With consumers unwilling to trust eCommerce channels to complete their car-buying journeys, the online auto sales industry is seeing shifts.
For instance, Bloomberg reported this week that private equity firm Thoma Bravo is looking into selling Canadian digital automotive marketplace Trader, which it acquired in 2016. The company’s valuation could be $2.9 billion or more including debt.
A study from Cox Automotive found that while 50% of car buyers completed at least some of the steps digitally in 2023, only 7% did so exclusively online. Those shares skyrocketed to 85% and 16%, respectively, for new electric vehicle buyers.
Online car sales companies often struggle to reach profitability, leading to an ongoing shake-up in the space. Plus, with eCommerce giants like Amazon entering the space, it is only getting harder to compete. Yet adoption of omnichannel car-buying journeys continues to grow.
“We continue to see ongoing adoption of our omnichannel retail experience,” CarMax CEO and President Bill Nash told analysts on the company’s first-quarter fiscal 2025 earnings call June 21. “Approximately 57% of retail unit sales were omni sales this quarter, up from 54% in the prior year.”
He added that eCommerce transactions made up only 14% of the company’s retail unit sales.
Even younger consumers still seek the high-touch experience of on-site buying for as major a purchase as a vehicle.
“We recently did a study, and the majority of younger people actually want to complete their purchase of a vehicle in person at the dealership, which was a bit of a surprise for us,” Rebecca Lindland, senior director of industry data and insights at Cars.com, told PYMNTS in an interview last month. “But we think that part of it is that you still want that chance to touch and feel and test drive your vehicle. … Younger consumers in particular still want to have that experience of going into the dealership, looking the person in the eye — that feeling of authenticity.”
Omnichannel adoption in the automotive industry outpaces other retail categories.
The PYMNTS Intelligence “2024 Global Digital Shopping Index: U.S. Edition,” created in collaboration with Visa Acceptance Solutions, revealed that across retail, only 1 in 5 consumers prefer to shop in stores with the assistance of digital technologies.
Data from the February/March installment of the PYMNTS Intelligence “New Reality Check: The Paycheck-to-Paycheck Report” revealed that for many consumers, car costs are a key concern. The study’s survey of more than 4,200 U.S. consumers found that 27% said vehicle-related expenses had a high or very high impact on their budget in the last year.
Plus, the April edition of the report “Why 60 Percent of Gen Z’s Live Paycheck to Paycheck” revealed that 11% of Generation Z individuals cited buying a car as their top financial goal.
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