B2C trading in the automotive industry: the internet is primarily a source of information
- The sale of new cars exclusively via the internet is still in its infancy. Probably just a few thousand cars were sold direct via the internet, i.e. as blind purchases, to private buyers in Germany in 2001 (less than 1% of all new registrations).
- In our view, the internet will not establish itself as a discrete distribution channel in the new-car segment in Germany. We forecast that in five years’ time the proportion of car sales completed directly via the internet by private buyers will be under 3%. But it will probably be used as a source of information in about 70% of all new-car purchases.
- In the medium to long term, the so-called built-to-order model promises to revolutionise the new-car segment. In this system, the customer draws up his own ideal car online, and the resulting order then flows directly into the production output chain.
- The internet is already firmly established in the used-car segment, the car marts taking the dominant role. In Germany, for example, more than half of all the used cars on the market currently figure on the car-portal websites. Each of the major providers gives its customers the choice of over 500,000 cars.
- The internet’s most important future function in the used-car market will be the same as it is today: putting buyers and sellers in touch via online car exchanges. Direct online sales of used cars to private buyers in 2007 will account for no more than 2% of all changes of ownership, while the internet will be used as a source of information in some 80% of used-car purchases.
- Conventional car-dealing will be most affected by the internet, which will accelerate the consolidation process that is already under way. The internet will enable car manufacturers to reduce their distribution costs. Private car buyers will benefit because the internet reduces their information deficit. Direct purchases of new cars via the internet can be expected to enjoy discounts of about 10% of the list price.
- Though in years to come internet car marts will maintain their dominant role as supply-and-demand brokers in the used-car segment, or possibly even extend it, consolidation is inevitable in this field too. In the longer term, only about five independent internet car exchanges are likely to survive in Germany.
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For in-depth analysis on e-commerce, see Deutsche Bank