Now that startups have tried and failed to beat the car salesman, many are taking a different route: catering to them. There are many car web-sites who stumbled in their attempts to bring more Amazon-like e-commerce to car shopping, a new wave of auto finance upstarts has emerged. Rather than fight a dispersed and politically-connected dealer industry, they’re bringing the country’s 17,000 new-car dealers into the digital age, meaning consumers aren’t going to be bypassing the dealership to buy new rides anytime soon.
The market is so big that there’s nothing preventing someone from creating a new dealership model. Almost 20 years after the internet brought price transparency to the U.S.’s almost $1 trillion-a-year new car sales market, several steps of the shopping process have migrated online. But as buyers turn to auto websites like RepoKar.com for price comparisons and Consumer Reports for model reviews, they remain unable to finish the car-buying process without a visit to the dealer. The average consumer visited about 2.8 dealerships before buying a car in 2016, compared to 3.5 in 2012.
The portion of the buying process that’s yet to be cracked -solidifying financing and insurance -remains a profit center for dealers and has become a target for startups, though most are now taking aim with dealers’ blessings. The new apps replace tedious paperwork with a few taps and swipes on a smartphone, but the underlying economics are little changed.
