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Online buying up, but in-store transactions predicted to remain dominant

October 30, 2020
Despite the buzz that online car-buying has garnered of late, the vast majority of consumers still prefer to purchase a vehicle at a local dealership, said Langley Steinert, founder and CEO of CarGurus, an online automotive marketplace.
"I don’t subscribe to the idea that the whole (automotive) world is going online," he said during a remote CarGurus conference for its dealer clients who list and advertise their inventories on its site. "That’s not going to happen."
Digital auto retailing gained traction last spring when COVID-19 arrived and government mandates temporarily suspended in-dealership vehicle purchases in many states.
Consumer interest in online car buying jumped from 19% in April to 39% in June, according to a CarGurus survey Steinert cited.
Steinert predicts 20% of auto consumers will want to buy a vehicle online, but the rest "will want to buy locally."
That’s presumably good news for dealers who have not made digital retailing a top priority. "They don’t need to throw up their hands and say the sky is falling," Steinert said.
Still, "20% is not a small number," he contended, referring to those consumers who he said will prefer remote car buying. "That is not a small trend. It needs to be addressed."
Those online buyers, he predicted, will skew toward younger people ages 28 to 35. "They would say, ‘Yeah, I’ll do that as long as there’s a 7-day money-back guarantee.’ "
In a good year, combined new- and used-auto sales in the U.S. can exceed 56 million units. Various sources predict 2020 new-vehicle sales of about 14 million and used-vehicle sales of 36 million in the U.S, making this an automotive off-year because of COVID-19’s economic effects.
Despite that, "Consumer demand we’ve seen on our site is more robust than I expected," Steinert said, adding it’s particularly the case with used cars. But he cited shopping-level differences between higher- and lower-income groups.
"(Shopping for) higher-end used cars ($20,000 and above) is robust, but it’s quite the opposite for those below $20,000," he said. "That’s because lower-income consumers were harder hit economically by COVID. Sadly, it’s a tale of two cities."
CarGurus is among a number of third-party providers that make money by listing inventories and forwarding leads to dealer clients. (, owned and operated by the CATA, is free to association members, and non-members have no presence on the site.)
But expect budget-conscious dealers to cut back on the number of lead aggregators they use, Steinert said. 
"Dealers will consolidate their options. They will probably go to two. Three, four and five will be dropped. It doesn’t make sense to carry five inventory-listing (fee-charging) providers." 
The providers with the largest audience and which offer the best customer experience "win the war," he said.