Human Highway: Online Car Sales Becoming ‘The New Normal’
The pandemic has caused a sea change in consumer behaviour and spending habits. Ride sharers and public transit users are now looking towards online vehicle sales to answer their shared transit woes.
by Carter Hammett
Two years after Dena Sacks of Markham O.N. was laid off in 2020, her financial situation appearing bleak, she found herself coming to terms with an uncomfortable decision.
Realizing she needed to pay off a rather sizeable loan, the 69-year-old Sacks decided it was time to sell her 2018 Hyundai Tucson
“I wasn’t happy about selling my vehicle,” she says. “However, when I contacted Canada Drives and spoke to Balil Imtiaz, he put me at ease and told me he would handle everything. He was very personable, very efficient.”
While the decision to sell a vehicle to pay off a loan isn’t exactly a novel idea, deciding to sell her car online was.
And it’s an idea that’s slowly but surely gaining traction with a wider audience.
Pandemic-ignited spending changes
Now that we’re entering the sixth—or is it the sixtieth?–variant in the never-ending merry-go-round of pandemic outbreaks, it’s intriguing to note how drastically Covid has impacted our behaviour and changed old spending patterns.
From the rise of the Great Resignation and hybrid workplaces to the birth of “microcredentials” there’s no denying how extreme the impact that Covid has been on our social infrastructure and behaviour. Indeed, contactless drop offs, QR codes on menus and online everything is certainly part of the current Zeitgeist.
One of the most significant changes has been the increased migration of consumers towards online purchases. And chief among those has been the increased interest of consumers in purchasing vehicles online.
In 2021 CARFAX Canada asked over 2000 Canadians who had recently purchased new or used vehicles about some of their purchasing preferences. Only 8% said they would purchase their next vehicle online, while a rather astonishing 92% demonstrated a clear preference for buying a car at the dealership.
One would think that online purchases would appeal to a younger tech-savvy crowd, but this too is somewhat surprising. Only 12% of new car buyers between 18-and-24 demonstrated interest in purchasing a vehicle online. That figure dropped to 6% with the 55+ crowd.
Despite changes to our Pandemic-related behaviour, most Canadians want a tactile experience and the opportunity to test-drive their potential purchase.
Compare these figures to a 2020 Google Consumer Survey which suggested that 60% of Canadians looking to buy a vehicle would use an online purchase option, while 17% would purchase a car sooner if there was an online option.
An at-home test drive ranked as the best alternative to an auto showroom visit, with about one third of all Canadians weighing in. Hot on the heels of these results were car review videos, an online configurator, a digital showroom, VR test drives and video conferences.
Compared to other countries, Canada has been slower to embrace online purchasing. A partial explanation for this is that some stages of the car purchase journey tend to rely on in-person activity, Things like insurance and registration or applying for financing can create some friction if done digitally.
Google Canada’s research demonstrates that Canadians are actually spending less time purchasing their cars, committing to their purchases in less than two weeks. About 59% have made their purchases in less than a month. The bottom line is that vehicle buyers are relying on online research rather than trekking to the dealerships.
Not surprisingly although national car sales had dropped by as much as 19.6% in 2021, dealerships were still in full swing.
However with the rise of online automotive showrooms and options to buy online with services like Clutch—which is also available in Nova Scotia–and Autozen increasing their visibility, buying and selling vehicles online stands poised ready to become the next hot thing.
Sell my car
In April of this year, Canada Drives (canadadrives.ca), an online car shopping platform, announced the launch of its “Sell My Car” feature. Canadians can receive a guaranteed quote online and are then given the option to sell their current vehicle directly to Canada Drives. The vehicle can be picked up as early as the next day.
The press release states that with the new feature, customers are given a quote within two minutes and can decide to either sell their vehicle and receive the money via direct deposit, or trade it in for a new one. Canada Drives will also take care of paying off any existing loans on the customer’s current vehicle. On average, selling a car privately takes more than four weeks; now with Canada Drives, the whole process can take as little as 48 hours.
“The entire team has been working hard behind the scenes to launch the new feature,” says Canada Drives founder and Co-CEO Cody Green. “For Canadians looking to sell their vehicle, they can visit Canadadrives.ca and fill in their vehicle details. In real-time, they will receive a guaranteed quote online and then have the option to sell their current vehicle directly to Canada Drives. As soon as the next day, their vehicle can be picked up and money transferred to their account. If a customer wants to trade in a vehicle, they can access Canada Drives’ inventory of thousands of certified vehicles. The value of the trade-in will be deducted from the total cost of the new car and Canada Drives will pick up the trade-in when the new car is delivered.“
Green says that when consumers visit the website, details on their current vehicle are collected, including the vehicle’s make, model, location and condition. The algorithm will generate a fair market value based on local retail prices of similar vehicles and the expected reconditioning costs.
“We developed and built our platform to ensure the customer’s experience lived up to our high standards. We created a website that provided a seamless car buying experience that was easy to navigate and clicks away from excellent customer service–and their next vehicle.”
There can be no arguing with the simple convenience of purchasing a car online. Doing the preliminary research online can save time and reduce a lot of potential stress, including avoiding aggressive sales tactics by showroom sellers. It’s now much easier to shop around while comparing prices and assessing features that match your criteria.
On the flip side, it can be difficult to understand the condition of the car you might be interested in. You may be putting yourself at risk by committing to a vehicle with deficits you might not be comfortable with. Furthermore, it can be difficult communicating concerns to the seller with a lot of unclear pingponging messages that can make the sales process cumbersome. Of course test drives are still done mainly on the lot.
