Future of Car Buying: From Offline to Online

Following a strong trend in auto sales, Toyota soon will begin testing an online system that will allow car buyers to completely bypass the traditional dealership “experience.”

Rather than spending hours at a dealership, consumers simply will be able to log in, select a vehicle, arrange for financing and then set up a delivery location.

For the time being, this purchasing model is limited to the relatively low-volume Scion brand. But presuming that all goes well, Toyota and Lexus will expand on this approach in the future.

Considering electric-vehicle maker Tesla’s success with a similar approach to date, it can be expected that larger, more established auto manufacturers will have an easy time making it work, too.

Consumer purchasing habits have changed with the rollout of disruptive companies such as Uber and Amazon across almost every industry imaginable. People who want to spend less time in a dealership, and more time on other aspects of their life, now have that option.

With a car-buying process that can take as long as four hours, there is room for improvement in speeding up the time of purchase. Dealerships need to adapt and cater to the consumer market that consists of instant gratification, multitasking and short attention spans.

Toyota’s initiative is part of a broader effort by the industry to simplify car buying through online and mobile tools.

Others have caught on. Large dealership groups such as AutoNation and Sonic Automotive also have set up online storefronts that enable consumers to shop more efficiently. General Motors’ Shop-Click-Drive program enables online customers to find vehicles, negotiate prices and handle paperwork.

To minimize price haggling, TrueCar has built a business around connecting its network of dealers with leads generated through its websites and mobile apps. With this program, time spent in the F&I office varies by customer and by the details of their individual purchase. The overall goal of the initiative should be to reduce the time a customer spends in the dealership to an hour.

The used-car market is changing as well due to companies such as Vroom, Beepi and DriveShift. If they succeed as expected, they will take a big chunk of profits from new-car dealers. Here again, dealers will need to adapt and change with the times in order to compete with these time-efficient online options. They better do it soon, the future is not that far away.

Steve Gefter is a managing director at IDDS Group, an automotive dealership consulting company.