The car trade of the future relies on digitalization

Increasing digitization is also changing customer expectations and consumer behavior in the car trade. In the past, many people only used the Internet to find out about different car models. Meanwhile however ever more user settle even cost-intensive investments like the acquisition of a used car on-line. Such developments lead to profound upheavals in the industry, from which customers ultimately benefit.

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Table of Contents

1. How does the classic car trade work?

The car trade in Germany?

In previous decades, car sales were almost exclusively carried out via licensed cooperation partners in the form of car dealerships. Even today, car dealers are an important representative for the manufacturers. Strictly speaking, there is a mutual dependence. Ultimately, car manufacturers depend on dealers to achieve good sales figures. Car dealers focus on the sale of vehicles on the one hand and on services on the other hand.

The majority of car dealerships only work with one manufacturer, which means that only the models of a certain brand are available to you there. However, as a result of mergers between different dealers, there are also larger car dealership chains that sometimes offer cars from several brands. At a used car dealer, on the other hand, you can usually find models from different car brands.

More and more car dealerships are closing: Whereas in the year 2000, around 18.000 independent car dealers existed in Germany in 2018, there were no longer even 7.000 car dealerships. This can be explained mainly by the fact that the financial cost of this type of sales is very high. Not only are costs incurred for showroom space, but employees and logistics also have to be paid for. In addition, the declining number of potential buyers due to demographic change, alternative offers such as car sharing and growing competition from direct suppliers and Internet portals are causing sales figures at car dealerships to fall.

2. What is the process of buying a traditional car dealership??

Buying a car from a dealer is divided into several steps. Whether you choose a new or used car has no significant impact on the process. First you make an appointment with the car dealer to inspect the vehicle. If possible, insist on a test drive. If you decide to buy the car, the next step is price negotiation. The purchase contract is then signed.

3. Discounts in the car trade

Almost every car seller has special promotions and discounts from which customers can benefit. Depending on the new car model, some offers are more than 25 percent below the list price. Car dealers usually offer particularly high discounts,

  • if you decide to buy cars in the low or medium price segment, or choose a model with low sales.
  • if you do not configure the equipment individually and your choice falls on a car already in stock with the manufacturer.
  • if you pay for the car in cash.
  • when you trade in your end-of-life vehicle to the dealer.

4. What advantages does the stationary car trade offer from the customer’s point of view??

Many car dealerships are family businesses that have been on the market for a long time. At such dealers you will usually always find a professional contact person, who takes enough time for the customers. Since car sellers usually focus on a single brand, they also have Expert knowledge about the corresponding manufacturer and the specifics of the different models. Furthermore, users here often benefit from additional services such as free or at least discounted repairs and maintenance.

5. What are the disadvantages in the classic car trade?

Traditional car dealers score points with their expertise and extensive service. From the customer’s point of view, however, there are some disadvantages. A first point is the selection of vehicle models, which is not too extensive due to specialization in a particular brand. Another disadvantage is the limited opening hours. On the Internet, on the other hand, users can obtain information about specific car models around the clock.

Another disadvantage is the high cost of the stationary distribution system. These have an influence on the selling price of the vehicles. In the classic car trade, distribution alone accounts for around 30 percent of the price.

6. The alternative: buying a car via an online platform

In addition to the purchase through a car dealer, there is another way to buy a car with online platforms. Platforms organize the Car dealerships across brands, which is realized through a large network of partners and brand dealers. This applies to suppliers of both new and used cars. In most cases, the portal acts only as an intermediary, so that you conclude the purchase contract with the dealer.

According to various studies, around 30 to 50 percent of all new cars in Europe are likely to be sold over the Internet by 2025. In addition, it can be assumed that new players will appear on the market with innovative offers such as a car flat rate.

7. What are the advantages of online car sales?

  • the online car trade allows a better comparability of the available offers, as a result of which your time spent searching for a new car will be shorter.
  • In the online car trade, the sales price for new and used cars is on average lower than the offers of stationary car dealers.
  • The online search offers a much larger selection of different models and vehicles.
  • Internet platforms for buying cars are available to users around the clock and not only during fixed opening hours.
  • Buying a car online is extremely convenient. Since you only need Internet access, it is not even necessary to leave your own four walls.

