One In Three New Car Purchases Will Be An Internet-generated Sale By 2006.

Jupiter Media Metrix reports that the Web for the automotive industry will be more important to consumers for research and to manufacturers for building and extending customer relationships than for sales transactions. As auto manufacturers learn more about their customers from online and off-line channels, Jupiter forecasts that Internet-generated new car sales will skyrocket from nearly 13 percent of total new car sales in 2001 to 32 percent in 2006, or 5.7 million car sales. Jupiter defines Internet-generated sales as follows: when customers are either referred to a dealership to transact a purchase off-line or they find the dealership with the desired product via the Internet and make the purchase off-line.

“The Internet is becoming an integrated component of the consumers’ car buying process by facilitating the gathering of pre-sale information,” said Julie Ask, Jupiter analyst. “The ability to research automobiles on scores of Web sites has created an educated customer base armed with information once held by captive dealers. Competing for those buyers inclined to shop online will require dealers to adopt a different skill set — one that focuses more on responsiveness, openness and service. Dealers who want to succeed must prepare to rise up to the challenge and adapt to a new breed of automotive buyers.”

Additional highlights and forward-looking analysis from the new Jupiter Research automotive report, titled “Jupiter Online Market Forecast: Automotive,” include:

— A June 2001 Jupiter Consumer Survey reveals that when visiting an auto-related Web site, consumers are most interested in detailed product information (42 percent), side-by-side comparisons (23 percent) and ratings and reviews from other consumers (nine percent). Jupiter analysts have found that consumers who turn to the Web before purchasing a car are looking to reduce time spent at dealerships.

— Although only four percent of used car sales (1.5 million cars) were Internet-generated transactions in 2001, Jupiter analysts forecast that 12 percent (4.8 million) will be attributed to the Web by 2006.

Jupiter analysts believe that although the Internet will never be the dominant source for online-committed used car sales (when customers commit to buying cars online, but final transaction is made in person at a dealership), it will have a strong impact on matching buyers and sellers.

— Less than one percent of online financial consumers use online financing for new vehicle purchases and merely one-half of one percent do so for used car purchases. However, Jupiter analysts assert that online financial consumers are primed to unlock the potential of this early-stage market. By 2006, the online car financing market will reach 32 billion dollars in agreements and represent nearly four percent of total car financing.

— According to the Jupiter Internet Automotive Model, 60 percent of vehicle-owning households are currently online, which is slightly higher than the overall U.S. online household penetration (57 percent).

By 2006, Jupiter expects both the percent of vehicle-owning households and the total percent of online households to grow to over 76 percent, providing an unparalleled five-year window for online auto sites to influence customer behavior and win customer loyalty.

“The impact of the Internet on the automotive industry extends beyond the initial transaction to lifetime vehicle ownership. Dealers must use the Web to build an adaptive relationship with the consumer, starting with a rich understanding of customers’ buying histories and extending to lifetime service of the vehicle,” Ask said.