As Internet shopping becomes more popular for new-car buyers, it also could become more profitable for retailers.
A recent survey of consumers found that most shoppers don't know how much to pay in dealer markup while Web surfing. And more of them say they are prepared to pay as much as $2,000 over dealer cost than say they are willing to pay $100 or less.
The findings come from the National Automotive Consumer Study, an annual survey of auto buyers conducted by Dohring Group of Glendale, Calif. Dohring interviewed 1,287 people around the nation this month who said they intend to buy a new or used vehicle.
According to the survey, 41 percent of the respondents said they didn't know how much they would be willing to pay over dealer cost when negotiating a vehicle price over the Internet.
The survey found that 24 percent would be willing to pay between $1,000 and $2,000 over dealer cost when negotiating over the Internet. When Dohring asked consumers the same question last year, 9 percent said they would be willing to pay that much.
'What we're seeing is a large number of people who say they accept the fact that the retailer deserves to make a profit on the vehicle transaction,' says Rik Kinney, Dohring senior vice president.
By comparison, 13 percent of last year's survey respondents said they would be willing to pay $100 or less over dealer cost when negotiating the price. This year, 6 percent said they would limit the price to $100 or less above cost.
The Dohring findings suggest that consumers have growing expectations for Internet shopping. Almost two-thirds of those surveyed said they expected to obtain either a better price or a similar price on a vehicle by shopping online rather than visiting the showroom. Just 12 percent of the consumers said they expected to see higher prices online.
The Dohring survey also reported a steep jump in the number of consumers who said vehicle incentives would influence their purchasing decision.
Last year, 36 percent said incentives would put them in the market for a new vehicle when they might otherwise not buy one. This year, that percentage rose to 45 percent.
At the same time, Dohring found that 57 percent said they would choose one vehicle model with incentives over another model without incentives. Last year, the figure was 48 percent.