The Future of Car Buying Will Be Completely Online
This past January, I bought a car from a dealership for the first time.
I was looking forward to driving around in a new car. But I knew how much of a pain it would be to go through the process of buying it.
For weeks beforehand, I did my research online to make sure I knew exactly what I wanted. Letting a salesman pick out which cars I’d be looking at was out of the question!
My No. 1 priority for my new car was storage.
My wife and I like to do projects around the house, and we also need the space to buy animal food in bulk. (We have two dogs, a pig, a rabbit, eight ducks, four chickens, 20 quails and counting.)
The most ideal solution was a pickup truck. So, I narrowed it down to a Ford F-150, made sometime around 2013 to 2016.
I had a price range in mind so narrow that I had to have an almost defensive mindset going into the dealership.
Of course, you also have to account for all the fees they throw at you after they hook you into buying. And that’s after hours of haggling on the price.
I spent 13 hours in one day going between three dealerships trying to negotiate the best price at each one.
I finally settled around 11 p.m., two hours after the dealership closed. That was following hours of texting its salesman about pricing.
I was even texted by one of the other salesmen the next day asking if I’d like to reconsider.
It was a draining experience, just as I had feared. I can’t even imagine what it would have been like if I didn’t know what car I wanted beforehand.
Since then, I’ve learned about a new process that will make buying my next car much easier…
The Move to Online Buying
Just about everyone I’ve talked to dreads the process of buying a new car.
This is an aversion that spans across generations. 56% of millennials would rather clean their homes. 24% of Gen Xers would rather get a root canal than negotiate with a car dealer.
A survey by Autotrader revealed that over 99.5% of people would prefer some change to the current process.
One of the biggest transitions that we’re seeing right now is the move to online buying. Imagine the easy process of buying something on Amazon, except with car buying.
Of course, there would be more paperwork involved. But it’s completely different (in a good way) than how we’re familiar with buying a car.
Instead of going to a dealership, most buyers are now using the internet to narrow their options. That’s a step in the right direction.
It’s so much easier than driving to the dealership and talking to someone who lives off of making sales. Plus, you can do it on your own time.
A Much Less Stressful Experience
The Autotrader survey showed that 72% of buyers would rather do paperwork online.
It’s hard to argue that it would be a much less stressful experience from the comfort of your own home!
But the future of car buying will be completely online.
Some dealers already offer this type of service. You don’t have to spend hours at a dealership filling out paperwork.
You can go to the dealership’s website, talk to someone over text or phone and get a better price than you would in person. If you agree to buy, the entire financing process is online.
This Trend Is a Huge Revolution in Car Buying
Right now, online buying is still in its infancy stage. But companies like AutoNation Inc. (NYSE: AN) are at the heart of its growth.
It has implemented its online system into all 260 of its physical locations.
Penske Automotive Group Inc. (NYSE: PAG) has done the same thing, adding an online shopping option to its 132 stores.
This creates an option for buyers to get through the entire process from the comfort of their own home. After it’s done, an employee will personally deliver the car.
AutoNation is having early success with this method. It’s now making about 30% of its new-vehicle sales completely over the internet.
These are two of the biggest auto retail companies in the United States. So you can see that this trend is something that’s expected to be a huge revolution in car buying.
Companies like Drive Motors, Vroom and CarsDirect are completely online car dealerships. But they aren’t publicly traded yet.
At this point, this is such a budding industry that there are few investment options. And there are no exchange-traded funds for it available in the market.
But this is something I’ll be watching closely. And if any more investment opportunities come up, I will be quick to recommend them.
Editor, Rapid Profit Trader