Dealerships Are Losing to Online Car Sales


For most people, owning an automobile isn’t really a luxury or a choice. It’s a necessity, an imperative part of making it to school, to work, and elsewhere. It’s where people seek their vehicles that can vary wildly. In recent years, though, more and more buyers have sought the convenience and ease of buying used cars online. And, as online used car sellers have made it increasingly affordable and secure to do so, consumers have flocked to digital marketplaces even more—to the detriment of local dealerships.

A recent Auto World News report confirms as much, stating that these online used car sellers are eating into traditional dealership profits—but who are these online sellers, exactly, and how are they beating dealerships?

Online Sellers are Popping Up

According to Auto World News, “four companies, Shift Technologies Inc., Beepi Inc., Vroom Inc. and Carvana LLC have been carving their way to the middle ground, trying to provide security and assurance to the buyers who choose to buy a car on the Internet.”

Indeed, the article continues, “they have been doing business with investors including Goldman Sachs Group Inc., Redpoint Ventures, and General Catalyst Partners. So far, these companies were able to attract more than $850 million in venture-capital funding from their business partners.”

A New Way to Buy Used Vehicles

The mere existence of these companies suggests that consumers are looking for a new way to buy used cars—a way that is easier, more comfortable, and more convenient than going to a traditional dealership. This is hardly a good sign for dealerships, especially since these online sales platforms seem to be succeeding. “For example, Shift Technology was able to sell 1,702 used vehicles in the San Francisco Bay Area in the first 6 months of 2016, as per California Department of Motor Vehicles report,” Auto World News affirms.

So what are traditional dealerships to do? The first step is acknowledging that there is an entire generation of buyers who may have little patience for the traditional used car lot experience. Business as usual just won’t suffice—yet there are ways for dealerships to adapt, including the use of online lead generation services.

Moreover, anything that can make the used car buying experience more convenient—or perhaps more valuable—is going to be a boon for dealerships. That doesn’t mean discounts; it means stepping up the quality of service. For many used car dealerships, that may be the only clear path forward.