The retail auto market is evolving again, due in part to the proliferation of Internet shopping sites such as TrueCar.com, Edmunds.com and shopautoweek.com. The last of those is part of Autoweek, a sister publication of Automotive News. Some dealers and manufacturers seem to fear such sites as a coming apocalypse. But like other retail developments, such as publicly owned dealership groups and multifranchise dealership malls, Internet shopping will change the way vehicles are sold and bought without destroying the system.
Though there are several successful Internet shopping sites, TrueCar, which boasts 5,800 dealer partners, typifies the medium. TrueCar lately has been a target of criticism among auto retailers who say the rising influence of Internet shopping sites drives down transaction prices for new vehicles.
Other retailers point to different factors.
For example, Group 1 Automotive last week dropped out of TrueCar.com, citing concerns over the security of data plumbed from dealers' computer systems by the fast-growing online lead generator. Group 1 cited consumer privacy risks created when TrueCar and other vendors gain access to data contained in dealer management system software. TrueCar requires access to verify sales resulting from leads it provides.
Some manufacturers also are wary of Internet shopping sites, fearing that dealerships that advertise and offer prices below invoice will diminish brand equity. For example, Honda, which considers Internet shopping sites as tantamount to advertising, has cautioned dealers that they risk losing local marketing dollars if they advertise prices below invoice on such sites.
To some, a war between good and evil is inevitable. But Internet shopping sites likely will prove to be just the latest way that consumers can get more information before purchasing a vehicle and an easy way for dealerships to attract customers.
Internet shopping sites exist only because they provide value to consumers. Automakers and dealers also need to find ways to serve the customer in our Internet age.