More and more Canadians are using the Internet to research new vehicles, but buying online has a way to go.
Only a few years ago, the Internet moved into the guest room of many Canadian homes.
Now it’s taking up permanent residence. According to Statistics Canada, 50% of Canadian households were online in 2000. This is up from 42% in 1999, and 29% in 1998.
Canadians spent $4.3 billion online in 2000, with 63% of shoppers making their most recent purchase at a Canadian site, according to a recent study by market researcher Ipsos Reid. Some 23% of us now pay our bills online So, we like to surf and we like to shop. But do we want to shop for big-ticket items such as cars?
Vehicle buyers are turning to the Internet to check used-car classified ad’s, and to research and compare new vehicles. Some are using it to locate a specific car, and the dealer who can sell it to them, or even to actually buy the car, sight unseen, and arrange to have it delivered to their door.
But like the Internet itself, these services are a work in progress. Here’s how things are shaping up in the automotive marketplace, both online and on the lot.
First, you may remember the buzz that dot-com companies would eliminate dealers, by supplying cut-rate cars directly to consumers. This hasn’t happened, and in general, it won’t.
“The relationship between the customer and the dealer is more than just the lowest price,” asserts Rick Gauthier, President of the Canadian Automobile Dealers Association. “If you’re stuck in a snow bank, you can’t call a dot-com to come and help.”
Well, not yet, but don’t expect it will always be that way.
Surf around and you’ll find many dealers now affiliated with some form of big, online entity: either an independent, multi-brand site, like Carpoint, Autobytel, or Cars4U, or a manufacturer site, or both. These guys have big plans when it comes to getting your automotive business.
These sites also offer special pricing, although typically you won’t find that price online. Vagueness about a car’s actual price has set the tone for car-buying for 75 years. It still causes stress for many buyers.
From the customers’ perspective, online resources are changing the way they’re going about buying a car. For one thing, there’s way more information available. Customers are emailing dealers and expecting almost immediate responses.
Or they’re arriving at dealerships armed with comparison charts, press releases about new models, printouts of online brochures and information about the latest dealer rebates.
They want to connect with someone who’s at the same point they are. Somebody better be home.
Let’s take a closer look at some of the bigger online players.
Carpoint.ca is an example of an independent, multi-brand site. It’s a Canadian version of the US Microsoft Carpoint.com. It focuses on new-car sales, and has 5000 affiliated dealers in the US. It doesn’t release the number of Canadian affiliates.
“It’s a comprehensive online buying resource for the automotive consumer,” says Ruth D’Souza, GM of Carpoint.ca. “We focus on those buyers not loyal to any one make or model.”
For Carpoint, it’s about building a community of “e-Consumers,” and providing a full range of automotive services to them. Visit Carpoint.ca and you’ll find the expected new-car buying service, but also news and reviews, safety information, chat groups, pricing and insurance information. Even free email services.
Ms D’Souza expects that in the future the site will connect with mobile devices like cell phones and in-car GPS systems to provide road reports and other timely information. Maybe even a tow-truck to pull you out of that snowbank.
The Carpoint site links into Microsoft’s ubiquitous online retail presence. That enables you to purchase everything from tires to travel, from flowers to health care products.
But can you buy a car here? Well, yes and no. You can research, compare and configure one to your specifications, then get a price based on the manufacturer’s suggested retail price (MSRP).
A local affiliated dealer’s Carpoint.ca representative assists with finalizing your purchase. In sales parlance, you become a lead.
Ms D’Souza acknowledges that the Internet consumer is “better equipped, more sophisticated than the consumer who just walks in off the street.” That’s why, she says, the Carpoint.ca representative supplies the dealer’s most competitive price at first contact.
No time-wasting is the objective — e-Consumers are viewed as savvy, with one eye on their wireless handheld organizers.
But at the end of the day, you’re still facing the guy with the tie. If you wanted to avoid that, you’re out of luck.
is another big independent. It currently focuses on new cars, and like Carpoint.ca, is a Canadian offshoot of an American company. It, too, has 5000 affiliated dealers in North America, and doesn’t release the number of Canadian affiliates.
Autobytel’s celebrated “no-haggle, no-hassle” price is not to be found on the site, though. MSRP is listed, as is a link to carcostcanada.ca. That independent site enables you to access Canadian dealer invoice pricing, for which you will pay a fee.
Why would you want to do this? Perhaps you want assurance that the Autobytel price you eventually get is acceptably situated between dealer cost and MSRP; that you’re being offered a good deal.
However, back on Autobytel, you won’t get closer to that final price until you press the “I want this car” button. A local dealer will be in touch within 24 hours to take it from there.
Richard Wannenmacher, Autobytel director of international Operations, crystallizes the site’s ultimate goal, which differs little from Carpoint.ca’s. He presents a vision of “automotive everything,” in which you’ll “park” your vehicle in a virtual Autobytel “garage.” There, everything associated with your car, including its insurance, maintenance, warranty, financing, servicing and safety recalls will be managed.
After the purchase, Autobytel will keep in touch. The hope is that over time, rather than being a Ford a Chevy guy, maybe you’ll become an Autobytel guy, or gal. You see, most of these sites have bigger fish to fry than simply selling you a car. They’re way ahead of you. They want it all.
