Pros and cons of buying a car online
Selling cars online isn’t actually a pandemic pivot move. Far from it. It really began at the start of the 21st century when the commercial version of the World Wide Web became widely available. eBay opened its online automotive marketplace in 2000 and was one of the first companies to get in on it. They went on to sell 2 million vehicles by 2006.
The Philippines tops internet usage worldwide (for the sixth straight year) and has 73% internet penetration. It would make sense for us to be one of the first countries to make online auto purchasing a standard service, but alas, such is not the case.
When auto dealerships closed at the height of the pandemic, instead of creating a portal where customers can actually buy cars, automotive marques opened up a window-shopping experience where their vehicles are viewed and perused from every angle and inside out. Unfortunately its a bit more complicated than just adding to cart and checking out.
Can you buy a vehicle online in the Philippines?
The straight and short answer: Yes, it is possible. But the caveat is you have to know where to look and who to buy from.
Some dealerships have tweaked their Facebook pages for auto e-commerce. A contact of ours says that one of the biggest reasons dealerships are hesitant to make the full digital leap is fraud prevention for financing. That includes bank-initiated training for approving officers to spot forged signatures. There are more, but our source is unwilling to provide additional information as it will compromise security protocols that are in place.
What are auto brands saying?
According to Elvin Luciano (PR and Communications Manager) of Toyota Motor Philippines, “the capability to directly make a car purchase online is in our roadmap”, but when I asked about a timeline, he only said “soon."
Suzuki PH has seen a 16% uptick in sales from 2019 to 2020, while Verna Hiyao, of Honda PH (Dealer Operations), tells me that 20% of all their reservations now come from their Virtual@Honda page.
Nissan saw impressive gains with close to 400% growth from online traffic coming from the ‘Request a Quote’ page on their website. This “proves that digital transactions in the auto industry are on the rise,” said Dax Avenido, Head of Communications and Assistant General Manager of Nissan Philippines.
But if automakers made it possible to buy a vehicle in just a few clicks, will you do it? If you’re still on the fence about this, let me break down the advantages and the cons of going for this high-value online transaction.
Pro: It will be a time saver
Since potential customers do not have to drive down to the dealership or dealerships, they save time and money (fuel, parking). If you haven’t been writing or filling up forms recently, your hand will thank you for saving it from cramps or carpal tunnel syndrome.
Pro: Zero pressure
We have all felt the full-court press of car salespeople. It’s subtle but very palpable. It is not entirely on them too. We feel slightly obliged because they’ve spent a good part of three hours explaining every nut and bolt of the vehicle. You won’t have to deal with any of that online.
Pro: Any time, any place
Websites don’t have operating hours because they’re open 24/7. You can check out the make and model you want any time of the day, even in your birthday suit. And you can watch our video reviews and walkarounds of the cars too on our YouTube channel or Facebook page.
Pro: Delivery right to your doorstep
Like Lazada or Shopee, the key to any online shopping experience is quick delivery. That means any automobile you buy online has to be delivered to your preferred destination. So kick your feet up, relax, and wait for the beep, beep to signal that your new whip is already there. They'll probably also make a pick-up available if you so choose, but that's another topic entirely.
Con: No touchy-feely
A big part of the auto-buying process is taking the vehicle in through (almost) all of your senses. Seeing the gorgeous design, feeling of the sheet metal, smelling the brand-new cabin, and hearing the engine rumble. You’re getting none of that from the screen of your phone.
Con: No 'tawad’
Haggling isn’t a uniquely Filipino practice, but we are the ones who perfected it to an art form. Without any salesperson or manager to negotiate with, say goodbye to getting extra freebies or discounts beyond free tint and floor mats that you could have expertly bargained for.
Con: Financing requires paper
Not only will financing be limited, but they also may not be available entirely online. Some financial institutions don't operate openly online yet. And given the pandemic, they've become more stringent with applications for auto loans. Many of them still operate on physical documents, or they simply don’t have an online outlet for these kinds of services, especially when it comes to signatures or post-dated cheques.
Con: No trade-in option
If you have an old vehicle you want to dispose of, a purely online transaction will make that difficult. Dealerships will need to assess your old jalopy before they can put a price on it (that will go towards the vehicle you’re buying). You can arrange to bring your car in, but that means stepping out of the virtual dealership and into a real one.
Con: Not many test drive options
This will be a dealbreaker for many. It's important for auto buyers to get a feel of the vehicle before even listing it down for consideration. And unlike other online shopping options, you can't exactly just initiate a return/refund on a car if you didn't like it after buying. There are brands that offer a test drive delivery where they bring it to you so you can try the car, but only a select few do that.
What does the market want?
A study shows that 56% of millennials, the largest auto-buying demographic, do not like facing sales execs because of the stressful scenarios during the sales pitch and negotiations. Plus, as we all know, the youth want to make their purchases directly from their mobile device.
CDK Global released the results of their recent survey. It showed that 83% of respondents think “online buying technology would help them narrow down their vehicle choice and determine what is affordable”. 60%, on the other hand, were more comfortable beginning the purchasing process on the dealer’s official website than in other third-party sites.
But, consulting firm Deloitte said 75% of customers still prefer to see the vehicle in person before buying, and for 64%, it is imperative to go through the test drive process.
Is our market ready to buy cars online? It is unclear at best. Yes, we are one of the top internet users globally, and last year local e-commerce contributed Php 599 billion to the GDP. But are we ready to spend our top peso on an automobile we have not seen (in the sheet metal) or even touched?
Sure, we now buy shoes we have not fitted yet, but can you say the same about your next car?