Start-ups aim to change the way you buy a car
Car shoppers are increasingly making purchasing decisions using the web, mobile devices, and apps, leading a few Silicon Valley start-ups to believe that the U.S. retail auto market may soon have a new house.
“I would go so far as to say that Silicon Valley is becoming the new Detroit of the auto industry,” said Zach Klempf, CEO of Selly Automotive, a company that sells software that auto dealers use to manage. their inventory and organize customer information.
Klempf stated that in addition to You’re here, Google and Apple By changing the face of the cars themselves, start-ups like Beepi, Shift, and Carvana hope to deliver a better car buying experience than in person at a dealership.
Investors have invested millions in start-ups that facilitate car sales. For example, Beepi, which promises buyers the best price on cars it meticulously inspects and then delivers, has received $ 148.95 million in funding from investors such as Redpoint Ventures, Foundation Capital, Sherpa Ventures and Chinese SAIC Motor. Carvana, which allows buyers to buy online and test drive a car for seven days, has raised $ 300 million.
AConsumer trends seem to validate these investments in start-ups.
“We live in an increasingly mobile society. People have been in a hurry for a long time and want an alternative to having to spend Saturdays moving from dealership to dealership,” said the spokesperson for Beepi. , LisaBroock, in an email to CNBC.
About 46% of car buyers have used smartphones and 31% have used tablets to find and buy a car, according to a study by Cox Automotive, which released its 2016 Car Buyer’s Journey report earlier this month. this.
The three most-visited car buy research sites have remained the same since 2012, according to a September report from JD Power: Consumer reports, Edmunds.com and Kelley Blue Book.
And General Motors himself has recognized the trend of online car shopping. Earlier this month, it launched its Used Factory Collection, a service that gives buyers access to GM’s collection of used vehicles that have been withdrawn from the company’s fleets or are no longer in use. not rented.
Through this service, a buyer can go online, choose a car, apply for financing, select a dealership to work with to purchase the car, arrange payments, and have their car delivered to their door.
The process may allow consumers to avoid going to a dealership altogether, although less than 1% of buyers have purchased and received their used vehicles without seeing them in person first, according to the GM spokesperson. , Ryndee Carney.
But the web and apps won’t quite replace the car-buying experience at dealerships just yet. According to a 2015 online survey by Capgemini, people look for resellers who offer technical expertise beyond a closing sales agenda. This company surveyed 7,553 consumers who plan to buy or lease a vehicle in the next 12 months.
“I see it increasing but never overtaking the traditional dealership model, especially with newer cars,” Selly’s Klempf said in an interview with CNBC. “The OEM – the manufacturers – they are very strict on the traditional dealership model and there are a lot of lobbyists, a lot of money in that part of the business, so I don’t see it going to be replaced. I see him being innovated. ”
A majority of new vehicle buyers make their first contact by walking into a dealership, with about a quarter doing so online, according to Arianne Walker, senior director of automotive media and marketing at JD Power.