In today’s digital age, the automotive industry has witnessed a significant transformation in how cars are bought and sold. The rise of virtual showrooms and online car marketplaces has offered convenience and accessibility like never before. However, recent research indicates that a substantial portion of car buyers remain sceptical about purchasing a used car online, fearing that it may result in inflated prices and a lack of transparency.
In this blog, we’ll delve into virtual showrooms, analysing both the benefits and drawbacks they offer to car buyers, particularly in terms of pricing.
In this article…
The Scepticism Surrounding Online Car Purchases
What Does This Mean for Car Dealerships? How Should They Approach Their Go-to-Market Strategy?
The Scepticism Surrounding Online Car Purchases
A recent survey conducted by the AA’s used car website AA Cars reveals that 21% of UK adults believe buying a car online will lead to price hikes. This scepticism is not unfounded, as buyers worry that without the traditional in-person negotiation process, they may pay more than the fair market value. However, examining the full spectrum of opinions and reasons contributing to this scepticism is essential.
1. Value for Money
The survey also highlights that 43% of respondents expressed doubts about getting good value for their money when buying a used car online. This sentiment suggests that many potential buyers believe they can secure better deals through physical dealerships, where they can assess the car’s condition, negotiate in person, and potentially obtain a better price.
2. The Importance of Inspection
Over 61% of drivers in the survey emphasise the importance of visiting a dealership to inspect the car before making a purchase. This preference for hands-on inspection stems from concerns about undisclosed mechanical issues and a desire for reassurance about the car’s condition. Many buyers worry that without a physical examination, they may inherit costly problems down the road. The most significant worry for more than half of surveyed drivers (52%) considering virtual car purchases is the possibility of undisclosed mechanical issues. This apprehension highlights a crucial concern: without a physical inspection, buyers may be taking a risk with their investment.
3. Haggling and Transparency
Approximately 27% of respondents believe virtual car purchases eliminate their negotiating ability. In a traditional dealership setting, haggling is common, and buyers often feel they can secure a better deal through face-to-face negotiations. The absence of this opportunity in the virtual showroom can lead to concerns about transparency and pricing fairness.
4. Counterbalancing the Scepticism
While the survey shows a significant level of scepticism toward online car purchases, it’s essential to recognise that virtual showrooms offer several advantages to offset these concerns.
5. Convenience
Virtual showrooms provide unparalleled convenience for car buyers, allowing them to browse, compare, and purchase vehicles from the comfort of their homes. This convenience especially appeals to busy individuals who may not have the time to visit multiple physical dealerships.
6. Expanded Options
Dealerships that offer digital buying options can attract customers from all over the UK. This expanded reach allows buyers to access a broader range of vehicles and potentially discover better deals, even if they need to travel to pick up the car.
7. Trusted Inspection
Interestingly, 22% of respondents indicated that they would consider buying a car unseen if a trusted organisation had inspected it. This suggests that third-party inspections and certifications can help alleviate concerns about the car’s condition.
The debate surrounding virtual showrooms and their impact on used car prices reflects the evolving nature of the automotive industry. While scepticism exists due to concerns about pricing, inspection, haggling, and mechanical issues, there are undeniable advantages to the digital car-buying experience.
What Does This Mean for Car Dealerships? How Should They Approach Their Go-To-Market Strategy?
As the automotive landscape undergoes a digital transformation, car dealerships must carefully consider how to adapt their go-to-market strategies to stay competitive and meet the evolving needs of consumers. The shift towards online showrooms and the changing attitudes of car buyers necessitates a thoughtful approach:
- Embrace a Hybrid Model: Rather than viewing the virtual showroom as a threat to traditional dealerships, consider it a complementary channel. A hybrid approach that combines both physical and virtual showrooms can provide customers with a choice, catering to varying preferences.
- Invest in Online Presence: A robust online presence is crucial. Dealerships should optimise their websites, ensuring they are user-friendly, mobile-responsive, and provide comprehensive information about their inventory. High-quality images, detailed descriptions, and virtual tours can replicate the in-person experience as closely as possible.
- Transparency is Key: Address the trust and transparency concerns head-on. Provide extensive vehicle histories, third-party inspections, and transparent pricing information. Build trust with potential buyers by offering accurate and honest representations of your vehicles.
- Differentiate on Service: In the age of online shopping, exceptional customer service becomes a significant differentiator. Dealerships can offer online chat support, virtual consultations, and seamless communication channels to assist buyers at every stage of the purchasing journey.
- Adapt Pricing Strategies: Be mindful of pricing strategies. While online competition can be fierce, dealerships should aim for competitive pricing while maintaining profitability. Value-added services and warranties can also be used to sweeten the deal.
- Provide Flexible Finance Solutions: Offering flexible car finance solutions with a wide panel of lenders allows car dealerships to cater to a diverse range of customers, including those with varying financial circumstances and credit profiles. By providing non-prime PCP finance options, car dealerships can make car ownership more accessible to a larger pool of buyers, increasing customer satisfaction and loyalty. Only two lenders in the UK offer non-prime PCP, and Marsh Finance is one of them. Contact us today to learn more.
- Invest in Cybersecurity: With online transactions come cybersecurity risks. Prioritise data protection to ensure customer information is safe. Invest in robust cybersecurity measures and educate your staff about potential threats.
- Market Your Virtual Showroom: Let potential buyers know about your virtual showroom. Use digital marketing strategies to drive traffic to your online platform, including social media advertising, search engine optimisation, and pay-per-click campaigns.
- Feedback and Adaptation: Continuously seek feedback from customers who engage with your virtual showroom. Use this input to refine and improve the online buying experience. Adapt your strategies based on customer insights.
As the automotive industry continues to evolve, finding the right balance between the virtual and physical showroom experience will be key to meeting the diverse needs of today’s car buyers.
Ready to Elevate Your Car Dealership’s Success? Partner with Marsh Finance Today!
At Marsh Finance, we bring over 50 years of unrivalled experience in car finance lending solutions to the table. Our commitment to excellence extends beyond competitive rates and fast pay-outs – we’re here to help you optimise your dealership’s operational efficiencies and ensure compliance while providing top-notch financial solutions to your customers.
With our FREE operational efficiencies and compliance consultancy service, you can unlock new levels of efficiency and profitability for your dealership. Take advantage of this opportunity to elevate your business to new heights.
Join hands with Marsh Finance and discover a partnership built on trust, expertise, and mutual success. Contact us today to explore how we can drive your dealership’s growth. Let’s make your business thrive in the automotive industry.