Tesla Sales Gallery. (Image courtesy of Tesla)
There’s no denying the fact that the ongoing digital revolution has rewritten many aspects of our lives, and the way we purchase vehicles is certainly no exception. Now, with the rise of online car buying, customers are finding new levels of convenience, efficiency and choice right at their fingertips.
According to retail insights from the latest EY Mobility Consumer Index (MCI), which surveyed 15,000 consumers across 20 countries, online tools for pre-sale and vehicle research continue to become more popular with 87 percent of respondents saying they use online tools for information gathering about their potential purchase.
Buying a car online offers shoppers the ability to complete the car-buying process at their own pace and without the pressure or hassle of going to a physical dealership. Shopping through an app can save you time if you’re too busy to visit a dealership and is a useful alternative for those who are unable to visit in person due to accessibility reasons. Most vehicles available through these platforms can even be shipped and delivered straight to your doorstep, meaning you truly don’t even need to leave your home.
Car apps and online marketplaces also allow shoppers to expand their shopping radius and view more options than would typically be available from strictly going to a local dealer. Shopping from a larger pool can make it easier to find the car you’re looking for, which is particularly useful in the current market where supply-chain issues and a shortage of semiconductor chips continue to limit available options.
The auto dealership, meanwhile, still remains an important part of the process as the survey discovered last year, with 66 percent saying they want to physically experience the car at a dealership and 61 percent saying they want to complete the purchase there, a number that has risen steadily from 54 percent in 2021.
Sure, there has been a lot of talk lately about the death of the dealership, but reports of the establishment’s demise still seems rather premature. In fact, what we’re looking at now is a move towards a hybrid approach. Buyers want to use online tools to help narrow down their search and understand the buying landscape, but when it comes to experiencing the vehicle, sorting out paperwork and the final sale, dealerships remain the favoured option
Tesla combines direct sales with a limited number of stores and service centres.
Yet, perhaps the days of spending weekends visiting dealership after dealership looking for that dream ride may just be all but numbered. Just a few years ago in 2019, many auto experts said Tesla was making a big mistake by deciding to sell cars exclusively online, arguing that whatever bad feelings people had about dealerships, they were essential to the car business.
But that strategy, which was adopted by Tesla’s chief executive Elon Musk, actually combines direct sales with a limited number of stores and service centres, appears to be proving the naysayers wrong. This is especially true considering that the whole process of buying the EV online is painlessly easy.
Tesla, founded in 2003, has opted for a direct sales model for its business, meaning it sells its electric vehicles directly to consumers without involving third-party dealersvhips. Tesla operates its own showrooms and galleries where potential customers can see its vehicles up close, receive information, and even arrange to take test drives. Orders are then placed online through the company’s website, eliminating the need for a traditional dealership middleman.
Since the brand’s launch in Malaysia in July last year, any potential buyer can simply go online and browse available models on the carmaker’s official website. Then, it’s just a matter of clicking on the “Customer Order” button on any one of the five models that are available right now.
And if you actually manage to proceed to the part where the “Continue to Payment” button appears, then congratulations: You have successfully booked the Tesla in question… Hardly rocket science now, is it?
Tesla Model S.
Tesla’s approach, which has been copied by other young American electric carmakers like Rivian and Lucid Motors, could eventually have major ramifications for the auto industry. Most carmakers and auto dealers are earning rich profits right now because of the shortage of new cars that has pushed up prices for both new and used cars.
Still, car companies and dealers all over may have to speed up the adoption of some of the awesome changes Tesla has introduced to win over new buyers for the brand. Here’s why:
1. CUSTOMERS ARE ALWAYS LOOKING FOR CONVENIENCE:
The online car buying market is primarily driven by the increasing convenience and accessibility provided by digital platforms. Consumers can now research, compare, and purchase vehicles from their smartphones or computers, eliminating the need for physical visits to dealerships.
Comprehensive online catalogues offer detailed information on car models, complete with specifications, pricing and even customer reviews, empowering buyers with the knowledge needed to make informed decisions. This digital convenience saves time and expands the reach of car buying, allowing consumers to explore a wide range of options without geographical constraints, thus fuelling the growth of the online car market.
