Figures from the UK’s Office for National Statistics show that online retail sales are going through the roof. With traditional sectors showing only modest growth, the latest official statistics for 2016, show stellar 14.1% year on year growth for online sales. Seemingly smartphones and tablets with 3G and 4G connectivity mean that consumers are now permanently in a position to scratch their retail itch.
So with all of this booming online consumer spending, you’d expect to see the UK’s motor dealerships and groups investing in websites that reflect the brands they represent. And you’d be right, but the odd thing in amongst all of this online activity, is the fact that currently it is not actually possible to purchase a new or used car online from any UK dealership.
Yes, you read that right, despite the fact that it’s 2017 already, if a consumer in the UK decides they’d like to buy a car online, the only option is to go direct to a small number of manufacturers, or go to an intermediary who will essentially sell their enquiry as a lead to a dealer. Unlike virtually anything else that a punter might want to buy, when it comes to cars, it seems it isn’t currently possible to pick one on a dealer’s website, pay for it and just have it delivered.
Motor Trade News was so perplexed by this that we surveyed a representative sample of over 1,600 dealers in the franchised and independent sectors to see if anybody could sell us a car online. Not a single dealer was able to oblige.
To find out what is behind this apparent reticence to sell online, Motor Trade News spoke to a number of leading dealers and online specialists from around the country.
Asked if it was possible to buy online, Paul Wilde, the Group Marketing Manager at south of England based Vauxhall dealer group, Picador PLC told Motor Trade News, “No, it’s not possible to buy a car directly from our website. We do not have the e-commerce infrastructure online to achieve this at present.”
Referring to the perceived downsides of online selling, Wilde adds, “From a dealer’s perspective we lose the opportunity to build a relationship with that customer. The online process become lifeless. There would be no customer loyalty. We also lose the opportunity to up sell associated products like GAP, Supagard etc. More importantly we lose the opportunity to supply another vehicle further down the line.”
Wilde identifies other factors which may be holding groups back from online sales, saying, “We would we be open to the returning of vehicles – would we landed with a host of vehicles should the end user not like the trim for example? Would we be more open to online fraud – after all we’re not talking the cost of white goods – we’re talking thousands and thousands of pounds.”
Asked if Picador have plans to sell cars online in the future, Wilde says, “No there is no immediate plan for us to sell directly from the internet but this doesn’t mean it won’t happen. This industry is fast paced but we’ll wait and see what happens. I’m not sure it will ever be the norm. Buying a car is probably the second biggest purchase you’ll make as a consumer. You want to make sure it’s right, touch it, feel it, sit in it and most importantly drive it. Buying directly from the internet takes this away. However, there may be some people who don’t want to change – have driven the same vehicle for years and years and know they like that specific model and spec. If this is just another purchase of the same model then this could be an option for consumers.”
For an independent used car dealership perspective, Motor Trade News spoke to Barrie Crampton, of North West of England Grosvenor Garage. Crampton told us, “We can do everything but finalise. We take deposits over the phone, a customer can go onto our site, see a car, watch a video of the car, they can read our reviews, get an instant part exchange quote, a finance quote tailored to their budget, complete an online finance application, get an acceptance then just come and pick the car up. For example we got an enquiry via Autotrader last week off a young girl, at 12.25 am, she then filled in a finance prop the next morning and she had an instant acceptance. By 10 she had phoned and left the deposit, and picked the car up the next day, without previously setting foot on our premises. The only reason we don’t sell cars totally on the site is that we like to make sure that the car is right for the customer, and affordable before we shake hands.”
Like Wilde from Picador, Crampton has concerns about the dangers to the motor trade of being caught out by online fraudsters, saying, “We like to speak to people before we take money. After being in the trade for 40 plus years I have a 6th sense for scammers and if there was a facility to buy and pay for a car online it would be open season for credit card fraudsters and we would be out of business and uninsurable in no time.”
A much more positive view is expressed by Midlands based technology firm Bluesky Interactive, who told Motor Trade News, “Firstly, we believe the willingness to buy cars online will occur as a shift change in the market place. It’s a bit of a chicken and egg scenario – the public is unlikely to move towards feeling confident paying online until it becomes a commonly available functionality, and many dealers and manufacturers won’t introduce the technology until they think the car buying audience is receptive towards it!
“We feel the public’s willingness or lack thereof is likely to be intrinsically related to perceived reliability of the company they are purchasing their car with. If they have done their research on their new car, been able to view their ideal car inside and out, read reviews, and are fully confident in the dealership and its reputation, then theoretically many people would be willing to buy their cars online. At the moment, however, it seems likely the lack of really in-depth content about each car, and an industry often viewed as “dodgy” and “untrustworthy” is putting people off.
“Whilst we are a digital agency, and believe that technology, software and products can offer really online opportunities for dealers, it also seems naive to ignore the emotive elephant in the room. Cars are a huge purchase, and most people aren’t willing to part with the sums of money involved without seeing or touching the car they are buying. Even though some research we read last year suggests a surprising percentage of people never take a car for a test drive, it’s still a big jump to buying remotely. We anticipate that the manufacturer or dealer that drives the shift in online buying will have built in a lot of offline touch points too – meaning whilst the purchase can happen online, much of the sales funnel will still be in the real world. Whether it’s booking test drives at home (a form we#’ve developed for one of our more forward thinking clients), or the ability to change your mind within 30 days etc, the integration of on and offline is essential.”
Echoing many of the the factors identified others in the trade, a Marketing Director at a highly respected franchised dealer group in the Heart of England, who tellingly wanted to remain anonymous, told Motor Trade News, “For me, it’s the legal complexities, the issues with part exchanges and issues with selling finance. For us to develop something independently that satisfied all these issues would be very expensive and time consuming. I can see one of the larger website providers developing something in the future though that could be used by their dealers. That said, I think we should be rolling out an online reservation payments system shortly.”
Asked what he thought are the key issues impacting the online selling of cars, this publicity shy dealer group Marketing Director added, “I don’t think the people we’ve got in the key roles in our dealerships / head office would feel it is a good use of our time and resources at this time.”
Rob Queen, Managing Director at Starkwood, a specialist web development company, responsible for hundreds of dealer websites, mostly in the independent used car sector says, “It depends how you define ‘sell’, all car dealers will argue that they ‘sell’ cars through their website as its their website that’s their shop window and generates the footfall and enquiries that then result in sell. If you are defining a ‘sell’ as an online, automated process whereby a customer can complete the whole transaction on line with no dealer intervention then the answer is no, dealers aren’t doing this. The closest some will get to is taking a deposit.”
Summarising dealer sentiment, the Starkwood boss believes there are a number of factors holding back a move to online sales by the UK motor trade:
1. The distance selling legislation favours the consumer over the retailer.
2. Consumer reluctance to make their second biggest purchase (behind their house) without seeing the product.
3. Franchise dealers have an advantage because a new car is always as described…a used car, especially over c20,000 miles, will show signs of wear and tear and even though the vehicle may be described along the BVRLA guidelines there is still room for interpretation.
4. Trust – the used car sector does have a poor reputation and consumers will be nervous to transfer funds without security.
5. Consumers will not do provenance checks on line but ask the dealer to do this for them.
6. Dealers want to upsell finance, warranties, insurance etc and online selling makes this more complicated and may encourage a consumer to get high street funding rather than the dealers funding.