Selling cars online isn’t really a pandemic pivot. Far from there. It really started at the beginning of the 21st century when the commercial version of the World Wide Web became widely available. eBay opened its online car marketplace in 2000 and was one of the first companies to get started. They then sold 2 million vehicles in 2006.
The Philippines leads the world in internet usage (for the sixth consecutive year) and has an internet penetration rate of 73%. It would make sense for us to be one of the first countries to make online car shopping a standard service, but alas, that is not the case.
When car dealerships closed at the height of the pandemic, instead of creating a portal where customers can actually buy cars, car brands opened up a window-shopping experience where their vehicles are seen and browsed from all angles and upside down. Unfortunately, it’s a bit more complicated than just adding to cart and paying.
Can you buy a vehicle online in the Philippines?
The direct and short answer: Yes, it is possible. But the caveat is that you need to know where to look and who to buy from.
Some dealerships have changed their Facebook pages for automotive e-commerce. One of our contacts says that one of the main reasons dealers are reluctant to take the full digital leap is to prevent financing fraud. This includes bank-initiated training for approval officers to spot forged signatures. There are others, but our source is unwilling to provide additional information as it would compromise the security protocols in place.
What are car brands saying?
According to Elvin Luciano (PR and Communications Manager) of Toyota Motor Philippines, “the ability to buy a car directly online is part of our roadmap”, but when I asked about a timeline, he only replied “soon”.
Suzuki PH saw sales increase by 16% from 2019 to 2020, while Verna Hiyao of Honda PH (Dealer Operations) tells me that 20% of all their reservations now come from their [email protected] page.
Nissan has seen impressive gains with nearly 400% growth in online traffic from the “Request a Quote” page on its website. This “proves that digital transactions in the automotive industry are on the rise,” said Dax Avenido, chief communications officer and deputy general manager of Nissan Philippines.
But if automakers made it easy to buy a vehicle with just a few clicks, would you do it? If you’re still on the fence about it, let me walk you through the pros and cons of this high-value online transaction.
Advantage: it will save time
Since potential customers do not have to travel to the dealer(s), they save time and money (fuel, parking). If you haven’t been writing or filling out forms lately, your hand will thank you for saving her from cramps or carpal tunnel syndrome.
Advantage: Zero pressure
We’ve all felt the full-court press of car salesmen. It’s subtle but very palpable. It’s not entirely on them either. We feel a little obligated as they spent the better part of three hours explaining every nut and bolt on the vehicle. You won’t have to deal with all of this online.
Advantage: Anytime, Anywhere
Websites do not have opening hours as they are open 24/7. You can check out the make and model you want any time of the day, even in your birthday suit. And you can also watch our video reviews and car tours on our YouTube channel or Facebook page.
Advantage: delivery directly to your door
Like Lazada or Shopee, the key to any online shopping experience is fast delivery. This means that any automobile you buy online must be delivered to your preferred destination. So put your feet up, relax and wait for the beep, beep to signal that your new whip is already here. They’ll probably also make a pickup available for you if you want it, but that’s a whole other topic.
Disadvantage: No tactile sensation
A big part of the car buying process is running the vehicle through (almost) all of your senses. See the gorgeous design, feel the sheet metal, smell the all-new cabin and hear the rumble of the engine. You don’t get any of that on your phone screen.
Disadvantage: no “tawad”
Haggling is not a uniquely Filipino practice, but we are the ones who have perfected it into an art form. With no salesperson or manager to negotiate with, say goodbye to getting extra freebies or discounts beyond the free tint and floor mats you could have expertly bargained for.
Disadvantage: financing requires paper
Not only will funding be limited, it may also not be fully available online. Some financial institutions do not yet operate openly online. And given the pandemic, they’ve gotten tougher with auto loan applications. Many of them still operate on physical documents, or they simply don’t have an online outlet for these kinds of services, especially when it comes to signatures or post-dated checks.
Disadvantage: No exchange option
If you have an old vehicle that you want to get rid of, a purely online transaction will make that difficult. Dealers will need to appraise your old clunker before they can put a price on it (this will go towards the vehicle you’re buying). You can arrange to bring your car in, but that means stepping out of the virtual dealership and into a real one.
Disadvantage: Few test drive options
It will be a dealbreaker for many. It is important that auto buyers have a feel for the vehicle before they even list it for review. And unlike other online shopping options, you can’t just initiate a return/refund on a car if you didn’t like it after purchase. There are brands that offer test drive delivery where they bring it to you so you can try the car, but only a select few do.
What does the market want?
A study shows that 56% of millennials, the largest demographic of auto buyers, dislike dealing with sales executives due to stressful scenarios during sales pitches and negotiations. Also, as we all know, young people want to shop directly from their mobile device.
CDK Global has released the results of its recent survey. It showed that 83% of respondents believe that “online shopping technology would help them narrow down their vehicle choice and determine what is affordable”. 60%, on the other hand, were more comfortable starting the purchase process on the retailer’s official website than on other third-party sites.
But, according to consultancy Deloitte, 75% of customers still prefer to see the vehicle in person before buying, and for 64%, going through the test drive process is a must.
Is our market ready to buy cars online? It’s not clear at best. Yes, we are one of the top internet users in the world, and last year local e-commerce contributed Php599 billion to GDP. But are we willing to spend our big peso on an automobile that we haven’t seen (in the sheet metal shop) or even touched?
Sure, we’re buying shoes now that we haven’t fitted yet, but can you say the same about your next car?