I recently purchased a new vehicle and like most buyers, I hate the traditional car dealer experience with trying to negotiate a fair deal. Researching the truck I was interested in purchasing, I looked for ways to limit the outdated annoying typical car sale experience. The long negotiation and waiting game at the dealership to get a fair deal was something I really tried to see if I could avoid.
With all the things people can buy online with the click of a mouse today, my initial idea to evade the conventional car sale experience at the dealership was to see if I could factory order a new automobile through the internet. To somewhat of a surprise I discovered this is not something that is possible. People can order prescription drugs, booze, and realistically just about anything by going to the internet. Why can’t I buy a new car online?
There is a simple reason consumers can’t buy a new car online.
The car dealer business is a big one. It is estimated in the US that there are 17,726 new car dealers as of 2021, according to IBISworld.com and industry statistics. The car dealer lobbies in combination with manufacturers have a big hold on the laws created for the auto industry. Their influence and money in Washington are what maintain the inability to factory order new vehicles online.
Car dealers argue that factory ordering new automobiles online would be challenging due to people trading in their old vehicles and the need for many buyers to obtain financing help. Auto dealers say they need to be able to assess the value of customer trade-ins which requires them to be able to see a vehicle in person. Moreover, they can sit down with customers and help them obtain competitive financing.
The auto dealers also argue the importance of protecting their franchises because of the services they provide for car owners along with the jobs they provide. Car dealers claim their service departments and workers are important to their business
A lot of the claims car dealers make for preventing online factory orders for new vehicles might be true on some level. However, the real reason car dealers do not want new car sales to go online is their profits would decrease. The dealers want to avoid competition from other manufacturers and markets. Furthermore, the move to online sales would impact their ability to upsell new vehicle add-ons which can easily increase the price of buying a car by 30 percent or more.
Car dealers simply do not want people to be able to factory order their auto’s online because their antiquated practice of negotiating with buyers at their dealerships is working for them. It has enabled them to make big profits. The in-person new car buying experience requirement has frankly allowed car dealers to have the advantage in price negotiations. It has given them the platform to make the largest amount of money they can with many uninformed customers.
Used vehicles can be purchased online and new Teslas in some states.
Although directly factory ordering a new car online from Toyota, Honda, or any of the other popular car manufacturers is not possible, you might be questioning if this truly is the case. If you are reading this article, you have likely seen the advertisements from places, such as Carvana and Vroom, for ordering an automobile and having it directly delivered to your home. Yes, you can order a car from these businesses online. However, you will find their vehicles are all used or with very little mileage.
Technically a buyer could make a complete purchase online for a used vehicle from a business that has this service. It is possible to get a newer car with 500 miles or so but this is still not a factory order. This type of purchase would still be a used vehicle.
The car dealerships and the lobbies they have in Washington are fighting to protect their interests. This includes competition that might hurt their financial bottom line. For this reason, they are constantly struggling to keep any car maker from selling directly to the consumer through the internet. Tesla is the only carmaker that has been successful in getting its vehicles direct to consumers.
Although Tesla can sell their new cars directly to a buyer through an online purchase in several states, the ability to do so did not come without resistance. The company had to overcome strict franchise laws the traditional car dealers are fighting to keep in place. The car dealers only want new cars to be sold by independent dealers because selling direct to the buyer would create much more price competition. Thus, driving down car dealer franchise owner profits.
Will buyers ever be able to factory order new cars on the internet?
With just about anything imaginable being able to be purchased online today, the question of being able to factory-direct order a car in the future through the internet is one most buyers have. Are car buyers going to be able to factory order a vehicle directly from Toyota or the many other automakers at some point in the future? The answer to this question is not to look for it to happen anytime soon.
Car dealers are going to keep fighting to have the franchise laws stay in a place that protects them from being undersold directly by an automaker online. It’s hard to say when and if changes will ever be made that give a buyer the ability to purchase their new car online. However, I believe it is a good bet not to look for any true progress anytime soon.
Although it could be some time before any changes are made to the traditional car-buying experience with the need of a dealership, it is likely at some point something will have to change. The advancements in technology and the way people buy things are going to force car dealerships to come up with solutions for buyers looking to make a complete purchase online.
The in-person car dealership buying experience has already changed.
Although a factory order for a new car direct online is not possible at this time, car dealers are having to overcome the use of technology as a buyer tool to get a fair price. This is something I recently experienced with my own car buying involvement. Email and online price shopping are creating more competition than most car dealerships would like.
Studies are showing that over 50% of the time shopping for a new and used auto is now done online. A study by Cox Automotive also found that buyers who were able to negotiate and complete purchase paperwork online were more satisfied with their experience. Studies are showing a growing number of car buyers want more online involvement in their car buying experience even though car dealerships are somewhat resistant.
Even though car dealers are in many instances unwilling to negotiate online or through email, I found in my recent buying experience that some are opening up to it. I believe a growing number of car dealerships are realizing they need to be approachable in ways other than just through a buyer driving onto their lot.
There are workarounds to factory ordering a new car online when it can’t really be done that will help with the buying process.
If you are in the market for a new car and have discovered it’s not possible to go directly to an auto manufacturer to place the order yourself, it is important to know some workarounds that will make the dealership experience much more pleasant.
First, use the internet and technology to your advantage. This is something traditional car dealers are not able to put a stop to. Research the price of the car you are considering purchasing. Moreover, investigate the average discounts you might be able to expect.
Use email as a tool for soliciting a possible new car factory order. Nothing is stopping a buyer from emailing car dealership sales departments. Be specific on what you are looking to accomplish and ask for an “out the door” price quote. This should be the final price of the new car with all fees and taxes.
With my recent car buying experience, I will say car dealers are trained in playing negotiation games through email. They do know how to avoid customer rebuttals through electronic communication. You might even find some car dealers unwilling to communicate in any other way but on an actual telephone call.
Be patient in the buying process if you decide to use email as a purchasing tool for a new vehicle. Look for any additional dealer add-ons were a car dealer is trying to add to the price and do not accept everything they claim.
Using email can be a workaround of not being able to completely factory order a car yourself online. You still will need to go to a car dealer to finalize everything. But you can work out all the details much easier through email and it will enable you to likely pay a fair price for the car you want to buy.
It should seem bizarre to most people that car buyers can’t factory-direct order a new vehicle online. With all the things consumers can easily purchase on the internet today with fast delivery, new factory order automobiles are not one of them and there is a reason for this.
Although the auto industry dealerships make claims of direct online sales being a challenge due to things like financing or trade-ins, this simply isn’t a good argument. There are solutions for overcoming these obstacles online. The bottom line on why car dealers do not want buyers to have the ability to purchase factory direct online is a financial reason.
If car buyers could order directly from the manufacturers, this would create price competition and car dealer profits would decline. The car dealer industry has a real interest in protecting the franchise laws that would allow online car sales. They are focusing on this closely and their lobbies in Washington are not likely going to allow changes anytime soon.
Even though buyers can’t factory-direct order a car online without the need for a car dealership, there are workarounds for a buyer to use technology to their advantage. Doing this will likely result in a better price for a new car and less hassle when finally having to finalize a sale at the car dealership.