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Laws, dealer services why we can’t buy cars online

Rick Popely
Chicago Tribune

As bricks-and-mortar stores around the country close up and more retail sales shift to the internet, the auto industry seems stuck in the past, plodding along in much the same way that it has for decades.

If you want to buy a new vehicle, you still have to schlep to a dealer, negotiate a price and sign a stack of documents before you drive away. With the notable exception of upstart Tesla Motors, which offers a completely online process, shoppers can start the buying process online, but ultimately they have to visit a dealership to close the purchase.

One reason is that manufacturers who have franchised dealers — everyone except Tesla — cannot compete with their dealers by selling directly to consumers either online or through company-owned stores, like Tesla or companies such as Apple. That is the law in all 50 states, so buying from a dealership is the only avenue.

Though some consumers clamor for an entirely online experience, the traditional trek to a dealership is still the easiest route. A substantial portion of car buyers rely heavily on the services dealers provide, such as accepting trade-ins, arranging financing and having a selection of vehicles in stock they can see and test drive.

“Buying online is the path of least resistance” for a new-vehicle shopper who is not trading in a car and has good credit, so they are a cinch to get approved for a loan, said Mathew Desmond, head of the North American automotive consulting firm Capgemini.

But most customers will have a trade-in or need to discuss financing, which isn’t well-integrated into manufacturer and dealer sites, Desmond said.

“Dealers use technology heavily, and they’re quite savvy, but when it comes to the challenge of integrating finance and insurance platforms for credit approval, for trade-ins and appraisals, and being sure that you have the right value for the vehicle, the integration of all those processes so that they work seamlessly for a great customer experience is a big challenge,” he said.

All vehicle manufacturers and dealerships have internet sites, but there isn’t a seamless transition from shopping on a manufacturer’s site to actually buying a vehicle on a dealer’s site. A customer who starts building and buying a car on the manufacturer’s site might have to start over with the dealership.

A 2016 survey of U.S. consumers by Capgemini bears this out. Sixty percent said they were willing to buy a new car online, and 60 percent said they want to avoid sales pressure at a dealership. However, 88 percent said they want to see the vehicle or test-drive it, and 55 percent said they want to be able to negotiate the price — something they might not be able to do online.

Tesla allows shoppers to build a vehicle with features they choose and place an order online and pick it up at a delivery center or have it delivered. Buyers also can purchase a vehicle out of inventory online or through a company-owned store. A brand called Lynk & Co that intends to launch in the U.S. in 2019 plans a similar approach of selling directly to consumers online and through company-owned stores.

In comparison, Desmond said General Motors’ Shop-Click-Drive program is an example of where other manufacturers are with online purchases. Consumers can shop dealer inventories online, pick a car, and check prices and financing options online, but they have to go to a dealer to complete the transaction and get an actual trade-in value.

GM launched Shop-Click-Drive in late 2013. A spokesman said about 72 percent of GM’s 4,300 dealers participate and the “new- and used-vehicle leads generated by the program approached the half-million mark in 2016.” He said he couldn’t be more specific.

During that time, though, GM sold more than 9 million vehicles in the U.S., so it accounts for only a small portion of its total sales, indicating that a vast majority of consumers still do all of their vehicle purchases the old-fashioned way — by going straight to a dealership.