Internet sales, home deliveries and no haggling are “inevitable”, says Tony Whitehorn
10 February 2016

The way cars are bought and sold is on the cusp of a dramatic change, according to Hyundai UK boss Tony Whitehorn.

Predicting the rise of internet sales, home deliveries, more, better-targeted finance options and the end of haggling, Whitehorn said the established methods of car purchasing and selling “had to change” and that “buying a car from your living room must become a reality because it is what customers want”.

However, Whitehorn stopped short of predicting the end of the traditional dealership. He said “they will always be our shop front and the venues that represent our image and standards to the public” and predicted that “a large number of buyers will always want interaction with a human being and the reassurance of having a physical place to go is something goes wrong”.

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However, Whitehorn said the growth of internet sales and marketing was inevitable, based on the evidence of the Hyundai Rockar dealerships in Bluewater and Westfield shopping centres. These dealerships sit alongside traditional shops and offer test drives and servicing but also allow the customer to order their car online with a no-haggle policy.

“Rockar is teaching us so much about how customers shop on the internet - and from the trends, we can see and understand the big changes that are coming,” said Whitehorn.

Whitehorn revealed the Bluewater dealership sold more than 700 cars last year, with the average age of a customer being 39, compared with an industry average of 51. He also revealed that 56% of buyers were female, again far higher than the industry average. Of those who placed an order over the internet, 51% bought their car between 7pm and 10pm.

“Those figures are transformational,” said Whitehorn. “We are on a journey, but what it tells us is that we are opening up new ways of selling cars, and as an industry, no matter how strong the allure of sticking to old, successful principles, we can’t resist that.”

While Rockar stores are allowed to discount stock, they do not offer the opportunity to haggle. In addition, staff are paid a flat salary rather than being incentivised to make sales.

“Again, these things are the start of a wider trend,” said Whitehorn. “If someone is paid to help rather than sell, the customer experience is that much better. Transparent pricing goes hand in hand with that. Internet sales will only work if we have one price and stick to it, and while that may take years to achieve, it is inevitable if we want a sustainable business.”

Whitehorn also predicted the rise of concierge buying services, where customers buy a car and have it delivered and maintained without ever visiting a dealership, saying that it is only FCA rules around signing financial documents in approved places such as dealerships that are currently holding the initiatives back. He also believes dealerships will eventually have to offer weekend servicing, as Rockar does, so that the car ownership experience fits better with modern lifestyles.

“When customers are demanding change, it is not a case of if it will happen, but when,” said Whitehorn. “Rockar is actually a halfway house to a new extreme, where you can buy a car from your home - and it is clear that is what a significant amount of buyers want to be able to do.”

Finally, with around 70% of Hyundai’s retail sales now on PCP,  Whitehorn is predicting the proportion will increase as customers and retailers better understand how to balance deposits and monthly payments.

Although most PCP deals are for three or four years, Whitehorn said the average point people swap to a new car is at 21 months, something that he sees as critical for driving new car registrations and allowing car makers to better predict demand and manage stock.

“Our industry needs to be more open-minded and more flexible in its approach than ever before,” said Whitehorn. “There are huge opportunities out there and the traditional models of selling cars don’t always cater for them.”

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Comments
9

10 February 2016

Didn't Proton try to do this 10 years ago? Anyhow internet companies like carwow etc will grow because your average car salesman can be a pain in the butt and once scarred by one you won't want to ever repeat the process. "end of haggling" maybe face to face but the price is always negotiable in my book!

 

Hydrogen cars just went POP

10 February 2016

And, if I recall it wasn't too successful. I would have thought that with something as complicated, expensive and personal as a car, buyers would want to see it, feel it, drive it etc before committing. And what's wrong with haggling, even if this is just limited to the value of the part exchange? I suspect that it's the dealers and manufacturers who are averse to haggling, not buyers.

10 February 2016

20 years ago, I think it's fair to say, the world was a very different place - for example you, getting a mortgage involved visiting your bank manager. Today I can apply for a 6 figure sum online.

I agree though, you're not going to buy something of that value and live with it for 3 years (or 21 months it seems) without having tried it first; it's not the end of haggling, but it is perhaps the addition of another buying option. The internet has a number of advantages, the first being that (once you've decided that models for you) you can see what your actual car and specification will look like as you tick the boxes. You can potentially cut out a huge chunk of the cost of sales and pass those savings onto the customer (especially if you centralise the demo process as well). I think this is the way the millennial generation like to purchase goods; I know if rental rates were more attractive (and made better financial sense for me) then I'd probably buy my car that way.

10 February 2016

it was daewoo not proton with the no haggle policy and look what happened to them!

 

Hydrogen cars just went POP

10 February 2016

I actually negotiated and bought my last new car over the phone, but it was an update of my previous model, and I'd poked around a few in the showroom and test driven a couple prior to this. I would always want the facility to view, sit in and drive the model I was going to buy, but I find showroom staff off-putting, and I'm constantly frustrated by their lack of product knowledge.

10 February 2016

The obvious next step for the likes of Bluewater and Westfield shopping centres will be virtual reality test drive. If the VR hardware becomes commonplace in the home an obvious option for build your own car. If you are still interested maybe then book a real world drive.

I feel Jim isn't being strategic enough autonomous vehicles turn car ownership on it's head. I was surprised not to read on this site that Google released this today "Google's self-driving car system could soon be given the same legal definition as a human driver, paving the way for vehicles without steering wheels or pedals."

10 February 2016

No haggle pricing has been around for ages. GM had it with their Saturn marque and Carmax is well-known for it. Sadly, the younger generation, coddled by mum and dad and used to just "Click to Buy" on the Internet, will only haggle over obtuse points such as the racial philosophy of a dead person or getting other people to pay for their stuff. In all likelihood they may not even test drive their cars first relying "user reviews" online which makes sites like Autocar's more important in that respect than print editions going forward.

10 February 2016

Of course Mr Whitehorn would like to be able to sell his new cars via the internet at a fixed price with no discounts to cash-rich but time-poor consumers. There may be some happy to do so, typically the same people who always allow their insurance policies to renew automatically and pay through the nose for the "convenience". However, one of the real advantages of shopping online is the ability easily to obtain competing quotes for whatever good or service you're interested in purchasing. Unless a manufacturer was to forbid its dealers from discounting and refuse to sell via brokers, there will always be price competition. I don't particularly enjoy haggling, but as long as both parties remain civil and treat the other with respect, then it's fine. The "clicks and bricks" model successfully employed by other retailers, where the shops effectively become showrooms for subsequent online purchases, seems a more likely evolution for the motor industry. Then there's the vexed question of the value of a trade-in. The so-called "guaranteed future value" at the end of a finance deal is a brilliant piece of doublespeak: it sounds like an asset but it's actually a liability, being the amount you owe and would have to pay to own the vehicle outright at the end of the finance period.

1 April 2016

Mankind evolves alongside technological advances that could develop a little too quickly as opposed to regular human pace. Hence, we need to constantly keep up with the latest trends in order to provide consumers with just what they need. If the car buying experience needs to be changed, then so be it, as long as the customers are happy and come back for more.

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