2. IT’S SIMPLY THE SAFER WAY TO DO THINGS:
Unsurprisingly, the recent outbreak of the coronavirus (COVID-19) pandemic has accelerated the adoption of online car buying as safety concerns have prompted a shift toward contactless transactions and interactions. Online platforms are now offering virtual showrooms, interactive 360-degree views, and video consultations with dealers, enabling customers to explore and purchase vehicles while minimizing physical contact.
These safety-driven adaptations have addressed pandemic-related concerns and also resonated with consumers seeking hassle-free and secure ways to buy cars. As safety remains a top priority, online car buying is expected to maintain its appeal beyond the pandemic era.
3. TRANSPARENCY, OPTIONS AND FINANCING TOOLS:
Of course, transparency in pricing, coupled with a vast array of vehicle options are also major drivers of the online car buying market. Buyers can easily compare prices, features, and deals across multiple platforms, ensuring they get the best value for their money.
Additionally, online car marketplaces often offer financing tools that allow customers to explore financing options, calculate monthly payments, and secure pre- approvals. These tools simplify the financial aspect of car buying and provide a seamless end-to-end experience. The combination of transparency, choice, and financing assistance enhances the overall online car buying journey, making it an attractive option for consumers.
4. FREEDOM OF CHOICE
But more than anything else, the most attractive benefit of buying cars online is the easy access to a wide variety of cars and brands. No longer is a potential car buyer limited by geographic location when setting out to buy online and therefore can look at a wider selection of cars from multiple platforms or dealerships.
This can be especially beneficial for out- of-town consumers in rural areas or for those looking for a specific make or model that may not be available at a local dealership. A quick look on popular Malaysian online car portal Carsome sees it offering over 1,000 models from over 30 car makes at any one time – with each model easily previewed virtually from wherever you are.
THE POST-PURCHASE JOURNEY
Buying a car online can alleviate some of the pressure and stress associated with doing things conventionally. According to a study conducted in January 2022 by US insurers Progressive, 78 percent of Americans who bought a car online considered it a highly satisfying experience.
Yet, despite the perceived convenience, buying a car online can still leave a potential buyer skeptical. Lack of satisfaction is another aspect of it. Test driving a car compared to browsing a few pictures online are two very different scenarios. Lack of sufficient information provided online can leave buyers less likely to purchase. When dealing with online sales, offering quality customer service and keeping customers happy can also be a challenging feat.
So, perhaps brands looking to make the shift to online sales may take another leaf out of Tesla’s SOP manual?
First of all, the brand actually has a physical service centre that’s located at Cyberjaya just next door to the Tesla Experience Centre, Cyberjaya. On top of this, it has also appointed an authorised body shop in the Klang Valley to carry out repairs on any Tesla that’s been through something like a fender-bender.
And since Tesla promotes a transparent pricing policy, potential customers can just view the price tag and options for any desired model online without the need for any negotiations with a salesperson type. This transparency goes a long way in enhancing customer trust and satisfaction towards a particular brand.
Meanwhile, its direct sales approach also allows the company to educate consumers about electric vehicles, dispel myths, and fully emphasise the benefits of sustainable transportation. This educational element is certainly more challenging to achieve within the traditional dealership structure.
Tesla’s direct sales strategy also allows it to swiftly respond to market trends, consumer preferences, and technological advancements. This agility is harder to achieve through the traditional dealership model, which often involves negotiation between automakers and dealerships.
Then, of course, by eliminating intermediaries, Tesla gains full control over the sales process, enabling a consistent and personalised customer experience. Tesla’s staff at its experience centres are also very knowledgeable about the vehicles and technology, facilitating informative interactions that can be tailored to each customer’s needs.
The direct sales model pioneered by Tesla definitely represents a bold departure from the traditional dealership model and has redefined how cars are sold and purchased. With its focus on customer experience, transparency, and technological innovation, Tesla has successfully navigated the challenges of the automotive industry’s established norms.
As the industry evolves, it will be intriguing to witness how other automakers respond to this innovative sales approach and whether it catalyses a larger shift in how vehicles are marketed and sold to consumers.
