July 25, 2002

Auto manufacturer’s web-sites generating more sales – J.D. Power and Associates

Westlake Village, California – While more leads than ever are being generated by online automotive buying services, leads from independent services are proving harder to close than those from their manufacturer and hybrid counterparts, according to the J.D. Power and Associates 2002 Dealer Satisfaction With Online Buying Services Study released yesterday.

The study shows that U.S. online buying services (OBSs) are responsible for generating 3 percent of new-vehicle sales by dealers. Manufacturer OBSs generate the same number of sales for subscribing dealers as independents do, but from fewer leads.

“With industry sales surpassing 16 million new units annually, a medium generating approximately 500,000 vehicle sales per year is not to be taken lightly,” said Scott Weitzman, senior director of automotive Internet research at J.D. Power and Associates. “Dealer satisfaction is directly correlated to closing ratios, and while the average number of sales prospects provided to dealerships by their OBSs may be higher than in previous years, the quality of these leads and the dealer’s ability to close those sales is the key.”

With high marks from dealers for its ability to generate business, Lexus.com ranks highest in overall satisfaction in the study. Independent online buying services are the top performers in overall lead generation per dealer. Autobytel provides the greatest number of new-vehicle leads per dealer, while Cars.com provides the most used-vehicle leads. AutoTrader.com is still used by more dealers than any other OBS and retains the largest share of the online used-vehicle market.

The 2002 study shows the historical gap is closing between the ability of independent and manufacturer-sponsored sites to create sales for their client dealers. Independent services are finding increasingly keen competition from manufacturer-sponsored OBSs. Services such as Lexus.com, GM BuyPower and VW.com continue to provide an increasing number of quality leads and are generating more sales for their dealers. Hybrid services, which provide leads from both Internet and non-Internet sources, have also experienced improved closing ratios at the dealer level. Costco and Sam’s Club offer such auto buying services to members.

“Manufacturer-sponsored online buying services hold six of the top 10 positions in the study’s satisfaction index in a year where overall industry satisfaction rose 28 points compared to 2001,” said Weitzman. “With industry closing ratios of 15 percent for new-vehicle sales and 21 percent for used-vehicle sales, these manufacturer OBSs are an increasingly important tool for dealers.”

Dealerships are also having more success with their own Web sites in 2002. Ninety-three percent of dealerships report having their own Web sites that generate quality leads with strong closing ratios of 20 percent for new vehicles and 22 percent for used vehicles. Still, nearly two-thirds (65 percent) of all dealers continue to subscribe to online buying services, representing a small increase over 2001.

The 2002 Dealer Satisfaction with Online Buying Services Study is based on more than 4,000 interviews with dealers throughout the United States.

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