Why auto dealers are pleased with their online referral traffic
As consumers become more familiar with using the Internet to purchase new vehicles, auto dealers are increasingly satisfied with the online buying services providing them sales leads, says a new study from J.D. Power and Associates.
"Although only 10 years old, the concept of online buying services has made a dramatic impact on how consumers shop for vehicles, how dealers promote their vehicles and how efficient the automotive industry is in distributing its products," said Dennis Galbraith, senior director of online marketing solutions at J.D. Power and Associates. "The Internet provides matchmaking capabilities that were never available to this industry before, and more improvement is inevitable over the remainder of this decade. The future will bring even greater emphasis on matching shoppers with the right vehicle, the right dealership and the right salesperson."
The study finds that dealers are most satisfied with online buying services sponsored by auto manufacturers. However, dealer satisfaction is improving particularly with hybrid online buying services, which are non-manufacturer affiliated services that deliver both online and offline leads to dealers. While hybrid services provide fewer overall sales leads, they have the highest average sales closure rate at 28%, the study says.
Satisfaction is also on the rise for independent services such as Dealix and Autobytel that primarily focus on the sale of new vehicles. Overall, online lead generation for new vehicles continues to increase. Currently dealers receive an average of 37 leads per month—up from 36 in 2004 and 33 in 2003. Manufacturer services are providing an average of 41 leads per dealer per month—up from an average of 38 in 2004, according to J.D Power.
The study also finds that online buying services that focus on the sale of used vehicles, including AutoTrader.com, Cars.com and eBay Motors, are providing fewer leads per dealer per month than in 2004. "The study results suggest that these services are providing higher quality leads to their dealers, making it easier to sell vehicles," said Galbraith. "Online buying services will come under increased pressure from new and existing lead models on manufacturer and dealer sites. However, incremental business from online buying services generally comes at a lower cost than using traditional media, indicating a bright future for these services."
The study is based on 5,053 dealer evaluations of online buying services.
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