Car dealerships are here to stay despite a surge of interest in online buying forced by the lengthy lockdown South Africans have endured for the past few months.
Even before the pandemic hit, online shopping trends were on an upward trajectory with buyers investigating how to obtain toilet paper, groceries and pool chlorine from the comfort and safety of their couches.
The rise in popularity of many existing and new online shopping platforms has, in turn, fuelled the notion buying cars in similar manner will soon be a reality.
So, is it possible to buy a car online from start to finish and have it delivered to your driveway without ever leaving home? Yes, but it was prior to COVID-19 and only under exceptional circumstances.
According to Mark Dommisse, Chairman of the National Automobile Dealers’ Association (NADA), there is both good and bad news for those hoping to click a webpage button and see a new car magically appear a few days later.
“Many local car brands are currently advertising new methods for South Africans to browse, and in some cases even buy, their next car from home. While these tools are very handy, there are limitations to how far you can travel along this buying journey, despite clever wording which may imply otherwise,” says Dommisse.
The fact is these new services offer an elegant way for Original Equipment Manufacturers (OEMs) and dealers to cast a wider net on a bigger audience, together with convenient solutions for willing participants within that audience. But the progression of any deal will ultimately trickle down to a final transaction between buyer and seller at dealer level.
For most a new or used car is the second highest expense after housing costs, so committing to a large purchase such as this is obviously a bit more complex than ordering a new kettle from Takealot. If your kettle arrives by courier a few days after you enter credit card details and click Buy on your laptop, and you are not happy with it for whatever reason, you simply return it and get a refund.
Besides the fact kettles do not come with a myriad upholstery options, optional features, engine choices and paint finishes, they also do not often come with mandatory insurance, finance plans, FICA requirements and large price tags. More importantly, it is unlikely you would be trading in your old kettle and this process would certainly require some physical interaction to facilitate – as it does with vehicle trade ins.
“While new digital technologies have, and will continue to accelerate and streamline car buying in South Africa, there are some simple reasons why ecommerce and car sales just do not gel as a realistic option in the foreseeable future,” says Dommisse.
“While there is no doubt for some a car is just an appliance and the smell of leather, face-to-face interactions and the feel of steering and gear shifts on test drives do not rank very highly on importance scales, the vast majority of car shoppers would prefer the touch, feel and smell of a genuine showroom experience, or at least to inspect the goods they’re committing to.
“Then there are the nitty-gritty regulations which take the wind out of the sails of the pure online car buying fantasy. Technically all transactions in South Africa, other than for property, can be concluded with a simple offer and acceptance. But online transactions are governed by the Electronic Communications and Transactions Act (ECTA) and it is here that matters such as offer and acceptance, as well as final delivery are regulated.”
The Act is designed for items that are extremely standard and understood by customers – such as a kettle. When it comes to special orders or anything where specifications are set by the consumer, the goods will only be suitable for use or enjoyment by that consumer in particular. Cars often come with many specifiable options, accessories and bolt-on value add products, which would force number of protections generally afforded to consumers by the Act to be excluded.
“Imagine an outrageous paint selection combined with an unusual interior colour. It would be unreasonable to expect a dealer to accept the return of this vehicle for any reason other than that it was not supplied to requested specification,” says Dommisse. “Though that is an extreme case, the same would apply to any vehicle with customer-specified fitments no matter how big or small.”
Items covered by the ECTA have a universal cooling off period which cannot be waived via the contract. This allows a consumer to cancel any transaction without reason and without penalty for goods or services within seven days of receipt.
The only charge that can be levied is the cost of returning the goods and payment of the refund must be made within 30 days of cancellation. This is obviously an unrealistic situation when it comes to the value of motor vehicles and the natural depreciation they face as second-hand goods, and this protection would be excluded if a vehicle has been altered in any way through client specifications.
“South African OEMs and dealerships are certainly working frantically to offer new ways of engaging customers via online portals and platforms, and NADA believes these developments will roll out thick and fast in the wake of the pandemic,” says Dommisse.
“Creating deals, building transactions, and exploring finance options, vehicle specifications, accessories and value-added products can all happen online and these processes will become slicker and more efficient. But the bottom line is that the final stages of the deal should be facilitated through a dealership together with a Sales Executive and qualified F&I Manager.”
In other regions, and the US in particular, the online car sales concept is nothing new. But despite how simple TV ads and websites make the process seem, this channel does not come without some fine print. The successes and profitability of American services such as Carvana and Vroom are also under question. They may paint an alluring picture of laptop purchases and shiny new wheels being delivered shortly afterwards, but the reality is that car dealers and showrooms are here to stay.