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Cost of Buying Vehicles On-Line Rising

2 November 1999

CNW Study Shows: Cost of Buying Vehicles On-Line Rising; Use of Internet Doesn't Shake Reliance on Auto Dealerships

    BANDON, Ore., Nov. 1 -- Only 18 percent of Internet new-car
shoppers are aware that vehicles purchased through on-line buying services
such as AutobyTel or Michael Dell's CarsDirect actually come from an
automobile dealer and not the factory. In addition, the cost of buying on-line
is rising versus using the conventional method of visiting a dealership.
    According to a national Internet study of new-vehicle buyers conducted by
CNW Marketing/Research of Bandon, Oregon, better than 70 percent of
web-surfing new-car shoppers think on-line services order vehicles directly
from an automaker and have it shipped to a dealership for subsequent delivery
to the customer. Actually, all vehicles sold over the Internet are purchased
from a dealership either by the customer or the on-line dot-com seller.
    In CNW M/R's study, those who used buying services such as AutobyTel
actually paid about 6.5 percent more for a vehicle during the first nine
months of this year than if they had used conventional means. In 1998 the
differences was slightly less than 5 percent. In 1997, the difference was
negligible.
    Consumers who used the Internet to research car prices and features before
visiting a dealership paid nearly 4 percent less than the typical conventional
customer during 1998. In the first nine months of this year, however, the
difference was less than 3 percent.
    "While the Internet is an important tool for collecting data on a
new-vehicle purchase, the most effective way of getting the lowest possible
price remains negotiating," says Art Spinella, vice president and general
manager of CNW M/R.