February 4, 2020
Back to News
Are click-to-buy schemes the future of buying cars?
There was a time when buying and selling a car was simple. Customers would head down to their local car dealership, have a look at the cars on the forecourt, take one for a test drive, and (if they liked it) buy it. Easy.

Obviously, this is still an option when you’re searching for a new set of wheels, but the difference is that customers now also do lots of research online. As a result, the way cars are being bought is evolving into a very different experience than it once was.

In a world where customers have come to expect every shopping experience to be as seamless as an Amazon experience, car dealers have had to rethink their offering.

But is everyone ready to order a test drive online or have a car delivered without ever having seen it? The dealerships of the future think we are and are making their businesses online only.
 

What is a click-to-buy scheme?

Today, most people still buy a new car in the same way as their grandparents bought a car. Partly because we are creatures of habit, but also because dealerships have fought hard to ensure laws and regulations are in place to protect their businesses.

But things are changing.

Click to buy aims to make buying a car as simple as possible.

Buyers can research, select a car and complete the purchase online, without having to get off the sofa, let alone make a trip to a car dealership. They can also get a trade-in price for their old car, configure their new car, sort out finance, and pay a deposit – all from their phone, tablet or laptop.

Customers also get the assurance of competitive fixed pricing – perfect for anyone who hates the thought of haggling down the price on the forecourt.

At the forefront of this drive towards putting the dealership online were young companies such as Carvana, Shift and Vroom. These US startups, all founded in 2013, have paved the way for other virtual car dealers to enter the market. Today, car dealerships are placing the entire car buying process online and putting the power with the consumer.
A new car showroom at a dealership

How popular are click-to-buy car schemes?  

Click-to-buy car sale schemes are becoming more popular with consumers. According to research by in-market car buyers Motors.co.uk, awareness grew by 21% last year.

The survey also revealed that 30% of UK car owners would seriously consider buying their next car online. This figure is backed up by a study by vehicle retailer Peter Vardy which found that 27% of drivers would be happy to buy a car online without first taking it for a test drive.

Phil Kerry, sales and marketing director, BMW Group Financial Services said: “Digital will become more important as people will increasingly buy directly from the carmaker online.

“The same is true of finance – people will take this out online rather than at the retailer.”

Research suggests that click-to-buy car sales schemes are most popular with younger generations, with the over 55 age category preferring the traditional approach to buying a car.

However, research by Mini suggests there is still some way to go before all customers embrace shopping for a car online. According to their data, many customers still want to test drive a vehicle before they hand over their cash.
 

Benefits of click to buy

There are a number of advantages for customers looking to buy a car through a click-to-buy scheme. First up is the price.

According to analysis, virtual used-car sellers offer lower average prices than bricks-and-mortar dealerships.

The research by automotive research firm iSeeCars.com found that the average used car price among virtual sellers was £1,570 lower compared to certified pre-owned cars and £155 lower than non-certified used cars.

Of course, there is the argument that customers could negotiate a more favourable price when on the forecourt (that’s not an option when buying online). However, getting the best deal on the day does depend on the customer’s negotiation skills.

Another key benefit is that virtual car sales shortens the buying process. Research by AutoTrader shows that 42% of potential buyers don’t end up getting a car from a traditional dealership because of the nightmare process.

Another 33% said they would trade in their current car sooner if the process was more streamlined. Proof that a quick, simplified buying experience is what many consumers have come to expect when shopping for all sorts of items – cars included.
A person using a laptop at a desk

The future of buying cars

When we look back 60 years or so ago, people were only able to buy a car outright. Today, they are spoilt for choice with different options such as financing and leasing.

Subscription and finance deals have risen in popularity to such an extent that many motorists now consider the price of a car as a monthly cost, rather than a full upfront cost.

Speaking about this, Ian Plummer, commercial director at AutoTrader has said: “Our latest research shows that people are more open to buying a car online if using a finance agreement because it’s considered less risky.”

He continued: “Car financing options have boosted car buying in the last few years and they will continue to give consumers more transparency and flexibility when buying their next car for years to come.”

Many vehicle retailers have already embraced digital technology and have benefited from it. Figures already show that digitised businesses have seen the time it takes to sell a vehicle reduced from 80 days to less than 40. And the more personalised the retail experience becomes over the years through click to buy and other initiatives, the more interaction we will see between online and offline experiences.

Dealerships are not going to disappear any time soon, but they will continue to evolve, with more businesses using technology to make buying a car simpler, more intuitive and more transparent.

If you are looking for ways to safeguard your motor trade business for the future, get in touch with Insurance Choice.

We can arrange a motor trade insurance policy to suit you. With more than 20 years’ experience, find out more about bespoke motor trade insurance and get a quote today.