Date
20 October 2017

Online car sales to gain traction — but only so much

Click on the picture of your favorite marque at an online shopping site and complete the procedures at the virtual checkout, and next day a dealer will call to inform you that the car is at your doorstep. This scenario may be a bit of exaggeration as of now in China but it is not very far-fetched, given the current trends in the marketplace.

One just has to look at online car orders placed during the “Singles Day” promotion on Nov. 11, the Chinese version of Cyber Monday, to get a picture of the changing buying habits of mainlanders.

Online transactions have been much stronger than anticipated during the shopping festival, fueling hopes that such sales will gain more traction going forward. Discounts of up to 35 percent struck a chord among prospective car buyers last month. For instance, AutoHome (ATHM.US), a one-stop web portal popular among car users, received more than 17,700 pre-orders worth 2.6 billion yuan (US$430 million) on the day, according to the Economic Weekly.

Amid these impressive figures, it’s safe to say that online car vendors have successfully made their way into the cyber marketplace. Promotion offers from various vendors and the enthusiastic market response during the latest “Double-12″ online shopping festival on Dec. 12 are further proof of the growing appetite for online deals. 

Selling cars online needs solid offline backing. A buyer can place an order online, but he will still have to get the car from a dealer and finish related procedures ranging from license to insurance.

Brick and mortar auto dealers and service centers are indispensable in the process while online channels can help trim marketing and promotion costs.

Despite all the buzz, one should bear in mind that auto is among the few segments where leading e-commerce sites Taobao and Tmall are yet to grab a big slice of the e-market. A substantial proportion is taken up by a number of professional web portals like BitAuto (BITA.US) and AutoHome.

AutoHome made a roaring debut on New York Sock Exchange on Dec. 11. 

Amid all the hype, one should not forget that e-commerce deals are always beset with uncertainties – buyers can easily cancel orders before the final payment is made, and this is especially the case with cars. BitAuto revealed that just 10 percent of its pre-orders were confirmed and referred to dealers.

And, the discount offers on auto websites may not be backed up solidly by the dealers, as the latter have the final say and can change their pricing policy at any time.

Currently only a small number of domestic automakers, such as JAC, Lifan and Geely, are trialing online sales as a supplement to their less extensive offline network. Meanwhile, the sales channel is still relatively immaterial to foreign auto giants and their allies.

– Contact the writer at [email protected] 

RC

 

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