How they sell cars on the Internet in Europe

(Editor's Note: We know how cars are sold over the Internet in America. But as connected as Americans are, European car buyers are certainly using the 'Net, too. The following story gives a different perspective on how vehicle e-sales are done overseas.)

When Volvo Cars, based in Stockholm, Sweden, decided to try selling cars on the Internet, it set up its test site in Belgium.

“If we succeed in Belgium, we succeed in Europe,” says Dirk Pissens, general manager of Volvo Cars Belgium. “The fact is that the Belgian consumer isn't that progressive.”

Progressive or not, there's no doubt that the Internet is changing the way Europeans buy cars, especially in places such as the Nordic countries and U.K. where the technology is highly developed and domestic prices are high.

Internet buying is combined with cross-border purchases, as consumers shop Europe to find the lowest prices.

In Sweden, direct imports account for 17% of newly registered cars so far this year, a 171% increase over last year.

Kurt Palmgren, president of the Association of Swedish Automobile Manufacturers and Wholesalers attributes the enormous jump directly to the Internet.

“We thought that direct imports would level off somewhat. But the Internet is acting as a sales channel and it's increasing instead,” he says.

In the U.K., car importers are using the Internet to market their services, reminding potential customers that British car prices are the highest in Europe, and that there's money to be saved by buying on the Continent.

Denmark offers some of the best prices for export. Danish taxes on cars — including car tax, value added tax, registration, and upfront fees for eventually scrapping the car — are so high (as much as 180% of the car's price) that dealers have to lower prices to make sales. But a buyer from another European country can take advantage of those prices without paying the Danish taxes, since he pays tax in his home country.

In the U.K., the BBC's commercial division, has a site called Top Gear where buyers can comparison shop for new and used cars, get advice about buying and reviews of different models, and information about insurance and financing. Top Gear also has a guide to buying a car on the Continent.

The chance to more easily comparison shop is one reason for the growth in Internet buying.

Volvo lets potential buyers ask for quotes from several dealers as well as compare their Volvo of choice with other manufacturer's cars.

In Germany, as in virtually all European countries, manufacturers are not allowed to sell directly to the public.

A DaimlerChrysler site allows potential customers to go into individual dealer Internet sites. They then configure their car and are given unbinding prices. The customer has the choice of accepting this price, which then becomes binding, and requires a DM500 (US$244) down payment.

But despite the Internet trend, even Internet sellers don't think traditional dealers will disappear anytime soon.

Says Top Gear's Nathan Watts: “A good dealer can be a source of information both before and for years after the deal goes through.”