And what about that financing thing anyway?
Naturally, obtaining the best possible loan option is of great importance. But what are the options when choosing between an online lender or in-house financing that’s offered by a dealership?
Usually, dealerships are more akin to a loan broker who will identify a third-party lender for your loan. One of the downsides of this however, is that most likely you won’t be getting the most bang for your buck. On the other hand, car dealerships often have less constrictive approval criteria.
Conversely, online vehicle financing holds appeal for virtually any type of consumer, including people with poor credit ratings. The options for online car financing are virtually unlimited. Be sure to obtain a lender who’s reputable, get a preapproval letter—which can often help you negotiate a decent deal with the dealership–and make sure to compare options.
Canada Drives actually started out as a financing service offered to Canadian car buyers, says Cody Green. “We pride ourselves on helping our users find a great vehicle and want to make it easy to get behind the wheel whether they are paying cash or need financing. From completing the finance application to signing the finance documents–everything is done 100% online. We work with all of the major lenders in the country to ensure customers are getting a great rate.”
If a customer wants to trade in a vehicle, they have access to Canada Drives’ exhaustive inventory of certified vehicles. The value of the trade-in will be deducted from the total cost of the new car and Canada Drives will pick up the trade-in when the new car is delivered.
Final thoughts
In September 2021, CarGurus, an online automotive platform for buying and selling vehicles, released a study that examined short-and-long-term trends of how vehicle shoppers reacted to the pandemic, as part of a series of studies that delved into variables like digital retail and vehicle inventory.
“Our most recent COVID-19 consumer sentiment study has shown that the pandemic has reshaped transportation and car-shopping for the foreseeable future,” said Madison Gross, Director of Consumer Insights at CarGurus. “As consumers continue to steer clear of shared mobility and turn to purchasing their own vehicle instead, they are interested in the ease of digital retail, with more people hoping to complete part of the car-buying process at home.”
Outcomes for the study included the fact that 63% of all consumers surveyed stated they’re more interested than ever in shopping for cars online. Furthermore, consumer expectations remain high. Even as potential buyers made gradual and cautious returns to the showroom, they were more interested in retaining some of the pandemic-related changes, including pre-scheduled dealership appointments, test drives at home and at-home delivery. Clearly, the vehicle-buying public’s behaviour has changed, and so have expectations. The collective hope appears to indicate that these dealership changes are in for the long haul.
“During the pandemic, we saw the pendulum swing for customer comfortability from brick and mortar to online stores,” says Cody Green. “This trend continued for those looking to sell items as well. In the used car market, we are now at the tipping point where customers are demanding more control and transparency from dealerships–especially with increased demand for vehicles–and feel that traditional dealerships are not offering the best price for the vehicle. We are removing salespeople out of the equation and the response has been overwhelmingly positive. We expect this trend to only continue as more Canadians feel comfortable making these types of transactions online.”
This includes purchasers like Dena Sacks. “This was my first time selling my car online,” she says. “Balil took care of everything and was very personable and caring at the same time because he knew this was a difficult time for me. The advantages of selling my vehicle in-person weren’t there. More so, there would be disadvantages of selling my vehicle in person, i.e. the paperwork involved, certification and everything else that would be involved to sell my vehicle privately. I didn’t really have to do much of anything because Balil handled it all. I felt that the wool wasn’t being pulled over my eyes compared to traditional dealerships. It was an absolutely pleasurable experience.”
Here are some of the places you can buy a car online:
Canada Drives
The entire process of buying a car, from financing to contract signing can be completed online. Purchases will also come with a 30-day warranty, a 7-day money-back return policy and same-day delivery in select provinces.
Online car financing through its partners, including allowing buyers to qualify for financing before choosing a car.
Clutch
Since their 2016 inception, Clutch has sold over 1000 cars annually. Their online platform allows Canadians to browse their inventory of over 700+ used vehicles. Each vehicle is detailed with information regarding the price, features, and specs. It also has detailed images of the interior and exterior of the vehicle. Moreover, every car on the site has a CARFAX report and undergoes a 210 Point Inspection, ensuring the car is in good condition. Sell or trade your vehicle online as well and get an estimate via an online calculator. In-house financing available through Clutch partners.
AutoTrader
One of the higher profile shopping sites, Auto Trader takes things a step further by selling virtually anything that moves: boats, motorcycles and even snowmobiles.
.Search for both new and used cars (including certified pre-owned vehicles) according to your preferences such as the car mileage, age, model, colour, price and other criteria.
CarPages
This site only allows government-registered dealers or identity-verified individuals to sell, so you have peace of mind since consumers are only dealing with reputable sellers. CarPages also has its own app for both Androids and iOS. The site offers pre-approval for car loans as well.
Unhaggle
Unhaggle brings the deals to you. Enter the details you’re looking for, determine the average vehicle price based on your criteria, review a dealer’s cost report, then be part of a reverse auction whereby dealers put in bids for you to purchase a car from them, not the other way around. Unhaggle then sends your request to the top dealers in your area who will offer their best prices.
Car Gurus
This dealer-only app will retrieve a list of vehicles that match the criteria you demand. This means you’ll only obtain a list of options from different car dealerships. Through it, you’ll be able to filter by the car’s safety rating, cabin size and fuel economy, which is hard to find. Car Gurus will also provide you with a price rating of each vehicle based on what other dealers are charging. This service can also determine a per-month payment estimate for budget-conscious buyers.
