Ecommerce has fundamentally changed every single major retailing market with one exception: automotive.
Not much has changed in the retail automotive space for nearly 121 years since the first car dealership opened near Cleveland in 1898. But ecommerce is set to change automotive retailing in a big way, just as it’s changed the way consumers shop for everything else.
That process is already underway, and beginning to dramatically alter how manufacturers, dealers, digital car sellers and others sell new and used cars to customers, according to data and analysis in the newly released 2019 Automotive Ecommerce Report from Digital Commerce 360.
Automotive ecommerce is already a sizable market that will generate estimated online sales of $14.6 billion in 2018, according to the report. But that still represents only about 1% of U.S. vehicle sales, which totaled about $1.1 trillion last year, according to the U.S. Department of Commerce.
Growth trends, however, make clear why automotive executives must pay close attention to developments in ecommerce. Just looking at used car sales, for example, the 2019 Automotive Ecommerce Report shows that the compound annual growth of digital sales was 7.61% from 2015-19 versus 1.73% for total sales. And this trend to buying vehicles on websites is just getting started. As soon as 2035, consumers may purchase as many as 1.3 million vehicles annually online, says research firm Frost & Sullivan.
As ecommerce grows, there will be big changes in how vehicles are bought and sold.
Today, there are 41 major car makers selling cars, trucks and sport utility vehicles in the U.S. and they sell mainly through about 17,000 dealerships, according to the National Dealers Automotive Association. Most automotive manufacturers and dealers use their websites as a marketing and sales generation channel to drive car shoppers to the showroom floor where the buyer completes the purchase.
But these days, consumers want more ecommerce options. In fact 49% of consumers already are willing to purchase a new vehicle entirely online, according to the Digital Commerce 360 Online Vehicle Shopper 2019 Survey of 1,089 consumers.
Some automotive manufacturers are responding to this consumer interest. Companies such as Tesla Inc., Rivian Automotive Llc, Porsche North America and Lynk & Co. now sell vehicles directly online to the public.
Dealers, too, are investing in ecommerce. The Findlay Automotive Group in Las Vegas, for example, has rolled out a complete digital car buying programs for customers that don’t want to come down to the car lot to make a purchase.
There also are a growing number of digital sellers such as Carvana Inc., Vroom, Shift Technologies Inc., eBay Motors catering to online vehicle buyers, and putting pressure on manufacturers and dealers that are slow to adapt.
Carvana, an online vehicle seller since 2013, sold just over 94,000 used vehicles online in 2018, the company says. It picked up the pace significantly in the first nine months of 2019, closing deals on 128,179 vehicles.
Within the next several years, Carvana expects to be selling at least 200,000 cars annually online. “Online automotive retailing is still a small percentage of total used car sales, which means there is incredible potential for growth,” says Carvana co-founder and chief brand officer Ryan Keeton.
This is just a small sample of the detailed data and analysis in the 2019 Automotive Ecommerce Report, which includes the following exclusive research:
The 2019 Automotive Ecommerce Report is available as a downloadable PDF for $299. It’s also included in our Gold and Platinum Memberships, which provide access to all Digital Commerce 360 research reports and certain online retailer databases.