This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
2/15/2005
New Car Market Emerging
In the article New-car buyers flocking to the Internet, it states that America’s new love affair isn’t with the SUV or even the arrival of hybrid gas-electric vehicles, but it’s with the Internet. The Internet is now crossing the last frontier in the new car buying process – online negation and purchase. Jupiter Research reported last month that Internet generated sales leads and requests for price quotes will account for 22 percent of new car sales this year, up from 15 percent in 2002. So what is fueling this trend? In part, it’s a result of our busy lives. On the Internet, shoppers can cover several, even dozens of dealerships in just minutes, compared to spending days driving form one lot to another. So do you think as this new market emerges and more computer-literate consumers reach the age of buying cars, that it will put the concrete dealerships out of business?
Subscribe to:
Post Comments (Atom)
2 comments:
I don't know if the internet will put bricks-and-mortar dealerships out of business.
I do know that part of what a dealership - or any other retail establishment - tries to do is close the deal while you are on site. The reason is transaction costs. You lose a little of your consumer surplus for every additional place you have to shop at. The dealership is thinking that if they can make it easy for you to avoid that loss completely, then they may be able to charge you a bit higher price (and capture some of that surplus for themselves).
The upshot of this is that the effect of the internet on dealerships is going to depend on how dependent they are on those profits that are driven by transactions costs. But ... I don't know the magnitude of those, or their importance.
I for one have actually found a car on the internet. Then drove to the dealer and bought it. I agree with Dr. Tufte. The internet in no way will ever put a concrete parking lot full of cars out of business. But it definately has changed the way you find a car to buy. Who knows I could be wrong. Maybe the internet will put brick-and-mortar dealerships out of business some day.
Post a Comment