Jupiter Media Metrix has reported that 'Internet-generated' auto sales are seeing strong growth, although the Web will be more important to consumers for research and to manufacturers for building and extending customer relationships than it will be for pure sales transactions.

In the Jupiter Research automotive report, entitled "Jupiter Online Market Forecast: Automotive," the firm forecasts that Internet-generated new car sales in the United States will soar 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 occurring when customers are either referred to a dealership to transact a purchase offline or they find the dealership with the desired product via the Internet and make the purchase offline.

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 in agreements and represent nearly four percent of total car financing.

"The Internet is becoming an integrated component of consumers' car-buying process by facilitating the gathering of presale 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 to the challenge and adapt to a new breed of automotive buyers."

A June 2001 Jupiter Consumer Survey revealed 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 in the U.S. (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.

According to the Jupiter Internet Automotive Model, 60 percent of vehicle-owning households are online currently, which is slightly higher than the overall online household penetration in the United States (57 percent). By 2006, Jupiter expects both the percentage of vehicle-owning households and the total percentage of online households to grow to more than 76 percent, providing an "unparalleled five-year window for online auto sites to influence customer behaviour and win customers' loyalty."

"The impact of the Internet on the automotive industry extends beyond the initial transaction to lifetime vehicle ownership," Ask said. "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."