Will Car Shows be Overshadowed by Online?

Auto enthusiasts who attend the North American International Auto Show, kicking off this week in Detroit, may be part of a dying breed. Jupiter Research predicts that more than a third of all new car sales will be “Internet-generated” by 2008.

In other words, more and more people will make their buying decisions because of information they’ve turned up online, whether the actual purchase takes place online or off.

The Jan. 4-19 extravaganza has 700-plus autos on display and will be the occasion for the unveiling of more than more than 70 new models. The show attracts journalists, executives and regular folks and is, of course, a tremendous marketing tool. But more and more people are researching their auto purchases online. This suggests that the big expenditures of time and money automakers lavish on trade shows may someday become less important — or at least that online marketing and advertising will become increasingly essential adjuncts to traditional launch events.

According to Jupiter Research, which is owned by the same parent company as this publication, about 39 percent of all new car sales will be researched online by 2008.
About 19 percent of 2003’s new car buying decisions were made online, for a total of 3 million cars. (About 16 million new cars were sold in the United States in 2003, according to the National Automobile Dealers Association.)

One indication of automakers’ recognition of the increasing importance of the Net is the regularity with which new models are introduced online. Ford introduced its new F150 series with a splashy launch campaign that used ads on the front pages of all three major portals. Volvo was the first to launch a new vehicle solely with online ads, but an online prelude to a larger traditional campaign is fast becoming standard. In the latest example, Volvo is launching an online advertising campaign for its redesigned S40 sedan in conjunction with its unveiling in Detroit this week.

“The decision to buy a car is the second most expensive purchasing decision a person makes next to buying a house, so they do a lot of research first,” said Vikram Sehgal, a senior analyst with Jupiter Research.

The Jupiter report also addressed sales that were completed on the Internet. Direct online new car sales will go up from less than 100,000 in 2003 to one million in 2008, according to Jupiter. The 2003 percentage of new car purchases transacted via the Net was .6 percent, and the 2008 prediction is 5.4 percent.

According to Sehgal, the used car market is also doing well online. In 2003, Sehgal said, 7 percent of all used cars sold were Internet-generated, and this is projected to grow to 15 percent of all used cars sold in 2008.

Unlike sellers of new cars, Sehgal said, online marketers of used cars have made it easy to make an auto purchase via the Internet.

“Online markets have done a great job in providing the technological platform for the buyers and sellers of used cars to effectively transact online. If it was easier to buy a new car on the Net, more people would do it,” Sehgal said.