Auto retailers are making significant investments in technology to enable consumers to do most -- and someday, all -- of a vehicle purchase online.
Dealers who lag behind must catch up or face a fate similar to that of independent bookstores in the era of Amazon, industry experts say. But they add that catching up is possible.
"It's like any technological advancements. You'll have the pioneers who'll go out there and draft the technology," said David Kain, president of Kain Automotive in Lexington, Ky. Kain Automotive provides digital marketing, sales training and consulting to dealers. But, he added, "What has historically happened is the smaller dealers and the midsize dealers are able to catch up."
Kain said 10 to 20 percent of dealers have software that enables them to do a car transaction electronically up to delivery, when state laws often require documents be signed.
Consumers, though, are mixed in their views of online sales. In a survey of consumers conducted for Automotive News, 80 percent of respondents -- excluding those who said they were at the dealership for service, not to buy -- said that "some, but not most" of the purchase process could have been done online.
Some dealers believe that doing a car transaction completely online is far off because of the many steps involved: valuing a trade-in, arranging financing and complying with regulations. There's also a fear that finance and insurance profits would fall without an employee pitching products to customers face to face, Kain said.
Years or months away?
"But the studies we've seen show that consumers will actually buy more F&I products using iPads in a dealership on their own than a finance manager can sell them," Kain said.
Some manufacturers are developing digital sales technology. Toyota is "aggressively" working on it, said Ryan Hensley, CFO of Bill Penney Toyota in Huntsville, Ala. Hensley wants that technology, but worries about the cost. He believes it is "years down the road" before full online transactions are commonplace.