Let’s look at a homegrown product that uses a somewhat different business model.
Toronto-based Cars4U.com bills itself as Canada’s only publicly traded, integrated, automotive retailer (TSE:CFU). Unlike Carpoint and Autobytel, it’s an actual e-dealer, not an intermediary.
It focuses on new-car sales and leasing. The company owns real bricks and mortar dealerships, as well as the Cars4U dot-com dealership.
According to Barry Shafran, president and CEO of Cars4U.com, the distinction is crucial. “Cars4u isn’t a lead generator, it’s an actual online dealership. You can buy the car and we’ll bring it to your door, if you want.”
Unlike other sites, Cars4U.com offers you a bottom line price, right there on your monitor, fully optioned, taxed and rebated. It’s an on-the-road price, and no fees are paid to get it. You do supply an e-mail address, but the quote is generated online, and takes only a few seconds after you’ve optioned your car.
The price is firm. This may be closer to what you have in mind from an online shopping experience.
“Not everything is discounted, though,” warns Mr. Shafran. “Right now an Acura MDX is selling at full list at any dealer in the country, and it will be on my site, too. About 70-80 per cent of vehicles are discountable at any one time, and that’s where you’ll find price flexibility.”
Currently, Cars4U.com owns three dealerships in Southern Ontario and is affiliated with 20 more. Ottawa is the next market it expects to enter. Beyond that, its corporate vision includes expansion across Canada.
A consumer’s experience with the independent, multi-make sites can vary considerably, however. Baba Shetty, senior analyst for Forrester Research of Cambridge, Massachusetts, points out that between the online, Web site experience, and the offline, dealership experience, there are many gaps.
“Enormous numbers of people research online, but don’t enter into a transaction,” he says. “Consumers say they go through this long, comprehensive research process online, and when they get to the dealer, they’re treated as if they never went through the online process. It all gets lost in the translation.”
There’s the rub: the interface between e-business and old business.
“Undoubtedly, the consumer has an expectation that an online buying experience will result in some additional benefits,” continues Mr. Shetty. “There’s a huge need to create standardized business practices at the dealer level in order to realize this.”
While the multi-make independent sites are working on this, don’t think the car manufacturers are sitting on their hands.
All of the manufacturers have gee-whiz sites. Some are directly facilitating sales through their own portals, all with dealer involvement.
Right now, one of the big guns in their arsenal is locate-to-order. Unlike the independent sites, manufacturers have access to information concerning their company’s nationwide inventory. Where the independent site may not be able to deliver the make and model you want, optioned the way you want it, chances are the manufacturer can.
GM Canada was thinking well into the future when six years ago it began work on GMCanada.com. The goal was to integrate all 832 GM dealers in Canada, along with other GM services with which consumers are familiar.
The result is what GM Canada Web site Manager Fred Lautenschlager calls “a microcosm of all the GM products and services – fully integrated, with each of the GM brands available on the site.”
The electronic infrastructure powering the site is the same one that manages GM inventory across the country, including GM Optimum used cars. If a new Pontiac Sunfire sedan exists in Canada that’s black with neutral interior, has air, power equipment, sunroof and a CD player, you can find it through GMCanada.com.
And once you’ve found it, you can buy it, or at least put a deposit on it. Then you can use tools available within the site to dry-run your offer on the car.
Your offer? Oh, sorry. You still have to haggle. Even the GMCanada.com special offers can be sold by the dealer for less.
Still, you can reserve your car and get financing approved in a matter of seconds. At that point, maybe you’d like to visit the dealer and actually take it for a spin!
Ford is taking a similar approach. Since May 2000, the Ford.ca site has piloted a configuration and locate-to-order service in Ottawa and Hamilton-Niagara called Buyer Connection. This is expected to roll out nationwide during 2001.
Likewise, Toyota is currently piloting its Toyota Access service at Toyota.ca. Scheduled for national introduction soon, this service also offers a discounted, on-the-road price, available online.
Stephen Beatty, Toyota Canada’s vice-president of corporate affairs, is acutely aware that online resources are providing an opportunity for dealers to overhaul their retail model. He underlines the importance of dealers and showroom staff being receptive to this change.
“In practice, it’s less about web selling, and more about changing the relationship between the dealer and the customer,” explains Mr. Beatty.
Where is it all going? Well, Forrester Research’s Baba Shetty thinks the independent multi-make sites may eventually gain access to manufacturers’ inventories. If so, they’d also be able to offer a locate-to-order service.
Beyond that, you have what has been called the Holy Grail of build-to-order automobiles.
Predicted to emerge in about five years, build-to-order will enable you to order the car of your dreams, optioned just the way you want it.
Behind the scenes, communications technology, management software, factory robotics and streamlined supplier co-ordination will merge to custom-build your car for delivery in about 20 days.
Not every car will be built that way, though. In practice, cars will typically be sold off the lot, or through locate-to-order. If your car’s not available, it will be built-to-order.
Forrester’s Mr. Shetty again: “Currently the main impact of the Internet is how it can influence the purchase of a vehicle. In the U.S., we think only about six per cent of purchases will take place online by 2005. However, online resources provide an opportunity to influence 55 per cent of total car sales.”
That’s a lot of sales, so expect dealers to be much better prepared to work with Internet consumers in the future.