketing, Maserati (FCA)
An era of disruption
This large desire for online purchasing power is evident across all respondent markets. 72% of customers surveyed indicated a willingness to buy a new car online. This ever-increasing hunger for a completely digital purchasing cycle continues to disrupt manufacturers, and we believe we are on the edge of a major change in the industry. OEMs should strive towards digital mastery and embrace changing business models. This will facilitate a closer connection with their increasingly internet-savvy customers. A more direct customer relationship can push forward an increase in retention rates. Given that so many customers have a hunger for a holistic online purchasing experience, including finance contracts, inspection packages, insurance, other add-ons, and less paperwork, this begs the following question: when will this become just another channel to market, a mainstream way of selling cars? Some OEMs have already realized that seizing the opportunity to digitally transform is crucial, and that this will decide whether or not they will be able to survive in a changing market. In the future, it won’t be enough to only produce vehicles and offer them through the dealer network. Car manufacturers will have to transform their business models to become completely customer-centric and to deliver on online sales expectations.
The rise of new players
Customers show willingness to purchase from the online platform of OEMs (57%); however, there is a keen interest in purchasing via new third party players, such as TrueCar In the USA or Tmall in China. Tmall is an offshoot of Taobao, which is operated by the Alibaba Group and is one of China’s largest B2C online marketplaces. Also, it currently cooperates with many OEMs for online car sales. Many customers stated that they would already be willing to purchase their car from one of these third party online platforms.
Currently, the data indicates that across all surveyed markets only 11% of respondents would prefer to purchase a car online from retailers such as Walmart, with up to 23% favoring pure-play online retailers such as Amazon. Such retailers have online sales infrastructure currently in place, and customers can already buy nearly all consumer products from them, so it is not unfeasible to imagine cars being purchased from them in the future. The willingness to buy from online-only companies like Amazon in China is higher, attaining almost 40%, which means that in the future, it cannot be ruled out that these retailers become important players in automotive e-commerce within particularly receptive markets. This, of course, would further increase pressure on OEMs to digitize their purchase process.
Although there is a slight interest in purchasing vehicles through third party technology company platforms (11%) like Google or Apple, this is greatly overshadowed by the preference for buying cars from the platforms of the more established automakers (57%) and automotive retailers.
1. Huge interest in buying online
Our survey demonstrates a huge appetite for new online car sales across different markets, with almost three quarters of respondents showing increasing interest in buying cars online.
2. Highest trust in automotive e-commerce lies with proprietary OEM offerings
Customers indicate a preference for purchasing new vehicles online directly from the vehicle’s manufacturer. Although tech companies are evolving, there is currently little trust in purchasing cars via tech company portals such as Google, or third party retailers such as Amazon.