RealTime IT News

Online Car Purchasing: To Buy or not To Buy

Two conflicting online auto buying releases have surfaced on the heels of Amazon/CarDirect.com's New York marketplace entry.

CNW Marketing Research's "Online Vehicle-Pricing Accuracy Study" found that consumers who rely on the Internet for dealer invoice and Manufacturer's Suggested Retail Price (MSRP) data are being milked for hundreds of dollars by car sites that negligently post faulty car model and option information.

At the same time, AutoTrader.com -- an Internet car classifieds company with a vested interest in steering consumers to make online car purchases -- said dealers found its site least expensive in overall cost of service and sales. The company also said the Internet increases car sales by creating visibility for dealerships. The company did not offer a comparative study of other sites.

The conflicting conclusions follow Amazon/CarDirect.com's entry into the New York marketplace and add confusion to an early online marketplace that took root only three to four years ago.

As a part of its study, CNW measured 10 third-party online automotive information providers, including AOL.com, AutoWeb.com, CarsDirect.com, CarPoint.com, CarPrices.com, ChromeData (through Yahoo), Edmunds.com, IntelliChoice.com, Kelley Blue Book (KBB.com), and Vehix.com.

According to CNW, a consumer's ideal vehicle is usually not "buildable" on some sites "even though the configuration of make, model and options is offered by the manufacturer."

The independent research firm found that the most accurate pricing and configuration information provider was ChromeData with an average error of about $24.00, down from $84.00 a year ago.

While CNW noted improvements for some of the sites, including "vast improvements" for Chrome and Kelley, it said overall inaccuracy on sites grew from $444.00 in 2000 to $630.00 this year.

"As many now-defunct automotive dot-coms discovered, online new-car pricing is tricky and difficult," said Art Spinella, president of CNW Marketing Research Inc.

"[Consumer-built cars] require precision software that reduces the likelihood of consumer errors while accurately reflecting the manufacturers' dealer-invoice and MSRP prices," he added.

While AutoTrader.com reported dealers enjoyed "a cost-effective way to advertise all of their inventory to many quality buyers," the findings posited by CNW certainly contest those findings.

"Because of the flaws ... consumers are not as trusting of online automotive data as they were just a year ago," CNW said.

"This increasing rate of skepticism and a rebirth of in-person comparison-shopping means a dealer or online site must have the most accurate information possible or suffer the potential loss of valuable customers."

As Amazon.com/CarsDirect.com enters the New York scene, the online duo will need to convince shoppers that it offers a trusted shopping service to research, price, design and order specific models with personalized amenities.