Buying a car through an e-commerce app or online probably wouldn’t even have been considered by consumers a few years ago, but that attitude is rapidly changing as people become more accustomed to buying online.
Consumers have become accustomed to buying computers, takeaways, airline tickets and everything else online during the pandemic, but so far many have been reluctant to make larger and more complex purchases like cars.
“We have already seen that the Internet has radically changed the way people buy cars. In the past, you would visit several dealers to find out about what was on offer and to get advice.
However, today you can do some research online to narrow down your favorite brand and model and find the best deals. Then you can view the car and test drive it before you decide,” says Ernest North, co-founder of digital insurance platform Naked.
He says that in the future we can expect this process to be entirely online for a significant portion of car sales.
“More and more people will not only research on the Internet, but also buy the car with one click. It’s a global trend and Allied Market Research predicts the global online car buying market will grow from $238 billion in 2020 to $723 billion in 2030.”
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Advantages of buying a car online
One of the advantages of buying a car online is that you can search for your ideal car from an endless selection of online dealerships, marketplaces and private sellers.
You can easily research different cars, compare prices and specs, and pay online before picking up your dream car. You can even have it delivered.
North says this opens up a world of opportunity.
“For example, if you live in Cape Town, you can buy a car from a dealer in Gauteng if it saves money or if there is no stock at a local dealer. You can also compare prices at a glance without having to deal with a sales rep keeping track of their commission. A natural outcome of the online shift is that prices converge and become fully transparent.”
In comparison, traditional car buying between different dealers can see price differences of 25% or more for a car of the same year, make and model. This reflects factors such as accident and service history, mileage and general condition of the car, as well as the negotiating position of the two parties.
“We have certainly come a long way in online car buying. The only thing you still have to do personally is take the vehicle for a test drive. Options like 7-day returns can make even that unnecessary for most people.”
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Personal advice when buying a car
Inevitably, some consumers will become more comfortable with the advice of a face-to-face dealer, but over time, the percentage of cars sold entirely online will increase as auto dealers and manufacturers improve their online skills, says North.
“Some automakers in South Africa are already selling certain new vehicles entirely online. One of the best examples is Volvo’s ‘build your own’ feature on the Volvo XC60 Recharge.
“The WeBuyCars online auction service is a good example of fully digital used car trading. Nevertheless, we are only at the beginning of the digital transformation of buying a car.”
Today, some manufacturers allow you to configure specs and features to your liking before completing the order or visiting a dealership, while most auto websites can show you high-resolution images and videos of a car for sale.
Soon, North says, we may see AR/VR experiences that showcase cars with immersive experiences that help you feel truly comfortable with the car you buy.
“The next step will be to offer a true one-stop experience. We can assume that online dealers, car manufacturers and marketplaces will allow you to compare financing offers, vehicles and insurance offers in one place. You can arrange financing, buy the car and get insurance from your laptop or smartphone without having to fill out forms or speak to call center agents.”
While we wait, North points out that you can already find financing and buy insurance through digital channels, making it quicker and easier to compare quotes. Naked offers a definitive quote in as little as 90 seconds and you can purchase coverage for your car locally without a single call.