Online car sales are gaining momentum

Although only a small proportion of all car sales still takes place online, the trend is definitely growing. What challenges must the industry overcome before online car sales become the new standard?

Online car sales via Internet platforms are becoming increasingly common.
Image: Cherryandbees/Adobe Stock

Online car sales are currently revealing their potential as the future of the car trade. More and more customers are either already buying cars online or could imagine doing so. However, the new customer requirements and sales strategies associated with that are presenting fresh challenges to car sellers. Among other aspects, they have to rethink the advice they offer and restructure their sales pipelines.

Online car sales are becoming part of the new normal

E-commerce is the new standard. The trend was already heading in that direction, but the pandemic and related lockdowns have further driven and accelerated online retail. And it’s not just young digital natives who are now shopping mainly online, wealthier age groups are also embracing the platforms of Internet retailers. It was only a matter of time until e-commerce moved from day-to-day items to bigger purchases such as cars.

Find out more in our articles on e-commerce today and in the future.

Electric cars – the driving force behind online car sales

As is often the case when it comes to new developments and ideas in the automotive industry, Tesla again plays a major role in online car sales. The carmaker opts for a combination of showrooms and an online sales platform to sell its vehicles. That allows hesitant customers to physically experience their next car, although the main infrastructure is built online. And the company’s success speaks volumes, leading an increasing number of providers in the industry to switch to the new sales model.

Read more about what Tesla can teach us about digitalization.

Car e-commerce benefits from the special nature of electric cars, which account for an ever growing proportion of sales. These models usually have much fewer options and variations, significantly reducing the uncertainty and testing needs of customers. In turn, that helps them shed their inhibitions when it comes to buying a car online. Everything can be configured online using familiar tools.

Online car sales mean new sales strategies

With regard to online car sales, some tried-and-tested e-commerce practices can be incorporated, while not losing sight of the specific requirements of selling a car. Cars are expensive items that most customers don’t just frivolously buy. For electric cars, customers also want lots of information and the opportunity to experience how the vehicle works and feels. The customer journey for car sales needs to be rethought in order to identify touchpoints between sellers and prospective buyers and maybe introduce a hybrid sales process.

For those reasons, car dealers must ensure that their websites meet the high expectations of prospective buyers. Putting together a small online shop won’t cut it. Car e-commerce actually offers scope to innovate.

Virtual salesroom

When buying a new car, we don’t just focus on its external appearance. Physically sitting in the car and familiarizing ourselves with everything inside it has always been just as important. New technical solutions take on this task in car e-commerce. AR and VR technology makes it possible to experience a car without having to be there in person.

For the car trade of the future to work online, there needs to be a suitable digital infrastructure. Once this has been established, experts reckon there are good chances of car e-commerce becoming increasingly successful.

Strong growth predicted for online car sales

Major Swiss bank UBS delved deeper into the topic of online car sales. It found that they currently only account for about 2 percent of all car sales in Europe and the U.S. However, UBS estimates that the sales model is set to dramatically climb. According to its prediction, around half of all car sales will be made online by 2030.

Investments will need to be made to build the necessary infrastructure. However, looking forward, UBS believes that switching to online car sales has huge savings potential. The major bank expects the costs of selling cars to fall by approximately 50 billion dollars. The experts argue that car e-commerce also generates higher margins and profits, which acts as an incentive for dealers to further develop their sales processes.

Online car sales: the interplay between e-commerce and AR technology

In the eyes of the experts, online car sales are set to skyrocket. In the next few years alone, they are expected to make up a much greater proportion of all car sales. However, this trend depends on a number of factors, from investing in the digital infrastructure to promoting technological innovations. AR applications in particular could transfer the experience of buying a car to the digital realm.

As with all e-commerce segments, online car sales also require the trust of buyers. This varies considerably between age groups and national markets. As a result, we can expect the trend to develop at different rates on an international scale. One thing is certain, though: experts are convinced that online car sales will ultimately become a major part of the car market.