Survey: One-third of car sales on Web by 2006

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By Jon Surmacz

(IDG) -- Many car buyers are using Navigator or Explorer to help them buy their next Navigator or Explorer, says Jupiter Media Metrix, the Internet measurement service of Jupiter Research.

According to a recent survey, Internet-generated new automobile sales (as a percentage of all new car sales) will jump from 13 percent in 2001 to 32 percent in 2006, representing an increase of 5.7 million vehicles sold. Internet-generated used car sales (as a percentage of all used car sales) will grow at an even faster rate, increasing from 4 percent in (1.5 million cars sold) 2001 to 12 percent (4.8 million cars sold) by 2006.

"Over the past year not only the third-party sites but also the manufacturers' sites are providing more and better information to customers," says Julie Ask, Jupiter analyst.

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The survey shows that 60 percent of vehicle owners are online. (Jupiter estimates that 57 percent of the general public have online access.) By 2006, Internet penetration will reach 76 percent in this group. Ask says the ratio is simple: The more familiar buyers become with the Internet, the more likely they are to use it as a research tool and buying channel for expensive items such as automobiles. In an earlier 2001 survey, Jupiter found that car buyers are most interested in Web sites that provide detailed product information (42 percent), side-by-side comparisons (23 percent), and ratings and reviews from other consumers (9 percent).

Ask says the increase of auto-related Internet activity will help business at car dealerships more than it will hurt it. Today, most customers prefer car transactions to be handled offline. Less than 1 percent of consumers use online financing for their new vehicle purchases. By 2006, Jupiter says the online car financing market will reach $32 billion in agreements, but this will still represent just 4 percent of all car financing. Besides, you can't take a test drive on the Web.

"I think as things have played out the dealers are not going away," Ask says. "The manufacturers are trying to help dealers to use the Internet to reach more customers. It's not a channel that can be ignored by the dealers, although it's going to be smaller than their traditional channels in the future."

In July 2001, Jupiter's survey of the most popular automotive sites ranked Kbb.com (Kelly Blue Book) No. 1 with more than 3.8 million unique users. Microsoft's Carpoint.com ranked second with 3.2 million unique users, followed by Autotrader.com's 2.7 million unique users.

Ford.com was the top manufacturer's site with 1.2 million unique visitors, ranking 11th overall. Yet, manufacturers are making gains online. According to the survey, visitors to manufacturers' sites showed a 31.2 percent increase over the same period last year. Ask says manufacturers will try to attract more visitors by adding customer service features that will aid users in their research.

"For manufacturers, it�s more around how the Internet is a tool for marketing and building relationships than it is a channel for sales," Ask says.