why can't I buy a car on the internet?

So many goods and services are bought on the internet these days that it almost seems arcane to buy something looking at someone and not a screen. So why is it still not possible to buy a car on the internet?

There are two big obstacles still preventing online purchases, but once they have been solved there is no reason why some people won’t.

The biggest obstacle is the sales process at the dealership. The ability to negotiate the price at a dealership and potentially ‘save’ thousands means that most people won’t want to buy a car online knowing that they could have saved money. Even if the dealer has an online only price, the perception of the consumer is that they could have always got an extra $100 or so dollars out of the salesperson.

Proof of this, is the sometimes sale of special supply-restricted models offered by manufacturers as an online only model, think Subaru BRZ or recently the Toyota Supra. These companies know they have a massive demand for these cars with little supply. So, they sell these cars online only as they recognize that they can sell these models at no discount and they recognize that the consumer won’t batter an eyelid.  

The only way to encourage online sales, is to have a fixed price across the dealer network so that the advertised price is the same as the transaction price and likewise the online price. i.e. there is no disadvantage to a consumer wanting to buy online. An example is Tesla and its control of the whole process including the retail of vehicles. They have proven what can be achieved online.

In New Zealand, both Honda and Toyota have transitioned to an ‘Agency’ Model, where the distributor holds all trading stock and hence controls the sale price. Consumers aren’t worse off because the advertised price came down to the transaction prices that were being offered by dealers anyway. But this model has ensured that both these brands are ready for online sales in the future.  

The next obstacle is that buying a car is a major purchase and subsequently most consumers prefer to test drive a car before they buy. If the car has a fixed price, why would a consumer test drive the car at the dealership and not buy if they are happy with the car?

For consumers to completely do their research online and progress to purchasing online, then the potential ‘buyers remorse’ issue will need to be resolved. Like how clothes and now shoes were encouraged to migrate online, these businesses offered free shipping and free returns to remove the risk of a consumer buying the wrong item. This then increased the volume of sales done online and made up for any increased shipping and return costs.

Sorry for the plug! – but at drivible our mission is to make the whole car experience seamless and to reduce the risk to such an extent that consumers and dealers feel comfortable selecting and transacting a car online. By transacting a car through a subscription, drivible can ensure that the official subscription price is the best price possible, whilst limiting the risk that you select the wrong car by only having a rolling monthly commitment.

Once consumers are comfortable with the subscription option, it is only natural that this model will migrate online.