A German mail order company, Quelle, is causing consternation and much critical comment within the German car retailing trade selling cut-price cars on the Internet, writes Hugh Oram.
Quelle is part of a big department store chain, and a couple of months ago caused an enormous surge of consumer interest when it sold a batch of Smart cars on the Net for a mere €1,990 each.
Now, it's gone a stage further, offering models from such marques as Ford, Nissan and VW, at price reductions of up to 20 per cent. Most of the cars it's selling are cars that have already been registered for a day, so that although they've never been driven, technically they're used cars.
Quelle says that if demand is good, it will put more models on offer, but the reaction from the German car retail trade has been extremely hostile, saying that Quelle is painting an inaccurate picture of the true prices being charged by dealers and the margins they are making.
Selling cars on the Internet is in its infancy in Germany, as it is everywhere else. Several other German websites are doing it, including Mobile.de and Autoscout24.de; one of the latter's current offers is a Renault Twingo Dynamique for €9,253.
Here, there's no rush to drive car sales on the Internet. Cyril McHugh, SIMI chief executive, points out that even in the US, less than 1 per cent of cars are sold on the Net.
McHugh says that one of the biggest difficulties with selling cars on the Net is dealing with the trade-in. Denis McSweeney, Ford Ireland's marketing director, says that while Dell has been successful selling computer equipment over the Net, for the motor trade to do the same would be a different proposition.
He says that bringing the Net up to the transaction level for car sales could prove difficult. Paul Molloy, managing director of Fort Motors in Dublin, says that consumers are using the Net to source data about cars before they buy.
People like the personal relationships they have with their local dealer and, says Tom O'Connor,Volkswagen sales manager in Dublin: "People are coming into dealers armed to the teeth with information but the actual selling of a car is a tactile experience." People need to kick tyres and feel new metal for themselves.
Even an expert on Net selling, Shenda Loughnane of the Interactive Advertising Bureau, is sceptical: "I can't see car sales on the Net happening in the short term. If you know the car and the brand you're buying, it might happen."
Another risk to buying on the Net is what happens when the car needs servicing? Tom O'Connor believes that if the industry went down the Net road, it could create a crisis among dealers who've invested heavily in the service side.
Joe Gantly, public relations manager at Fiat Ireland, admits that Net sales could develop for fleet buyers. Tom O'Connor, on the other hand, believes that fleet managers would be even more reluctant than private motorists to buy online, because they are even more reliant on dealers for service. Dealers make much of the personal bond that they have with their customers, for sales and service. As one source says, "you can't bond with a computer". But will motorists change their age old buying habits if they get a big enough discount on the Net?
The Net might be a great place for finding out about showroom deals but, as Cyril McHugh of SIMI concludes: "Consumers use the Net for information purposes, but sales will continue through dealers. In the short to medium term, the Net won't work for new car sales."