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Is the future of auto sales in the online realm, or are there too many variables involved in those transactions to ever see traditional methods fully give way to new technology? With the U.S. auto industry coming off a banner year, the answer might be forced to present itself sooner than later.

SHUTTERSTOCK

This year had its ups and downs for retailers. But one area that experienced more than its fair share of undeniable “ups” was the U.S. auto industry.

More cars were sold in the month of October, for example, than any other month since 2001; and with strong projections for December, the industry is on target for an all-around record sales year. While lower gas prices, extended recovery from the most recent recession and low unemployment rates have all contributed to the booming year for car dealers, technology is also playing a larger role in the banner sales year.

Just how good is business? According to Automotive News, U.S. auto sales are on pace to break the industry’s single-year record by more than 100,000 vehicles. LMC Automotive (a reporting agency for the industry) projects December sales will top 1.71 million cars and light trucks, which is 14 percent more than a year ago. That would bring the total for 2015 to 17,542,165, a 6.1 percent increase from 2014, beating the current record of 17,402,486 set in 2000. If LMC’s projection for December holds true, this would be the fifth time in six years that industry sales grew by at least 1 million units from the prior year. Automakers will have sold 68 percent more vehicles this year than in 2009.

Jessica Caldwell, Edmunds.com director of industry analysis, comments: “It’s truly remarkable that the auto industry is finishing off its best year ever just six years after the depths of the Great Recession … Low-APR offers and tumbling gas prices are making it easy for shoppers to buy or lease a new car but don’t overlook the products themselves. If you’re buying a new car today, you’re getting a safer, more fuel-efficient and more technologically packed vehicle than ever before.”

It’s true that technology seems to be at the heart of how and what consumers are buying when it comes to cars and trucks. The discovery process has seen the most fundamental shift thanks to technology. Today, thanks to sites like Kelley Blue Book, Edmunds, AutoTrader and Carfax, consumers have more access to information about their potential car purchase than ever before.

According to J.D. Power’s 2014 New Autoshopper Study, “automotive Internet users” spend nearly 14 hours shopping on the Internet prior to purchasing a car. Those who spend 12 or more hours researching online end up visiting an average of 3.3 dealers prior to buying. While shoppers who spend five to 11 hours online, visit an average of only 2.5 dealers.

“There may be a notion in the marketplace that the more auto shoppers use the Internet to determine which vehicle to buy, the fewer dealers they are inclined to shop, yet we see just the opposite,” said Arianne Walker, senior director of automotive media and marketing at J.D. Power.

But according to another study, titled “The Digital Influence: How Online Research Puts Auto Shoppers in Control,” conducted by C+R Research, the dealer visit still ranks highly as a resource for auto shoppers. While consumers can find more information than ever online, the study notes, nothing replaces the tactile experience of seeing, touching and test-driving a car, all of which helps tap into the emotional aspect of making such a significant purchase.

Online tools for researching cars have gotten easier and easier to use and more readily available from mobile and tablet devices. Today, a shopper can look up the price of a car in a dealer or private sale, as well as the trade-in value, in just a few minutes.

“Consumers used to rely heavily on the dealer visit to learn more about a particular car,” the C+R Research report states. “Now, with online sources and mobile devices placing so much information at their fingertips, consumers feel educated and confident before they ever set foot in a dealership.”

Of course, what the consumer doesn’t know when shopping online is what kind of incentives or buy-back programs manufacturers or competitor dealerships may be offering at the time. The going markups for used car sales and the dollar amount that will be offered for a trade-in vehicle is still largely at the discretion of the salesperson — and that is a major problem for consumers.

According to yet another report, this one titled “Car Buyer of the Future” and conducted by AutoTrader, only 17 out of 4,002 people surveyed said they were happy with the current car buying process. Areas identified as needing the most improvement included the test drive, deal structuring, financing paperwork and the service agreement. Many respondents liked the idea of online deal building, with over half of those in favor (56 percent) saying they’d like the ability to start the negotiation process on their own terms online. Moving the lengthy paperwork process — currently taking 61 of the 90 minutes consumers prefer to spend at the dealership — online is also a favored solution.

“While there is good work going on right now to adapt decades-old sales processes, consumers are telling us that we as an industry are not moving fast enough,” said Jared Rowe, president of AutoTrader. “By recognizing — and embracing — the need for change, we have a tremendous opportunity to surprise and delight our consumers.” While there is a clear call for more online options, dealerships are not in danger of becoming obsolete anytime soon, with 84 percent of consumers in the study indicating they still want to close the deal in person.

The benefits for dealerships that can adapt to consumer demands are clear. According to the AutoTrader report, nearly three-fourths (72 percent) of consumers say they would visit dealerships more often if the buying process were improved, while two-thirds (66 percent) of consumers say that they would be much more likely to buy from a dealership that offers their preferred experience and over half (53 percent) say they would buy a vehicle more often if the buying process were improved.

Still others would like to see the entire car buying experience go digital. Not unsurprisingly, eCommerce marketplaces are starting to respond with new auto-buying options. According to Business Standard, India-based online retailer Flipkart recently announced it would start offering auto and motorcycle sales on its platform. The online giant is starting small, offering a limited selection of vehicles through partnerships with local dealers. The move comes in response to the launch of rival Snapdeal’s Snapdeal Motors, which offers an “integrated buying experience” that, among other things, enables loan approvals within two minutes of a vehicle purchase on the site.

“There is a paradigm shift in the way people shop online today, with more and more unconventional categories, like automobiles and auto accessories, small home appliances, personal care and jewelry gaining popularity,” Anil Goteti, vice president of business at Flipkart, told Business Standard in an email response.

All eyes are on India to see if auto sales can go 100 percent online, cutting out the middleman and making buying (and paying for) a car as easy as point and click.