IN DENVER, CAR BUYERS FIND GOOD DEALS ONLINE
But study finds that it depends which kind of vehicle you’re looking to purchase.
Online competition is squeezing retailers of every stripe, and even local car dealerships aren’t immune from the “Amazon effect.”
iSeeCars, a car search engine, studied whether buyers received a better deal through an online dealer such as Carvana, Shift and VROOM or at a traditional dealership. It looked at 9.4 million vehicles, model years 2012-18, that sold last year.
“While online shopping has become commonplace in most consumer segments, car shoppers might be reluctant to purchase their vehicle online because it’s such a major purchase,” Phong Ly, CEO of iSeeCars, said in the study.
Buyers who put their concerns aside received a discount, sometimes a substantial one, going through an online dealer, especially on certain trucks and sport utility vehicles. Traditional dealers tend to offer the best pricing on sedans.
Consumers nationally saved 0.8 percent, or $185, on average going online versus brick-and-mortar, according to iSeeCars. Online savings were much larger in Western cities — led by Albuquerque, which showed a 3.1 percent overall discount. Denver ranked fifth for its online discount at 1.8 percent, and certain models carried much larger savings.
Online buyers of the Chevrolet Equinox in metro Denver paid 10.9 percent less on average than those who went the traditional route. The discount on the Chevrolet Silverado 1500 and the Chevrolet Colorado came in at 10.7 percent, the Ford Edge at 10.1 percent and the Ram Pickup 1500 at 9.9 percent.
The models where buyers received a better deal at a conventional dealership in metro Denver included the Hyundai Accent, with a discount of 4 percent, the Chevrolet Impala and Subaru Outback at 3.9 percent, the Chevrolet Sonic at 3.7 percent and the Nissan Leaf at 3.5 percent.
“The metro areas where online dealers offer greater discounts than traditional dealers tend to be in the markets where used cars are more expensive,” Ly said. “This could be because the supply is low.”
Buyers in Florida, for example, fared much better going to a traditional dealership.
If Ly is correct, online dealers serve a role in bringing vehicles in from oversupplied market to undersupplied ones and smoothing out prices.
Tim Jackson, president and CEO of the Colorado Automobile Dealers Association, said online competitors represent a small slice of the market and haven’t disrupted local dealers.
“So far it hasn’t had a noticeable or meaningful impact on sales in our dealerships,” he said. “I have not had a single dealership call me with concerns about these brands.”
Online players are spending millions and losing millions trying to build awareness with consumers.
“If they are taking a loss on every car to build volume brand and name identification, it is hard for dealerships to compete with that,” Jackson said. But he adds that the more they sell, the more the online dealers lose, and it will only be a matter of time before investors say enough.
Ernie Garcia, CEO of Carvana, said in February that his company, which sold about 100,000 cars last year, will eventually sell 2 million vehicles per year. He expects that volume will come from a faster turnover in used vehicles as technology makes the buying process easier.