Survey Says:Internet Most Important Medium For Car Buyers...So where are the OEM advertisers?

Car Makers and Dealers in Discord over their E-Business Future, Survey Shows

Consumers demand new web services while rating dealers high for satisfaction

Paris, October 4 - Use of the Internet by car buyers has risen sharply in the last 12 months, with 38 per cent of consumers in 2001 describing it as an important source of information on vehicle features and prices for their next purchase compared with 27 per cent in 2000. The web is now rated more highly for car information than print advertising which only 29 per cent of consumers thought important, and scores double the rating of television advertising which just 19 per cent ranked as important.

The percentage of car buyers using the web to purchase a vehicle is rising even more rapidly, although it remains relatively small. Online purchasing of vehicles has increased in the US over the last year from 1.6 to 3.0 per cent of total sales (equating to 400,000 vehicles), in Germany from 0.7 to 1.6 per cent and in the UK even more dramatically with a tenfold increase from 0.1 to 1.1 per cent.

The findings come from the third annual Cars Online survey by Cap Gemini Ernst & Young, one of the word’s largest management and IT consulting companies, and are based on interviews by market research company the Gartner Group of 8,000 consumers, 800 car dealers and leading car manufacturers in 10 countries: the USA, UK, Germany, France, Italy, Sweden, the three Benelux countries and Japan.

But the survey also reveals sharp differences within the motor industry in attitudes towards the Internet. Some 79 per cent of respondents working for motor manufacturers (OEMs) perceive the Internet as either an opportunity or a great opportunity for their business and only 21 per cent as a threat. But among car dealers 63 per cent of those interviewed regard the Internet as a threat and only 37 per cent as an opportunity, even though positive consumer attitudes towards dealers are revealed to be high and rising. The likelihood of respondents recommending their car dealer – a key measure of satisfaction and loyalty – increased in all countries surveyed - from 68 to 77 per cent in the US, 64 to 72 per cent in the UK and 61 to 69 per cent in Italy, for example.

Pierre Durand, head of Cap Gemini Ernst & Young’s automotive centre of excellence, said: ‘The survey confirms that the Internet is rapidly becoming an indispensable part of the sales and marketing process. It is now firmly on the map for a significant and fast-growing proportion of the consumer market. During the past 12 months virtually all of the world’s major car makers have been galvanised into making major efforts on the Internet front, but our survey reveals a disturbing lack of liaison between many manufacturers and dealers which may negatively impact the way the market develops.’

The percentage of consumers with web access visiting a manufacturer’s site ranged from 31 to 43 per cent in most countries, compared with typical figures of 27 per cent visiting franchised dealer sites, 15 per cent independent dealer sites and just 14 per cent visiting specialist car broker sites. Visits to the sites of the major manufacturers’ websites in 2001 exceeded visits to all automotive websites in 2000, suggesting that they are now providing much of the online information that consumers need.

These numbers show that for consumers interested in buying new cars, the giants of the motor world are regaining control of the net, with visits to the websites of major manufacturers gaining ground strongly in the last year at the expense of specialist automotive e-commerce start-up companies.

The survey reveals big variations in web use from country to country. In Japan, the country leading the field in web use, 36.5 per cent of consumers had used the web for research before buying their current car and 5.4 per cent had actually bought the car online. In France, by contrast, the equivalent figures were 2.0 per cent and 0.2 per cent.

The survey also dispels some myths surrounding the Internet.

Myth 1: ‘The web eliminates distance’

First, it shows that the web has not eliminated distance as a key purchasing factor: out of 10 factors likely to inhibit online shopping, 74 per cent of respondents picked distance from the online dealer as the number one reason for not using the web to buy.

Myth 2: ‘The web is for the young’

Second, it shows that Internet use by car buyers is by no means the exclusive preserve of the young. For people aged 18-35 years buying new cars in the past year, some 27 per cent researched online and 2.9 per cent purchased online. For those aged over 35, the comparable figures were 17 per cent and 2.1 per cent.

Myth 3: ‘The web is great for one-stop shopping’

Third, it shows that use of the web for one-stop shopping – buying the car, insurance, breakdown cover etc – scored very low with consumers, being listed 12th out of 13 factors as a motivator for web use.

The increasing sophistication of web-using car buyers is highlighted by two website features they are starting to demand. Apart from product and price information, 45 per cent of consumers interviewed said they wanted online configuration as a key service, enabling them to experiment with different vehicle specifications and options and then immediately discover the price and delivery implications. And 35 per cent quoted Order Tracking as a feature they required – the ability to inspect online the progress of their vehicle towards final delivery as it moves through the assembly and distribution system.

Pierre Durand said: ‘Clearly many consumers are no longer content with websites that are mere electronic brochures. They expect the data on their screens to be linked in real-time with what is happening all the way down the supply chain, and satisfying this need is in my view one of the big challenges that the industry must, can and will now address. Our survey shows that car buyers need the industry to make faster progress towards the build-to-order model with firm delivery dates promised at the time when the order is placed. In the Internet age, these missing links in the automotive supply chain must be quickly found and put in place.’