The future of buying cars could soon be fully online

Buying a car via an ecommerce app or online is probably not something consumers would even have considered a few years ago, but this attitude is changing fast as people get more used to buying online.

Consumers became used to buying computers, takeaways, air tickets and everything else online during the pandemic, but until now, many hesitated to make larger and more complex purchases such as cars.

“We have already seen the internet radically change the car purchase journey. In the past, you would visit several dealers to see what was available and get advice.

However, today you can do your research online to narrow down your preferred make and model, as well as find the best deals. Then you can view and test drive the car before deciding,” says Ernest North, cofounder of digital insurance platform, Naked.

He says in future we can expect this process to go completely online for a significant portion of car sales.

“More and more people will not only do their research on the internet, but also buy the car with a single click. It is a global trend, with Allied Market Research forecasting that the global online car buying market will grow from $238 billion in 2020 to $723 billion by 2030.”

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Benefits of buying a car online

One of the benefits of buying a car online is that it empowers you to search for your ideal car from an endless range of online car dealerships, marketplaces and private sellers.

You can easily gather information on various cars, compare prices and specifications and pay online before picking up your dream car. You can even have it delivered.

North says this opens up a world of possibilities.

“If you live in Cape Town, for instance, you can buy a car from a dealer in Gauteng if it will save you money or if there is no stock at a local dealer. You will also be able to compare prices at a glance, without negotiating with a sales rep who has one eye on their commission. A natural outcome of the shift online is that prices will start to converge and become completely transparent.”

By comparison, in the traditional car buying journey, there can be a 25% or more discrepancy in the pricing of a car of the same year, make and model between different dealers. This reflects factors such as accident and service history, mileage and the general condition of the car, as well as the negotiating position of the two parties.

“We have certainly come a long way in the online car buying journey. Just about the only thing you still need to do in person is take the vehicle for a test drive. Options such as seven-day returns may make even this unnecessary for most people.”

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Personal advice when buying a car

Inevitably a portion of consumers will always feel more comfortable with the advice of an in-person dealer, but over time, the portion of cars sold completely online will increase, as car dealers and manufacturers enhance their online capabilities, North says.

“A few car manufacturers already sell certain new vehicles completely online in South Africa. One of the best examples is Volvo’s ‘Build your own’ functionality on its XC60 Recharge.

“WeBuyCars’s online auction service is a good example of second-hand cars traded completely digitally. Even so, we are just at the start of the digital transformation of car purchases.”

Today, some manufacturers let you configure specs and features to your liking before finalising the order or visiting a dealer, while most car websites can show you high resolution pictures and videos of a car on sale.

Soon, North says, we may see AR/VR experiences showcasing cars with immersive experiences that help you get truly comfortable with the car you buy.

“The next step will be to offer a true one-stop experience. We can expect online dealers, car manufacturers and marketplaces to let you compare financing offers, vehicles and insurance deals in one place. You will be able to arrange financing, buy the car and get insurance from your laptop or smartphone, with no need to fill in forms or speak to call centre agents.”

While we wait for that to happen, North points out that you can already find financing and buy insurance via digital channels, making it quicker and easier to compare offers. Naked already offers a final quote in 90 seconds and you can buy cover for your car on the spot without a single phone call.