Volvo has started online car-buying to offer a more premium alternative to web-based aggregator services.
The new platform was launched in the UK, Volvo’s third-largest market, and is being watched closely by company officials based in other European markets, the brand’s UK CEO, Jon Wakefield, said at the launch here last week.
“We have clear evidence showing that of all Western European markets, UK consumers generally have a higher propensity to buy things online,” Wakefield said of the decision to begin Volvo Online in the UK.
The platform is the only one in the UK that will offer the ability to buy a car using all types of finance, a part exchange and “e-signatures” to authenticate credit agreements, Volvo said.
Hyundai, Peugeot, BMW and Mitsubishi also offer online car sales in the UK.
Private customers make up a little less than half of Volvo’s sales in the UK. Of those, 90% finance their purchase, Wakefield said. The site offers the ability to buy using hire purchase (known as an installment plan in North America), personal contract purchase (like hire purchase, but with the bulk of the payment deferred to the end of the contract agreement) or personal leasing.
Leasing, also known as personal contract hire, has moved from being a fleet-only form of financing to one embraced by private buyers as well. Its growth has led to the increase of aggregator sites ranking lease deals on new cars from finance brokers.
“We are seeing quite a swing” to personal contract hire, Wakefield said, adding that 15% of Volvo cars in the UK are bought using private leasing.
Volvo won’t try to compete with the aggregator sites on price but will instead offer a more premium online buying experience that brings in the local dealer.
“If you just want the best price, you will go to an aggregator,” Wakefield said. “If you want a brand experience, this is the way you will do it. Some might prefer a more honest transaction with their nearest dealer.”
The buyer inputs a zip code and selects the nearest dealers. The price is expressed as a monthly figure if buying on finance and is set by the dealer. Customers can see how the monthly figure will change when options are added to the car.
“The consumer now has full control, delivered by the Internet, and we recognize that,” Wakefield said. “We want to make life simpler for them.”
The platform, developed in the UK with a feature developed with the UK-based vehicle auction company Manheim, offers a trade-in price for a used car that takes into account longer delivery times for a new car by reducing the agreed amount over time.
The move online doesn’t mean the death of dealerships, Wakefield said. “We are firmly of the belief we need physical partners — it’s not contradictory,” he said.
More manufacturers are offering the ability to buy online to address the rise of customers researching new-car purchases on the internet rather than by visiting dealerships. PSA Group aims to a target of 100,000 online sales by 2021, up from 6,000 last year, CEO Carlos Tavares told analysts on a call in February.