The growing clout of automotive online buying services

Online buying services are influencing more vehicle sales than ever, dealers are receiving more leads than ever, and dealer satisfaction with lead quality has increased since 2003, according to a new study from J.D. Power and Associates.

Dealers receiving leads from manufacturers are receiving more new and used-vehicle leads per dealer than was the case in 2003, the research firm says. Manufacturer services, such as GM BuyPower and FordDirect, now provide 38 new-vehicle leads per month per dealer per service, compared to just 31 in 2003—an increase of 23%. As they did in 2003, dealers are experiencing average closing ratios of 18% from these new-vehicle leads, according to the study.

Online services that focus primarily on the sale of used vehicles, such as AutoTrader.com, Cars.com and eBaymotors, are providing 29 used-vehicle leads per month per dealer per service — up from just 20 leads per month in 2003. Dealers are experiencing the same average close ratios they did in 2003 from these used-vehicle leads.

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"We have continued to see increases in the number of leads provided to dealers from online buying services," says Dennis Galbraith, senior director of research at J.D. Power and Associates. "Our studies clearly show that more buyers are getting to the dealer they purchase from through online leads."

Dealer satisfaction with lead quality from both manufacturer and independent services has also increased. The greatest improvement in satisfaction with lead quality is with leads from manufacturer services and services focused primarily on the sale of used vehicles.

"Progress must continue to be made by online buying services," says Galbraith. "When dealers get a taste of something that helps them connect with vehicle shoppers, desires and expectations rise rapidly. They want more vehicle sales from online leads and they want it to be easier than it was the year before. This is an industry that is increasingly living up to those high demands."

The study is based on 3,791 dealer evaluations of the online buying services they use.