Boost Motor Group Inc.

J.D. Power: Internet Surpasses Print Advertising

WESTLAKE VILLAGE, Calif. (June 17, 2005)

The Internet has overtaken traditional newspaper and magazine classified ads in leading more consumers to late-model vehicle purchases, according to the J.D. Power and Associates 2005 Used Autoshopper.com Study.

"Online advertising, including classified ads, auctions and other leads have overtaken print, and it is very likely to remain that way," explained Dennis Galbraith, senior director of research at J.D. Power and Associates.

"Shoppers tend to go where the inventory can be found, and advertisers place their inventory where shoppers can be found," he continued. "Market share brings a barrier to entry in the used vehicle classified market. It is clear that online classified services such as AutoTrader.com and cars.com have broken through those walls by gaining the necessary market share. There is little reason to expect anything but continued growth in online classified services at the expense of print."

While J.D. Power executives said the percentage of used vehicle buyers using the Internet has remained flat (53 percent), the Internet continues to grow in its ability to impact shopping decisions of consumers who surf the Web. Among all buyers, nearly one-fourth (24.3 percent) are impacted in their seller selection by information discovered online, up from 22.5 percent in 2004, executives explained.

J.D. Power executives went on to say that manufacturer Web sites are also becoming increasingly important. While 90 percent of automotive Internet users still visit independent sites such as Kelley Blue Book's kbb.com or Yahoo! Autos, 74 percent visit a manufacturer-sponsored sites such as FordVehicles.com or Chevrolet.com to look for used vehicles, which is up from 70 percent in 2004.

"Manufacturers have a vested interest in making sure their dealers are able to sell pre-owned vehicles quickly, and they are getting increasingly serious about it," said Galbraith. "The better these vehicles are marketed, the faster the inventory turns and the higher the residual values and the lower the depreciation. This helps new vehicle buyers with lower lease rates and better trade-in values."

The study also found that dealer sites play a vital role in online shopping. More than one-half (52 percent) of all shoppers who credit the Internet with leading them to the vehicle they purchased indicated a dealer site as the primary online source. About one-half of these shoppers said that an independent site, manufacturer site or search engine directed them to a dealer's site where they found the vehicle they purchased.