Date
23 October 2017
Some car dealers are not keen about selling vehicles via the web, because many online customers are price-sensitive, driving down the already thin margin. Photo: internet
Some car dealers are not keen about selling vehicles via the web, because many online customers are price-sensitive, driving down the already thin margin. Photo: internet

Less to online car sales in mainland China than meets the eye

Numerous surveys and reports have been saying mainland Chinese customers are willing to spend more on luxury items online.

Some even predict half the sales of luxury products in the mainland will be done over the internet by 2020.

Jumping on the bandwagon, major e-tailers, vehicle e-commerce sites and carmakers have been pushing hard to increase online sales.

Although many have reported strong results, some insiders told the media the numbers are grossly overstated.

“Because the car brands are very eager to grow online sales, they have given some sales targets to dealers,” one dealer said.

One would expect an online sales transaction to involve a customer going online to complete a purchase.

But in some cases, that is not happening.

Most websites cannot entice enough car shoppers to spend tens of thousands of yuan on a vehicle they have not touched or test-driven.

Other steps related to a purchase — like applying for a vehicle license, insurance and car loan — are hard to complete at one go online, and this is another reason that deters buyers.

To make their sales of cars look like online transactions and fulfill their online sales targets, car dealers may arrange for customers who have already visited the showroom and expressed keen interest on buying a car to close the deal online.

Car dealers also have doubts about the quality of online customers in general.

Online car buyers are not necessarily the kind of customers carmakers would prefer.

“They are usually more price-sensitive,” another dealer said.

The profit margin for a new car is typically in the low to middle single-digit percentages.

Online deals are even less profitable, worse if vendors have to throw in gifts like free accessories or upgrades to lure buyers to their websites.

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FL

EJ Insight writer

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