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The Honolulu Advertiser

Posted on: Saturday, May 28, 2005

Internet changing car-sales culture

By Richard Sine
Wilmington (Del.) News Journal

If you want to bypass haggling over a new car but still get the best price, experts and car dealers say, the Internet could be your best bet.

Finding out about wheels online

The Internet has a wealth of information to help you learn about and buy a car. Here are a few sites plus a government page that keeps track of an ever-changing number of sites:

www.autobytel.com, Autobytel

www.carsdirect.com, CarsDirect

www.consumerreports.org, Consumer Reports

www.edmunds.com, Edmunds.com

www.intellichoice.com, IntelliChoice

www.jdpower.com, J.D. Power and Associates

www.vehix.com, Vehix.com


The Web has changed the relationship between those who sell cars and those who buy them.

"People have no idea how easy it is to buy a car using the Internet," says Philip Reed, editor at auto information firm Edmunds.com. "A lot of the uncomfortable tasks of car buying have been solved."

You can get a quote on the new car you want and make dealerships compete for your business.

Buying a car through the Internet allows you to leave the showroom sales force behind because most dealerships have separate Internet departments.

"It works completely independent of the sales force you encounter when you walk on the car lot," Reed says.

The commissions at Internet departments typically are based on sales volume rather than prices, he says. That gives Web salespeople an incentive to offer an agreeable price quickly.

Nearly three of every 10 new car buyers are purchasing their vehicles through dealers' Internet departments, Reed estimates.

Many dealers welcome the change, saying the Internet has made both selling and buying a car more efficient.

"The Internet has changed the culture in dealerships," says Michael Price, chief operating officer of Price Automotive Group that has eight dealerships in Delaware and Maryland. "It's putting the right kind of pressure on dealerships to speed up a sale, to eliminate a lot of the back and forth, to provide straightforward information, and not to oversell."

Customers can walk into a dealership knowing how much it paid for a car and the profit on each option. While customers' increased knowledge cuts into dealers' profit margins, Price says, savvy dealers can make up in volume what they lose in margins.

Price estimates the average showroom sale requires more than three hours of his sales force's time. An Internet sale can occur in less than an hour.

"If an Internet salesperson can sell 20 cars a month, even if he takes a little less commission on each sale, he's making more than if he sells 10 the old way."

After looking through consumer guides and test-driving several cars, Charles Connon and his wife, Ann, of Newark, Del., settled on a Toyota Camry. But instead of buying the car where they tried it out, the Connons went to the Internet.

The reason? Price.

"They're competing right there on the Internet, so they don't mess around," says Connon, who estimates he saved several hundred dollars through Internet shopping. "They give you the best price they can, because they know the other guy's going to do the same thing."

Connon admits it felt awkward to test drive a car at one dealership and then buy it elsewhere.

Reed suggests buyers tell dealers up front that they intend only to test drive, and that they'll come back if they like the car and the dealer.

Many people who don't buy their cars through the Internet still do their homework on the Web before entering a showroom.

Nearly two-thirds of new car buyers use the Internet when shopping for a car, according to J.D. Power and Associates.

The average buyer spends nearly five hours shopping online and visits an average of seven Web sites. While many of these sites look similar, they offer very different features.

Manufacturer or dealer sites offer plenty of information about specific cars they are selling.

Independent sites such as Edmunds.com or Vehix.com compare different makes and models.