Report Sees Internet Car Sales Revving Up

Sales of new cars over the Internet, though stalled at $2.1 billion in 1999, will accelerate to $27.3 billion in 2004, according to International Data Corp., Framingham, Mass. "Reducing the cost of any good increases the product's consumption, and there's a lot of room for the Internet to reduce the cost of car buying,'' says Jonathan Gaw, research manager with IDC's consumer e-commerce research group. The barriers, according to IDC are systematic, not technological. Manufacturers, dealers, Web sites and financing and insurance companies must find ways work together and develop good business models. "The sale," IDC warns, "will have to be as seamless as buying books online." The firm sees online referral systems falling out of favor. Instead, sites that promise up-front no-haggle pricing are increasing in popularity. Manufacturers could turn dealerships into showrooms and delivery points, while they maintain the customer relationship online, says IDC. But dealers won't roll over. "Dealers are wary of online schemes that threaten to cut them out of the process, and no system of selling new cars will work in the long run without their participation,'' Gaw adds.