Online car sales: Creating a 'buzz' and new business

Several forms

Online vehicle sales have taken on several major forms.

Many automakers have opened online shops to just take orders with a small deposit, but the deal must be finalized at a real dealership.

The deposit for ordering a Geely Gleagle is 500 yuan, while a BMW is up to 10,000 yuan.

Some online operations offer group sales discounts, like what Mercedes-Benz did to sell its smart cars. They also require buyers to finish the process at a traditional dealer.

A third form is complete online selling - buying a car just like buying a T-shirt - with all the procedures finished online.

But in China or other countries, only a few automakers have made such attempts.

In 2009, US automaker General Motors cooperated with online auction company eBay to enable customers in California to bargain with dealers and pay for a new car online.

Yet even in the US where online vehicle sales emerged earlier, such moves are rare.

Normal online operations offer information on vehicle models and take orders, but the deal is closed in person at dealerships.

"Actually most US people view vehicles on the computer but still buy one at a dealer outlet," said Liu Shuang, an executive at Jing-dong, another popular online retail website in China. But other forms are beginning to emerge.

The third-party vehicle trading website Yiche.com provides comprehensive services including model comparisons, detailed consultation and dealership selection.

It sends customer needs to various dealers, helping them trace potential buyers.

Skoda invented another form. It began cooperation with Alipay - a third-party payment platform - in early 2009 to offer online services including consulting, model display and door-to-door delivery. But buyers still have to finish the deal in a real dealership.

More for advertising

Online vehicle selling are still more about marketing, rather than actual profits, said industry insiders.

Several bottlenecks must be cleared - including test drives, deliveries, after-sale services and online car loans - for truly digital deals to become common, they said.

Yang Xueliang, Geely's public relations chief said the online approach will not affect traditional dealers in the next five to 10 years. But he warned that if online sales surpass 10 percent of the total, actual dealers will have to make some changes.

Still, the potential is large in China, according to a survey by consulting agency Arthur D Little of potential customers in China, the US and Germany.

Results showed that 86 percent of Chinese respondents might be willing to buy a vehicle online, compared to 42 percent in the US and 38 percent in Germany.