Columns James Baggott

Comment: Different strokes for different folks but will online car sales ultimately take over?

Time 3 months ago

It’s a topic that I haven’t seen split opinion as fiercely since the Leave or Remain camps went head to head over Brexit.

Don’t worry, this isn’t a deal or no-deal musing, instead, it’s about the topic that seems to see industry heavyweights fall into two very clear, opposing camps – digital car sales or physical car sales.

No one can deny that the coronavirus crisis has supercharged the industry’s digital transition like nothing else.

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If the car industry needed a rocket up its nether regions to get its act together online, the Covid-19 pandemic was a Hubble telescope-carrying space explorer to the buttocks.

Auto Trader recently reported that we’ve seen seven years of development in seven months from car dealers online, and it’s true most dealers didn’t let the crisis pass them by when it came to sharpening up their online offerings.

It helped that they were somewhat forced to.

If you want to carry on selling cars during a lockdown you have to have a fully transactional website for car sales and offer home delivery or click-and-collect if you wanted to do any business at all.

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Many dealers have used this to such an advantage during previous lockdowns that they managed to not only keep selling, but actually sold more than they did the year before.

Several dealers have told me exactly that – Peter Smyth of Swansway Garages explained in issue 154 of Car Dealer Magazine how click-and-collect enabled the dealer group to sell more cars this November than last.

That’s quite an achievement, isn’t it?

If someone had told you back in February last year that soon some dealers would be selling all their cars online without customers seeing them first for a test drive, you’d have labelled them drunk and sent them home, wouldn’t you?

I find it fascinating that some dealers remain unconvinced.

I’ve spoken to lots of them over the past few weeks and months and the difference in opinion when it comes to the future of digital car sales is vast.

Most admit that offering a reserve online function is critical and some, like Alex Jones of Carbase, told me this had seen their conversion rates sky-rocket.

However, he didn’t believe customers wanted to complete the whole purchase online. And he thinks they never will in great numbers.

Some might think it’s a used car thing.

Daksh Gupta, of Marshall Motor Group, told me – after his last trading update that showed used car sales for his business were down around 12 per cent in November – that was because customers hadn’t been able to test drive them or see them in person.

That might be true, but at the same time over on the internet Big Motoring World boss Peter Waddell and automotive investor John Bailey were busy taking the wraps off their purely online used car sales website Carzam, betting exactly the opposite.

I’ve recently tried it out, and you know what? It works.

From what I understand, the Cazoo-rivalling website is already making impressive sales and within days customers were happy to part with tens of thousands of pounds and buy a used car purely online.

Arnold Clark CEO Eddie Hawthorne, sitting atop the most profitable Car Dealer Top 100 list, said his firm had offered customers more ability to interact on its website and that by giving the customer the power to decide what they do online it had managed to increase its margins even further.

On the other hand, the most profitable independent dealer Trade Centre Wales has resolutely decided that online sales is not the future and is spending millions elsewhere attempting to drive customers into its showrooms.

It’s fascinating to see how different areas of the industry are reacting to online sales.

Some love it and are convinced it’s the future, betting their houses on the fact it’ll overtake physical sales soon enough. Others remain unconvinced and are focusing on a blended approach. Which way the customers pivot remains to be seen.

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Perhaps there is no right or wrong answer – perhaps the used car market is simply big enough for everyone to carry on doing it their own way and still make a success of it.

Which side are you betting on?

This column first appeared in Car Dealer issue 154. For more features like this one, view the latest edition by clicking below. Sign up to become a Car Dealer member free of charge to get the latest issue before anyone else.

James Baggott

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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