‘In three clicks I bought a car:’ Online vehicle market revs up amid pandemic
The pandemic has accelerated a shift to online car shopping
William Mellor knew he wanted a 2015 Ford Mustang — a 50th anniversary edition of the sporty American automobile.
He set up alerts through various vehicle marketplaces and when he received a notification that a vehicle was available, he clicked on the link.
“It took me to the Canada Drives website,” Mellor said, referring to a Vancouver-based company that offers online vehicle purchasing and delivery in B.C. “It was what I wanted at the price I was looking for and in three-clicks I bought a car.”
He added: “They delivered it and I had seven days to change my mind and it came with a 30-day warranty. With terms that good you can’t make a mistake.”
The pandemic has accelerated a shift to online car shopping, with more consumers researching and purchasing a vehicle fully online.
It’s a dramatic change from less than five years ago when Stephen Seibel launched Clutch Canada Inc., the first company in Canada to sell cars 100% online.
Buying a car online seemed unthinkable to many at the time, he said.
“Everybody thought we had lost our minds,” said Seibel, founder and chief operating officer of Clutch. “We were told nobody would buy a car online.”
Yet demand for contactless service during the COVID-19 pandemic has challenged traditional vehicle sales.
Dealerships have scrambled to keep up with demand, increasingly offering live chat, virtual tours, home test drives and the option to buy online.
“There was definitely more hesitancy and pushback before the pandemic because the idea of buying a car online was such a foreign concept,” Seibel said. “Then COVID hit and sales dropped to basically nothing in March and April but then started to pick back up and it’s been very, very strong growth since.”
Autotrader.ca, an automotive marketplace with private and commercial vehicle listings, saw a record-high 25 million visits in a single month last August — a 21% increase year-over-year, said Jodi Lai, editor-in-chief.
“We’re seeing a higher volume of Canadians searching for cars online and buying a car online is a natural progression of that,” she said.
“All parts of the buying process that traditionally would happen inside the dealership — figuring out lease or finance details, accessorizing, getting warranty and protection plans, getting trade-in values — all that you can now do online.”
The vehicle marketplace has more than 30,000 vehicles that be purchased “100% online from start to finish,” Lai added.
Automotive industry experts say there are some important tips consumers should keep in mind before buying a vehicle online.
Know your budget
Before you start searching for a vehicle, experts say it’s important to figure out what you can comfortably afford.
“The first thing you should do is know your price,” said Kristine D’Arbelles, public affairs director with the Canadian Automobile Association.
“If you’re buying a car online, it means that there’s going to likely be either an email or phone call and you need to understand what you can afford first.”
Yet it’s not just the sticker price of the vehicle, but insurance, maintenance and gas costs, she said.
Keep the sticker price top of mind
Many traditional dealers will ask consumers what sort of payment they want and will adjust the sticker price or interest rate from there, Seibel said.
“They will try to get you into the payment game,” he said. “They’ll build a loan that meets the biweekly payments that you want, but what they’re actually doing a lot of the time is they’re either jacking up the interest rate, or they’re jacking up the price of the vehicle.”
His advice is to find an online payment calculator and negotiate based on the list price of the car.
Do research, ask questions
While a test drive was once considered a mandatory part of the vehicle purchasing process, shoppers are increasingly turning to online reviews to learn about a vehicle, Seibel said.
“There’s a tremendous amount of information available online without having to go for a test drive, especially in the new car space,” he said.
Once you’ve done your research, experts say car shoppers should be armed with questions before they start negotiating a purchase.
“You should have a list of a dozen or two dozen questions that you’re going to ask regardless of whether you’re talking to a dealership or it’s a private sale,” D’Arbelles with CAA said.
“And you should ask for pictures of every detail and not just settle for zoomed-out photos.”
Beware the return policy
While most new vehicles don’t come with a return policy, experts say it’s important to check the fine print before buying a vehicle online.
“The biggest thing is make sure there’s a return policy in case you get the car and you don’t like it for any reason or there’s a quality concern,” said Seibel, who noted that Clutch cars come with a 10-day money back guarantee.
“A lot of places will advertise that they have a return policy but when you read the fine print, many vehicles are excluded.”