Recent development in the auto industry have largely been propelled by advances in eCommerce. Customers these days have different expectations than previously. Many expect to be able to make purchases with just a click of a button. However, this has not always been realistic when buying automobiles in person. Many customers are still not comfortable with the idea of buying cars online. Due to high prices of new cars, used cars have become even more popular in recent years. This is especially true for millennials and generation Z customers. Consumers between the ages of 18 to 34 are more open to buying a car online than consumers between the ages of 35 to 54.

CDK Global has done a survey that illustrates this. According to the software company, 70% of shoppers expected to find the ability to configure a payment on a dealership website. However, 83% say online shopping technology would help them narrow down their vehicle choice and determine what is affordable.


Interestingly, there have been several innovations that have happened in parallel with this shift. Auto Trader and other popular brands have had dominance selling used cars online. Regardless, Arizona based online used car retailer Carvana have gone a step further. This solution is based on 360 degree photography that enables customers to see the interior and exterior of a car. It even highlights the flaws in the vehicle being sold. This provides transparency for the buyers. The company delivers purchased cars to customers addresses after purchase. This service is also available in Kansas and Charlotte. Customers are flown in on subsidized flights, can pick up a vehicle and drive back to their home state. This is for when the purchased car is further away from the customer.

The Challenge

As exciting and disruptive as the business model behind Carvana, there are still challenges. Unfortunately it seems like the model has not caught on yet on a wider scale. Other companies like HGreg Nissan Kendall seem to think they have found a sweet middle ground. The Florida based dealer is offering a similar service to Carvana. However, this give customers the choice of a totally online car purchasing experience. Or a physical shopping experience where customers can physically observe the car.