Tuesday - August 8, 2000

Online Direct and Influenced New Car Sales to Exceed $128 Billion

The impact of the Internet on the US automotive market will increase dramatically in the next five years, affecting sales of both new and used automobiles, according to new research from Jupiter Communications, Inc. (Nasdaq: JPTR), the worldwide authority on Internet commerce. Online-direct and online-influenced new vehicle sales are expected to exceed $128 billion in the US by 2004. However, to achieve this market, automakers, dealers, and service providers must focus on integrating the Internet into their business to create a seamless network of service and product offerings, which will drive benefits to consumers-whether they browse online or buy online.

The Internet has become an indispensable tool for vehicle research allowing consumers to become better-informed buyers, and allowing manufacturers to establish a direct relationship with consumers. A recent Jupiter Consumer Survey found that 38 percent of online consumers have conducted auto research online.

Jupiter analysts forecast that approximately eight percent of US new car sales, or 1.3 million units worth $33 billion, will be sold online in 2004, up from 17,000 vehicles in 1999. The auto research that consumer conduct online will influence an additional 22 percent of domestic new car sales in 2004, or 3.8 million vehicles worth $95 billion.

"Consumers will only purchase complex products like cars online if the Internet actually improves the current process," said Rob Leathern, an analyst with Jupiter Communications. "While there is an abundance of information on the Web to help consumers make their purchasing decision, it is still a disjointed and cumbersome process to sort through."

Growth within the online direct auto market, where consumers agree to purchase a particular vehicle via the Internet, will be linked to the Internet's ability to increase integration between manufacturers, dealers, and service providers. In fact, Jupiter analysis shows that consumers will benefit additionally from this shift toward integrating technologies in the retail distribution network in the next two to three years as auto markets use the Internet to better gauge and understand consumer demand.

Leathern advises that automotive players-from manufacturers and dealers, to financing and insurance companies- must work closely together to create a seamless car buying experience that offers consumers the efficiencies they expect in online transactions. Those companies who do not harness the Web aggressively will risk losing market share to those who do.

--

Return to August 2000 News Archive