For years now there have been forecasts about how the Internet would revolutionize auto sales, now auto industry leaders say dealerships are within a year or two of being able to complete an entire vehicle transaction online. That includes pitching finance and insurance products and getting electronic signatures on key documents.
Automakers and dealers are investing in technology enabling consumers to conduct most -- and in the future, all -- of a vehicle purchase online. The dealers who are lagging behind will have to catch up or face a fate similar to that of independent bookstores in the wake of Amazon, industry experts say.
But they add that catching up will be possible. "You'll have the pioneers who'll go out there and draft the technology," said David Kain, president of Kain Automotive in Lexington, Ky. "What has historically happened is the smaller dealers and the midsize dealers are able to catch up."
Kain Automotive provides digital marketing, sales training and consulting to dealers. Kain estimated that 10 to 20 percent of dealers have software that enables them to do a car transaction electronically up to delivery, at which point some state laws require certain documents have a wet signature.
Not everyone agrees this is the future. Some dealers say completing a car transaction online is years away because valuing a trade-in, arranging financing and complying with regulations make it too complex. Others warn that online deals open the door to cybercrime.
There is also worry that F&I profits would decline without a face-to-face pitch. "But the studies we've seen show that consumers will actually buy more F&I products using iPads in a dealership on their own than a finance manager can sell them," Kain said.
Online sales is one approach among many to selling cars, reflecting customers' varied preferences. Indeed, surveys show consumers are mixed in their views of online sales.
DealerSocket's 2016 Dealership Action Report found two-thirds of franchised dealers believe consumers would like to complete the entire buying process online, but only one-third of consumers who were surveyed said they'd want to do so.
Still, some automakers and their captive finance arms are developing digital sales technologies.