8. Legal issues relating to the car trade

Question Explanation
When does a car purchase come about? In the classic car trade, the legally valid purchase of a vehicle is usually sealed by a written sales contract. In the online car trade, on the other hand, the contract is sometimes concluded via e-mail. Similarly, it is common for the actual purchase to take place offline, for example, the car dealer sends the customer a sales contract.
What are the obligations of car sellers and buyers?? The main obligation for the seller is to hand over the car, and the handing over of the car key is sufficient. In addition, he is also obliged to give you the vehicle title and registration document, as well as the service booklet and existing warranty documents. The buyer, on the other hand, has to pay the established price and take care of the acceptance of the car and its re-registration.
Is the seller liable for material defects?? In principle, the statutory liability period for material defects is two years. It doesn’t matter whether you buy the vehicle on the Internet or at a car dealership. However, private sellers are allowed to exclude warranties. In the case of a used car, legislation allows commercial dealers to reduce the warranty period to one year.
  • Question: When does a car purchase come about?
  • Explanation: In the classic car trade, the legally valid purchase of a vehicle is usually sealed by a written purchase contract. In the online car trade, on the other hand, the contract is sometimes concluded via e-mail. It is also common for the actual purchase to take place offline, e.g. the car dealer sends the customer a purchase contract.
  • Question: What obligations exist for car sellers and buyers?
  • Explanation: The essential obligation for the seller is to hand over the vehicle, whereby handing over the car key is sufficient. In addition, he is also obliged to give you the vehicle title and registration document, as well as the service booklet and existing warranty documents. The buyer, on the other hand, has to pay the fixed price and ensure acceptance of the car and its re-registration.
  • Question: Is the seller liable for material defects?
  • Explanation: In principle, the statutory liability period for material defects is two years. It does not matter whether you buy the vehicle on the Internet or at a car dealership. However, private sellers are allowed to exclude warranties. In the case of a used car, the law allows commercial dealers to reduce the warranty period to one year.

9. Online presence in the car trade is becoming increasingly important

The average user no longer relies solely on traditional car dealers as a source of information. Instead, the prospective buyer gathers information from a variety of sources before deciding on a particular vehicle. The first point of contact is usually the Internet, where there are numerous customer opinions and ratings for each car model. As a result, the first point of contact with the brand now usually takes place online as well.

10. Car sellers need a digital strategy

Nowadays, contact points with potential customers are primarily on the Internet. This new situation necessitates a Adaptation of car dealers’ business models. Thus, there is a need to answer digital inquiries without long waiting times and, on the other hand, to advise potential customers online.

It is still far too often the case that e-mail inquiries are not answered even after 24 hours. Consequently, a fusion between the digital sphere and the real world can only be achieved with appropriately trained personnel. This is often – but not always – already available.

11. First manufacturers launch direct sales via the Internet

Meanwhile, the first automakers are already offering online direct sales. This allows you to order vehicles directly from the manufacturer. In most cases, the selection of models on offer is still relatively manageable. In the past, on the other hand, there was often only the option of configuring the car according to one’s own ideas. For a binding purchase, on the other hand, it was necessary to visit an authorized dealer.

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Depending on the car brand, the direct purchase also includes financing, payment and sometimes even the trade-in of your old car. Nevertheless, manufacturers continue to cooperate with authorized dealers. However, the latter are increasingly assuming the role of sales partner.

12. Digitization poses challenges for traditional car dealerships

The digital transformation is forcing manufacturers and car dealers to adapt their distribution systems to the new conditions. First changes are already visible. For example, more and more vehicle manufacturers are increasingly relying on so-called “online car dealers” Showrooms in city centers instead of oversized “glass palaces” on the outskirts of the city.

In addition, in order to compete against digital platforms and not lose market share, it is necessary for manufacturers and their authorized dealers to work much more closely together. One example is the mutual provision of information about the customer in order to get to know him even better. Only on this basis, for example, is there any possibility at all, Personal support strategies to design.

Despite increasing digitalization, stationary car sales will continue to be important in the future. Due to the many innovative technologies, the average user often needs professional advice from an expert before making a purchase decision. This is especially true for luxury class models, where there are a large number of different equipment options available.

13. Conclusion: Online car sales offer many advantages

Whether it’s better to buy a new car from a brick-and-mortar dealership or an online car dealer depends primarily on your personal preferences. Car dealerships continue to score points with their personalized service. When it comes to prices, the selection of vehicles and the convenience of ordering, on the other hand, online dealers have the edge.

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