Online car sales are set to cost 27,000 automotive sales jobs by 2027, as new research from online review community Trustpilot and the Centre for Economics and Business (Cebr) reveals motorists looking for a new car will become increasingly likely to buy online, rather than from a dealership.
Traditional salespeople could take a back seat as tech-savvy consumers become more comfortable making purchases of new and used cars online. The new research uses consumer survey data to predict that one in five new cars will be sold on the internet by 2027.
Car dealers could see more than £41 billion revenue and 27,000 jobs disappear if they fail to adapt to the new sales environment.
Trustpilot’s UK Managing Director, James Westlake said “Competition will be stiffer than ever, as dealers will be forced to compete across both traditional and digital sales channels. The key to winning this race is not just on price, but by generating consumer trust and confidence to buy a car through their platform.”
Dealerships are being encouraged to adapt their current business model to meet changing consumer behaviors. Some manufacturers are already responding to consumers’ desire to purchase online. For example, Peugeot has created a new platform which allows customers to buy a car in just one website visit. Tesla’s new sales model cuts out the dealers altogether and sells directly to customers in their branded stores.
“With more than half of all shoppers checking online reviews before making a purchase, one effective way to boost sales is by embracing feedback. By inviting consumers to review your business you will not only help to humanise it but also boost search rankings and most importantly, generate trust,” Mr Westlake commented.
The shift to online car sales is predicted to begin slowly and accelerate as more consumers become comfortable buying online, and as the industry adapts to the new sales reality. However, the research suggests that nearly £1.5bn worth of sales will have moved online by 2020.
Christian Jaccarini, an Economist at the Centre for Economics and Business Research (Cebr) said, “As automotive retailers establish online platforms and consumer behavior adjusts, we expect to see car sales shift online, as seen in other industries. Transaction numbers may be small at present, but recent evidence suggests that businesses which fail to accommodate changes in consumer behavior will leave themselves exposed in years to come.”
The pace of change could be slower than that seen in international markets, however. Whereas just 20% of UK consumers are open to buying a car online, 60% of consumers in China and India are already open to the idea, according to research from Capgemini*. This marks a sizeable change in the industry more widely, as the mature car markets are likely to have to learn more from emerging economies in the future.
Tim Smith, Group Strategy Director for GForces, a leader in providing digital technology, marketing, and consultancy services to the automotive industry, believes online sales are an opportunity, not a threat, to the UK’s vehicle retailers.
“More of the car-buying journey takes place online than ever before,” Mr Smith explains. “And that online environment allows us to have more sustainable, productive, and engaged relationships with our clients. Ultimately, that means greater insight, allowing us to respond better to customer needs, and see improved conversion as a result.”
But, Trustpilot encourages dealers moving into an online environment to learn from other sectors which have gone before. “Inevitably with any change that requires customers to behave differently, it is important to give them reassurance and confidence to encourage trial of a new service.
Arranging one-off events to showcase new products and services, price matching, and customer reviews are highly effective tactics that drive customer preference,” Mr Westlake advises.