Frost & Sullivan: Online Retail to Become the Preferred Form of Vehicle Purchasing Among Private Buyers

Frost & Sullivan: Online Retail to Become the Preferred Form of Vehicle Purchasing Among Private Buyers

Posted 06 September, 2019 at 11:30

Author Mark Bradshaw on behalf of (ISW) Independent Shop Watch


Online sales are expected to cross 1 million in 2020 and grow to more than 6 million by 2025, finds Frost & Sullivan

SANTA CLARA, Calif. – September 5, 2019 – The online vehicle retail model is disrupting the traditional dealership model by enabling original equipment manufacturers (OEMs) to quickly introduce their products to the market while keeping costs low. In 2018, more than 618,000 new vehicles were sold online globally, nearly double the unit sales in 2017. Online sales are expected to cross 1 million in 2020 and grow to more than 6 million by 2025. It is expected to become the preferred form of vehicle purchasing among private buyers, but fleet and corporate buyers will continue to favor the traditional retail format.

For further information on this analysis or an interview with the expert, please email Francesca Valente: francesca.valente@frost.com

“The popularity of the eCommerce model among the younger audience and the success of Tesla‘s online retail strategy is likely to encourage other automakers to explore online retail beyond just pilots,” said Isaac Abraham, Senior Consultant, Automotive Retail & Business Strategy. “With the emergence of novel purchase models such as vehicle subscription and short-term leases, the dealership of the future is expected to become more experience-centric.”

Frost & Sullivan’s recent analysis, Global Vehicle OEMs’ New Online Retail Strategies, Forecast to 2025, highlights the performance of the online vehicle retail market and future trends in the eRetailing space. It also benchmarks various OEM initiatives in the segments of passenger cars and light trucks. It studies the different types of methods employed to sell vehicles online as well as the evolution of the online vehicle sales market by 2025.

Alibaba is expected to be the frontrunner in providing eCommerce solutions in China and is partnering with entrants to maximize its reach in the region,” noted Abraham. “Hyundai is likely to introduce its in-house online vehicle sales platform in Singapore, the UK, and Canada, while, Polestar will enter the North American market with online stores leveraging its current Volvo dealership network. Following the digitization of its retail platform, Volkswagen could become one of the best-selling online automotive brands in Europe.”

To stay relevant in a rapidly changing market, OEMs need to explore the growth opportunities presented by:

  • The growth of eCommerce platforms such as Amazon and Alibaba.
  • Creation of experience-centric dealerships.
  • Building their own eCommerce platform, similar to the platforms developed by brands such as Hyundai and Peugeot, using support from the financial services arm.
  • Adoption of a hybrid physical-digital approach to keep costs low when entering a new market. Already established companies can start consolidating dealership locations.

Global Vehicle OEMs’ New Online Retail Strategies, Forecast to 2025 is part of Frost & Sullivan’s global Automotive & Transportation Growth Partnership Service program.

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