Less than five minutes. That is how long it usually takes shoppers to buy a book on Amazon … or a new Hyundai online. Last November the South Korean carmaker formed a partnership with auto retailing entrepreneur Simon Dixon called Hyundai Rockar to sell cars in the UK via the Internet 24 hours a day, seven days a week in a pilot program that could be rolled out to other markets.
Not only do customers avoid price haggling, they also don’t have to travel to Hyundai’s dealership to get their new car. A new i30 compact is just a few clicks away, and it can be delivered right to the customer’s home. “It’s a totally new approach to selling cars. I would say it is maybe the first pure digital dealer,” Hyundai Europe Vice President of Marketing Jochen Sengpiehl told Automotive News Europe.
While Hyundai’s trial appears to leave the future of auto showrooms in doubt, automakers remain very reluctant to completely remove dealers from the retail process. Volvo, Mercedes-Benz and others, however, are very interested in strengthening their online tools to at least make it possible for the bulk of the transaction to take place on the Internet.
Test drive decline
The Internet has already stolen business away from many kinds of bricks-and-mortar retailers, and now it threatens to upend the traditional dealership model. Andrew Tongue of ICDP, a market research firm specialized in automotive retailing, argues that the main reason for going to the dealership before purchasing -- physically inspecting a vehicle and taking it for a test drive -- is becoming steadily less relevant for today’s society. “The industry tends to rate the value of the test drive much more highly than we customers do; some of us spend more on our monthly satellite TV and broadband package than we do on our car loan,” he wrote in a research note in January.