Even a major purchase like buying a car is moving more online as the pandemic scuppers face-to-face negotiating, with vehicle marketplace Carsales.com.au saying Covid-19 has accelerated migration to digital platforms.
In booking an 11 per cent rise in adjusted full-year net profit – which strips out certain non-recurring or non-cash items – the company announced it was creating Carsales Select, a new digital used car service.
The listed firm cited research showing 37 per cent of consumers were willing to buy a preloved vehicle online but only 1 per cent of deals took place there completely.
“Internationally, new ‘digital dealer’ models are gaining market share where they have migrated offline elements of the sale to online,” Carsales said in a presentation.
The company looked into consumer reluctance to do the whole deal digitally, finding two-thirds were understandably most concerned about the car having hidden problems.
Other critical factors were accessing a competitive price without having to haggle, being able to test drive before making payment and having the car home delivered.
The company says its Select website to be launched this financial year will offer pre-negotiated prices using an algorithm to ensure the cost is competitive, certified inspection reports including high quality photos with imperfections highlighted and the ability to instantly reserve a purchase.
Carsales says it will also offer seven-day money-back guarantees to instil confidence in lieu of a pre-purchase test drive, plus limited warranties.
Macquarie Research said it was an interesting development for the company and labelled the earnings result strong and above expectations.
“While current lockdowns and retail closures are having an impact on leads and private ad volumes, if our experience is consistent with prior lockdowns, the business is well placed to recover all or most of the declines once retail reopens,” Carsales said on Monday.
The company also operates businesses in South Korea and Brazil and recently took a minority stake in Trader Interactive, a US marketplace for recreational vehicles, powersports, trucks and equipment, labelling the purchase a “transformational acquisition” providing exposure to a large and attractive market.
It has been a remarkable period for the automotive sector, with the pandemic causing factory closures, worldwide semiconductor shortages and massive supply chain disruptions that slashed new car production globally by about 23 per cent in 2020.
According to Datium Insights, that equates to more than 15 million fewer new vehicles than in 2019.
It has caused drivers to turn to used cars in droves, sending prices through the roof.
At the same time, safety concerns on public transit has prompted many commuters to buy a car.