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.

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