Car dealers finding customers on-line

JACK KAPICA — Automobile dealers had better start selling their cars on-line or face disaster, an international auto think tank says.

There is a marked difference in sales performance between dealers who have integrated on-line sales into their business strategy and those who have not, the Car Internet Research Program stated.

The study, based on a survey gathered on-line during May and November, 2003, counted responses from 152 dealerships representing approximately 5 per cent of the Canadian Automobile Dealers Association.

Its findings suggest that those who do not use on-line sales are missing out on profit opportunities and also expose themselves to market erosion resulting from encroaching geographic reach by those who do.

Currently, half of the nation's dealers invest in dedicated Internet staff, according to the study. This group was twice as efficient at closing sales over the Internet for both new and used vehicles. Of these, 20 per cent close more than 10 per cent of their used vehicle sales on-line, and most expected this figure to double in the next two years.

They also receive higher profit margins and twice the geographic reach of their used vehicle sales due to the Internet, the survey said.

"With exactly half of dealers with dedicated Internet sales staff you can view the glass is either half full or half empty," Car Internet Research Program director Christian Navarre said.

However, he added, there remains little depth to the Internet presence of these dealers.

"For instance, only 10 per cent of the dealers claim to have the ability to display parts inventory, and most of these are only manually-processed forms," he said.

Few websites allow a consumer to build a quote with all charges, and only 10 per cent have the ability to accept on-line payments.

The study confirms figures of previous years, which show that dealers of European and Asian vehicles consider the Web to be of greater importance than domestic brand dealers do.

The study also found that dealers who have emphasize Web use have not only extended their trading range, but also have increased both vehicle sales and profit margin.

Dealers who have invested in dedicated Internet staff experience on-line sales exceeding 10 per cent twice as often than those who don't, which includes new and used vehicles.

Close to 40 per cent of Canadian dealers are convinced that their Web marketing is equal to or more important than their print advertising. This is despite the fact that dealers experience no reduction in advertising costs from their Web activities.

The Car Internet Research Program, an industry, government and academic-sponsored program, conducts independent research under the administration of University of Ottawa's School of Management. Research findings are published and shared among its membership.