Analysis: The increasing popularity of buying cars online

Gasgoo.com (Shanghai) - Being able to purchase vehicles on the Internet is one of the newest developments in the Chinese automobile market. Mercedes-Benz, Jianghuai Automobile, BYD and Geely Automobile are among some of the manufacturers whose vehicles can now be purchased online. Although online buying has yet to replace the traditional business model of going to certified 4S dealerships to buy cars, there are those who believe it will become a mainstream sales method in the near future.

Gasgoo.com (Chinese) held a weeklong survey on the topic of online automobile purchases, collecting opinions from 1,091 industry analysts and professionals.

In the first question of the survey participants were asked if they believe online automobile sales are gaining momentum or not. The majority of participants, 63 percent, agreed with that viewpoint. By comparison, only 30 percent disagreed and seven percent were undecided.

Aside from changing the exchange of information and interpersonal communication, the Internet has dramatically influenced the buying and selling of all sorts of commercial goods. In just over a decade, a number of online platforms have gained mainstream acceptance, including B2B, B2C, C2C and O2O. Enterprises in other industries, including auto part manufacturers, have already taken advantage of the opportunities offered by these online platforms. It seems only a matter of time before the Internet becomes a major outlet for automobile sales as well. In the US, Ford and GM have already made attempts at making sales online via Yahoo! and eBay, respectively.

There are several potential reasons why many in the industry believe online sales will gain popularity in China. Firstly, the growing reliance of modern automobiles on driving technologies may actually be decreasing the amount of enjoyment many drivers gain from actually driving and, in turn, may eliminate the necessity of test driving a vehicle before purchasing. Secondly, increasingly streamlined production may reduce auto part costs and, in turn, decrease automobile prices. Finally, vehicle restriction policies in many Chinese cities and increasing business costs may convince many manufacturers to primarily sell their vehicles online in order to maximize profits.

However, there are still many real factors preventing the mainstream acceptance of purchasing automobiles online. In the second question, survey participants were asked to select what they feel is the largest impediment keeping online sales from gaining mainstream popularity. 29 percent of participants believe that online services' inability to provide a customized sales experience on the same level as a dealership is the largest obstacle they need overcome. 23 percent pointed to the complexity of the automobile sales process. Concerns about aftermarket customer service and the relatively high prices of automobiles compared with other consumer goods each gained 19 percent of participants' votes. Finally, six percent believe the major issue hindering the growth of online sales is the preferential treatment OEMs give dealerships.

Compared with other consumer goods, automobiles are relatively complicated goods to purchase. Buying an automobile requires vehicle registration, automobile insurance and setting up long-term payments. Additionally, in the event of a problem, automobiles require specialized maintenance, which can conveniently be found at 4S dealerships. The sort of comprehensive sales service dealerships offer may be a deciding factor for many potential consumers to make their purchases at a dealerships directly rather than online.

Furthermore, the high price of automobiles compared to other goods and the length of time they will be used, which can vary from five to eight years or even longer, mean that many consumers will place a great deal of importance on actually seeing and driving the vehicle in person before committing to a purchase, which is a major benefit that dealerships offer over online services.

In the final question of the survey, participants were asked what is the largest advantage the Internet has brought to the automobile industry. 31 percent of participants answered that the most advantageous benefit that the Internet has brought is the widespread availability of pricing information. 25 percent pointed to the collection of consumer information for dealerships. Only 22 percent of participants maintain that online purchase of vehicles is the largest benefit brought on by the Internet, while 18 percent cited the online availability of auto parts and other post-sales services.