New data from the US indicates a sharp increase in the role of the Internet in vehicle marketing, although there are warning signs this rate of growth may be about to slow.
More than half (54%) of all new-vehicle buyers in the US turn to the Internet for help when shopping for a new vehicle - up from 40% in 1999, according to the JD Power and Associates 2000 New Autoshopper.com Study. The primary reason people go online when shopping for a new vehicle is to find price-related information to help them negotiate with dealers.
"Although the use of the Internet for car shopping has grown exponentially, we expect the rate of growth to slow significantly over the coming years,`` says Chris Denove, a partner at JD Power and Associates. "Part of the issue is that almost all new-vehicle buyers already have access to the Internet. Therefore, to sustain growth, the industry will need to improve the content of Web sites in order to attract those fence-sitters who already have Internet access but choose to stay offline while vehicle shopping."
Kelley Blue Book (KBB.com) - an American vehicle price guide in print and online - remains the most frequently visited site for shoppers searching for vehicle information, according to the study. More than one-fourth of all new-vehicle buyers visited the KBB.com site. The fastest growth, however, came from shoppers who went beyond vehicle research and actually purchased their vehicle through on online buying service.
This year, 4.7% of all new vehicles were sold through an online buying service - up from 2.7% in 1999. Among the buying services, Autobytel.com remains the most popular and now accounts for more than 1% of all new vehicles sold in the US. The next largest online buying services in terms of new-vehicle sales are Microsoft CarPoint and CarsDirect.com, respectively.
"A very interesting finding is that the people who use online services are the ones who need them the least," Denove reveals. "Online buyers tend to be well-informed, aggressive shoppers who would be prepared to negotiate with dealers without the aid of the Internet."
The Ford Division Web site is the most frequently visited automobile manufacturer Web site in the US - more than 1.5 million vehicle buyers will log onto the Ford Web site this year before buying their vehicles.
Ford buyers, however, are not the most likely to use the Internet for shopping. That distinction belongs to Audi owners, with 81% of them turning to the Internet to assist in their car shopping. The high rate of Internet usage among Audi buyers results from its very affluent, yet relatively young buyer base.
By comparison, only 38% of Buick buyers go online. The low rate of Internet usage for Buick is because its buyers are the oldest of any manufacturer.
The study also found that Yahoo is the most popular search engine for automotive shopping, while America Online is the most frequently used Internet service provider among automotive Internet users. Being the largest provider, however, has its drawbacks.
"America Online attracts so many people who are new to the Internet that many of its clients do not engage in sophisticated Internet applications such as vehicle shopping," says Denove.
The study provides evidence that traditional offline advertising is an extremely effective way to drive traffic to a Web site. AutoTrader.com, which is currently the sixth most frequently visited Web site among new vehicle buyers, saw its hit rates soar after it launched an aggressive radio and television advertising campaign.
"This is quite a testament to the power of advertising when one considers that AutoTrader.com is designed primarily as a tool for used-vehicle shoppers," Denove comments.
The study also found a strong correlation between the likelihood of buyers going online for their vehicles and them using the Internet for other types of shopping. For example, car buyers who use their Internet access to help them shop for their vehicles are more than twice as likely to use online travel sites such as Travelocity.com.
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