The automotive manufacturing industry has a long history of maverick companies and CEOs that rise up and challenge the status quo.
A prime example is Henry Ford, the automotive pioneer who gave the car industry the Model T, mass production and the assembly line.
Today, the maverick out to change the way auto makers produce and sell cars—and how consumers research and buy them online—is Elon Musk, founder of Tesla Inc. The manufacturer of electric cars is challenging convention by bypassing dealers in favor of a direct-to-consumer strategy that lets consumers research and purchase a vehicle entirely over the web.
Tesla, which began building cars and selling them online to consumers in 2012, produced and delivered 245,506 electric cars last year. The manufacturer is on track to boost production and vehicle delivery by as much as 63% to between 360,000 and 400,000 vehicles in 2019.
Tesla doesn’t build conventional cars powered by gasoline. Instead it builds electric car that have advanced features such as big touch screens with web connectivity on the center console, and the ability to self-park and self-drive. Tesla also cut out the middleman by developing a direct-to-consumer sales model that lets customers build, finance, purchase and arrange for delivery for their vehicle entirely online.
“Tesla is the only auto maker to sell new cars directly to consumers online without the involvement of a physical dealer,” says Morgan Stanley analyst Adam Jonas. “It’s just so easy to buy a Tesla through the company’s website—it’s three clicks, and that’s about as many clicks as it takes to buy catnip on Amazon.”
So far, Tesla’s sales amount to only a tiny fraction of U.S. auto sales. Vehicle manufacturers sold about 17.52 million new cars, trucks and sport utility vehicles in the U.S. in 2018, according to Moody’s Analytics. That means that the nearly 246,000 cars Tesla sold to consumers online amounted to only about 1.4% of all new U.S. vehicle sales.
Today, with the exception of Tesla and some new initiatives from Porsche Cars North America Inc. and the soon-to-launch electronic truck maker Rivian, manufacturers that sell vehicles in the U.S do so through dealerships.
Nonetheless, there are increasing signs that more car makers are looking at ways to sell cars, trucks and SUVs directly online to consumers, according to data and analysis in the newly published 2019 Automotive Ecommerce Report from Digital Commerce 360.
Porsche is one auto manufacturer moving in this direction. Beginning sometime in 2020 at 25 yet-to-be-named U.S. dealers, Porsche North America plans to roll out a pilot program that will give customers the option of purchasing a new or used Porsche mostly online.
The aim is to help Porsche reduce its inventory of vehicles on dealer lots. The new digital buying program features new and pre-owned vehicles that are in a participating dealership’s inventory, and covers all aspects of buying, financing or leasing a selected vehicle. That include payments and trade-in calculators, credit approval, and financing and insurance options through Porsche Financial Services.
Customers can upload photos of their personal documents for identification verification and car pictures for trade-in valuation. That will allow the dealer to prepare the necessary paperwork for signing when the customer arrives, Porsche says.
“Physical and digital retail experiences have to work hand in hand, yet stay typically Porsche, so offering our customers an enhanced digital option for acquiring a Porsche makes this experience even more accessible and more convenient,” says Detlev von Platen, member of the executive board for sales and marketing at Porsche AG.
Porsche, which sold about 57,000 new cars in the U.S. in 2018, may eventually roll out the digital vehicle purchase program to all of its 191 U.S. dealers. “A wider national rollout is possible, depending on the results of the pilot,” the company says.
The U.S. market is part of a broader global push by Porsche to sell more cars online. Porsche has more than 650 dealers worldwide and beginning in 2020 will offer digital car-buying options for its European customers.
Customers can reserve a Porsche and choose between cash purchase and leasing. If a Porsche buyer would like to trade in a car, she can provide initial information and use her existing payment method connected to her Porsche ID to pay for the vehicle reservation, Porsche says.
“Today, customers move between the digital world and physical retail as a matter of course,” von Platen says. “Our new digital marketplace meets this need and therefore makes the experience of purchasing a vehicle even easier and more convenient.”
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.Favorite