The quintessentially American pastime of browsing Sunday newspaper ads, then wandering from dealer showroom to used-car lot in search of a vehicle is rapidly fading, replaced by hours of Internet research.
Today it’s possible to discover how much (or little) you should pay for the beige Ford Fusion you’ve had your heart set on, to gather all relevant specifications, and to find out whether a specific Fusion with navigation and white upholstery is available for purchase at a Ford dealership near your house.
Gannett (GCI), the owner of USA Today and 82 other daily publications and other media products, earlier this week placed a big bet on the future of Internet search for vehicles with its purchase of the 73% of Cars.com it didn’t own for $1.8 billion, valuing Cars.com at $2.5 billion.
Cars.com, like other carbuying information sites such as Autotrader.com and Edmunds.com, offer plenty of free information. Any visitor to one of these information sites will be asked to fill out an electronic form, including name, email address, phone number and zip code, in return for additional information. The resulting sales “lead” will be sold to car dealers near the shopper.
The sites generate revenue by selling display advertising as well as the leads to dealers – who then may pursue shoppers by phone or email. TrueCar, an auto information site with a different angle, acts as intermediary between shopper and dealer, in return for a fee from the dealer.
Dealers, naturally, hope to to spend as little as possible purchasing leads from the likes of Cars.com, especially since the same lead may be sold multiple times to competing dealers. More and more dealers are trying to compete with lead generators by attracting carbuyers directly to their websites. General Motors (GM) is helping those of its dealers that wish to sell directly on line.
AutoNation, the public-owned dealership chain and the nation’s largest, last month said it intends to invest $100 million to build a web-based tool that will provide information and allow customers to place an order. Clearly, the company is banking on the future, with an eye toward younger shoppers.
Mike Jackson, chief executive of AutoNation, told the Wall Street Journal: “You can sit at home, watch TV. You can view our entire inventory, select the vehicle you’re interested in, get a price and then you can send us a deposit.” Without visiting the dealership, the vehicle then belongs to the customer.
The process of buying a car is far more complicated, of course, than buying a book from Amazon or a pair of sandals from Zappos, requiring the completion of multiple forms for regulators and licensure. If a car is being traded and financing is required, more barriers ensue. Carvana, a carbuying “vending machine” based in Atlanta allows customers to complete the purchase of high-end used vehicles on line, including delivery.
How long the business of generating leads remains viable remains to be seen. Clearly Gannett believes it will be around for some time. More likely, especially if AutoNation is successful, dealers will gravitate to providing information and acquiring customers directly.
What’s virtually certain is that the practice of kicking tires at a dealers’ lot on Sunday afternoon soon may go the way of browsing for books at the library: A quaint practice of the elderly.
