Online retail is rapidly disrupting dealerships as a preferred method of selling cars, with direct online sales expected to surpass 11 million by 2020 and reach 6 million by 2025, according to a report from Frost & Sullivan.
Online sales reached in 618,000 in 2018, which was double the figure in 2017. The firm says that original equipment manufacturers are able to keep prices low, while quickly introducing the cars to market by selling directly.
“The popularity of the e-commerce 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,” Isaac Abraham, senior consultant, automotive retail and business strategy, said in a release from Frost & Sullivan. “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.”
He said that Alibaba is expected to take the lead in China, selling through various partnerships. Hyundai is expected to launch its own in-house program in the U.K., Canada and Singapore. Meanwhile, a firm called Polestar is expected to launch a program in North America through its Volvo dealership network.
Cover image courtesy of Frost & Sullivan.