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SHOPPING FOR WHEELS ON THE WEB
by Bob Brooke

For some people, buying a car involves combing the dealerships, shaking hands, and kicking tires while haggling over prices. For others, it’s a tedious process of research, comparisons, and test drives. In today's customer-driven economy, car-buying methods remain as relics from an earlier era. But the Internet may be changing the way people buy cars.

Web-based car buying is still in its infancy. According to Tony Cohen, senior research manager for respected industry analyst J. D. Power and Associates, no cars are currently "bought" through the Internet--that is, begin with a Net-generated lead and conclude in a sale. And only half of the shoppers who submit a purchase request to an online buying service purchase a domestic vehicle. Among new car buyers, Hispanics make up over 3.3 percent of the market.

According to a study by J.D.Power, the percentage of new-vehicle shoppers using the Internet to help them make purchasing decisions increased to 40 percent, or 5 million shoppers, during the first quarter 1999 from 25 percent in 1998, and is projected to increase to more than 65 percent by the end of 2000.

While more consumers are using auto buying sites, they’ve been disappointed by those that promise online buying only to return them to a traditional dealership. Generally, consumers go to the Internet to avoid the pressure and frustration of the traditional dealership experience.

Though online car-buying sites are beginning to take shape, there are no dominant ones. Major sites like Autobytel.com and InvoiceDealers.com offer many benefits. They're packed with reviews, customer comments, information about crash tests and model recalls, and places where buyers can shop for financing and insurance.

But their approaches vary. Some emphasize picking the right car, others focus on getting the right dealer--and none emphasizes saving money. Selling cars on the Internet may eventually reduce prices, but so far the emphasis is less on price than on process. As Mountain said, "Customers just want to buy a car without any hassles from a car salesman.”

In reality, sites point consumers toward actual dealers. A limited number of dealers in a geographical area sign up with one or more Web services (for a fee) to obtain sales leads. Since a seller can't pop the vehicle in the mail like a CD bought on the Net, proximity to the dealer is important.

Though buyers can find most car information in print, they can get it faster and more easily online. Going to the Net allows for more customized research, too. A buyer can survey all currently available mid-size sedans or compare minivans. Manufacturers' sites are another option. Most offer detailed model information, but only a fewincluding GM and BMW--help buyers find a dealer or direct them to showrooms for actual purchases

All car buying sites work similarly. After buyers choose the make and model they want from a menu, the site sees whether a dealer in their area offers that car. Next they fill out a long form. Once buyers finish entering their information, they receive a reference number, an online case folder, and phone numbers of real humans. After entering their zip code and the make, model, year, and style of a car they want, they get a photograph and price. And after selecting their credit rating for pricing purposes, they see options for leases, loans, and annual mileage.

Autobytel.com. The father of online car sites makes a good first stop on a car-buying excursion. It offers a rich mix of streetwise information from real owners and drivers and detailed specifications from manufacturers.

InvoiceDealers.com offers a comparison-shopping engine for new cars in an open-bidding process. It provides multiple, immediate price quotes and a still-growing nationwide network of more than 800 dealers. It boasts a no-haggle policy with no hidden charges and provides referrals from every dealer in the area that's a part of their network.

But buyers should also check sites like J. D. Power's Initial Quality Survey, which measures the number of problems reported by 100 owners of each vehicle make and model during the first 90 days of ownership. Ultimately, online research is no substitute for a test drive.

Most buyers come away feeling that the online process is friendlier than the real-world experience, but they don’t reap huge savings by going on the Internet noted Cohen of J.D. Power.

The future of online car sales seems murky. Currently, every sale passes through a dealer at some point--and that’s unlikely to change in the near future. Regardless of future developments, Internet-based automobile selling remains a long way from the computer industry's standard sales model, in which customers buy directly from the manufacturer. For those looking for a good deal and trying to buy in a more civilized way, the Web is the best place to start. But they shouldn’t expect it to make everything better
yet.

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