Car buyers now rule thanks to Web, analysts say
Power shifting away from dealers ‘The Internet is the showroom’
Consumers now hold most of the cards when buying autos because they are embracing the power of the Internet, industry analysts say.
“ The power in car buying has moved dramatically from the dealer to the consumer in the last few years,” industry watcher Dennis DesRosiers said at a seminar about the impact of consumers tapping the Internet. The seminar was sponsored by Internet search engine Google Canada. DesRosiers said online research has left auto consumers in a position where they may know more than the dealer’s representative about the product, cost and financing. DesRosiers and Charles Schade, senior director of the research practice at U. S.- based J. D. Power and Associates, said many consumers no longer shop for autos at dealerships, but go there to negotiate terms. “The Internet is the showroom,” Schade said at a separate J. D. Power outlook conference. “ They go to dealerships to close the deal.”
Schade said the Internet has become an integral part of the auto-buying process because that’s where an increasing number of shoppers select the vehicle they want and can afford. They conduct further research on the price of the vehicle and then go to various dealers armed with that information for negotiations.
“ In the past, the dealers had most of the cards,” he added. “ Now the customer has them, and sometimes more.” A J. D. Power survey of more than 18,000 buyers of new vehicles in Canada this spring found 89 per cent of them visited an online auto site before visiting a dealership.
Furthermore, 35 per cent indicated their Internet research had a big impact on the vehicle choice.
DesRosiers, president of DesRosiers Automotive Consultants, said consumers are also using “ blogs” or online journals to find additional details about products and their real costs.
“ I can find the measurements of a trunk so it can fit my hockey stick,” he added. On the other side, auto makers are creating “buzz” through their own blogs and viral marketing, where companies try to exploit social networks to exponentially increase brand awareness.
For example, General Motors Corp. vice- chairman and design guru Bob Lutz has his own blog. Blogs are becoming so important in the industry that auto makers are lending vehicles for bloggers to test- drive, according to DesRosiers. GM’s Cadillac division conducted an online marketing campaign that included a contest to produce 5- second Super Bowl commercials earlier this year. BMW created short films for downloading from its websites that triggered about 100 million page views before DVD release, DesRosiers added.