Internet Attracting New Car Buyers in the UK

Consumer unhappiness with the new car market in the UK may lead more automobile buyers to turn to the Internet, according to a report by Fletcher Research.

Fletcher’s report “Dream Machines: Selling New Cars Online” found that 73 percent of those polled dislike the current practice of pressure selling, and 62 percent voiced concerns of being overcharged. Conversely, 85 percent of respondents feel the Internet will push new car prices down, and 82 percent anticipate a more open disclosure of information courtesy of the Internet.

According to Fletcher, in the UK the Internet is appealing to older, better educated, and more affluent car buyers who use the medium for research purposes, but not necessarily for purchasing. The key deterrent to buying a vehicle online are the significant financial commitment and the need to test drive the vehicle, cited by 66 percent of respondents.

“Online consumers want to use the Internet to help them buy cars,” said Neil Bradford, director of Fletcher Research. “Currently, manufacturers and dealers are using the Web to drive interested users to the offline sales channel, but successful online strategies will combine the research and communications potential of the Internet to instill faith in consumers to commit to vehicle purchases online.”

By 2003, nearly 500,000 purchase decisions will be made online, representing 20 percent of the UK new car market. According to Fletcher, the luxury car market will be the most impacted by the Internet, with 65 percent of luxury car purchase decisions influenced the Net. This represents 70 percent of overall revenue generation from this sector.

Fletcher also found that online car services such Autobytel.com are in a good position to enable customers to make purchase decisions online and to build relationships. Their potential, however, is limited by Europe’s Block Exemption, which regulates the relationship between manufacturers and dealers. According to Fletcher, only if the Block Exemption is removed in 2002/2003 will the Internet shape online car buying in Europe as it does in the US.

“If manufacturers and dealers do not move quickly, by 2003 new intermediaries could exploit changes in legislation to set up services in response to customer needs, including direct to the manufacturer sales negotiation,” Bradford said. “Established manufacturers and dealers must exert their control of near-purchase and after-sales market to retain customers for lucrative cross-sales products.”

The research draws on Fletcher’s UK Internet User Monitor™ survey of 40,000 UK Internet users, a Q2 poll of 1,00 adults and their attitudes on car buying, and interviews with leading figures from the automotive and Internet industry.