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Automobile online shopping: From showroom to screen

Online car shopping is reshaping the automotive industry and customer experience.

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Quantumrun Foresight
January 18, 2024

Insight highlights

Online car shopping is on the rise, and innovations like virtual showrooms and AI-powered sales assistants are enhancing the buying experience. The shift towards digital platforms could force traditional dealerships to adapt or close, while governments may need to implement new regulations to protect consumers and ensure fair competition. The accessibility of online car shopping may increase car ownership in underserved communities and reduce the environmental impact of the car buying process.

Automobile online shopping context

According to a 2022 global survey by data company YouGov, Australians and Americans are the most likely to consider online car retailers for their next vehicle purchase (21 percent each). Moreover, Australians have shown a greater likelihood than the global average to explore various forms of online car purchases. The highest consideration was given to car manufacturers with both online and offline presence (23 percent), followed by online car retailers (21 percent), manufacturers with an exclusively online presence like Tesla (16 percent), and online auction sites (11 percent).

These results confirm the trend identified by Google and research firm Kantar back in 2018. Before purchasing a car, 92 percent of consumers conduct online research. A considerable 64 percent of buyers who view online videos for purchase guidance claim that innovative formats, such as 360° videos, could persuade them to buy a vehicle without a test drive. Since 2016, the watch time for "test drive" videos on YouTube has increased by over 65 percent, reflecting a trend in online video consumption that parallels the earlier growth in electronics reviews and unboxing videos.

With the expansion of online shopping, companies are exploring new approaches to the buying experience. Conventional car dealerships are enhancing their online presence and providing home pick-up and delivery services to save customers the journey to the showroom. Additionally, they are enabling customers to complete paperwork online at their leisure, tackling yet another common inconvenience.

Disruptive impact

One of the primary results of the increasing shift to online car shopping could involve the transformation of dealership models. Traditional brick-and-mortar car dealerships may need to adapt to a more digitally-oriented approach, focusing on enhancing their online presence and offering virtual showrooms, personalized consultations, and at-home test drives. This transition could result in a reduction of physical dealership locations and staff downsizing, as fewer in-person interactions would be required.

Another potential impact of increased online car purchases is automakers' acceleration of direct-to-consumer sales. This model allows manufacturers to sell vehicles directly to customers through their websites or online platforms, bypassing traditional dealerships altogether. This shift could result in cost savings for consumers, eliminating the need for dealership markups and streamlining the sales process. However, it could also lead to the decline of dealership networks and create challenges for automakers in terms of managing customer relationships, after-sales services, and potential legal issues surrounding dealer franchise laws.

Lastly, the growth of online car sales could spur innovations in the automotive retail landscape. New online car-selling platforms and technologies may emerge to facilitate seamless transactions and provide potential buyers with an enhanced, immersive experience. Virtual reality showrooms, artificial intelligence-driven recommendation systems, and secure online financing options could become the industry norm, fundamentally changing how consumers research, compare, and ultimately purchase vehicles. As the industry evolves, stakeholders will need to adapt and embrace these changes to remain competitive.

Implications of automobile online shopping

Wider implications of automobile online shopping may include:

Traditional brick-and-mortar dealerships experiencing decreased foot traffic and sales, forcing them to adapt to online sales strategies or face potential closures.

Governments needing to implement new regulations to protect consumers and ensure fair competition. These regulations may address issues such as data privacy, consumer protection, and taxation of online transactions.

The car purchasing process becoming more accessible for people living in remote areas or those with limited mobility, as they can research and buy vehicles without leaving their homes. This trend can contribute to increased car ownership in previously underserved communities.

The development of more advanced digital platforms and virtual tools for car sales, such as virtual showrooms, augmented reality experiences, and AI-powered sales assistants.

A decline in demand for traditional car salespeople, resulting in potential job losses or a shift in the required skill set for automotive sales professionals. However, this shift may create new job opportunities in digital marketing, customer service, and e-commerce logistics.

Reduced overall environmental impact of the car buying process by eliminating the need for consumers to travel to multiple dealerships, leading to reduced traffic congestion, fuel consumption, and greenhouse gas emissions.

Consumers having easier access to a wider range of vehicles from different countries. This development can increase international trade in the automotive sector, potentially affecting trade policies and agreements between countries.

Changes in the automotive supply chain, as manufacturers may need to adapt their production and distribution processes to accommodate direct-to-consumer sales or new e-commerce logistics partners. This trend could increase efficiency and cost savings for manufacturers and consumers alike.