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August 21, 2011

News & Features

Wired buying: The Internet provides an alternate route into dealerships

Special to NWautos

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Websites for individual dealerships (like Renton Kia's, top left), Costco Auto (right) and eBay Motors are giving consumers a new entry-point for buying a vehicle.

Beth Volk had done all of her research. She knew exactly what car she wanted, right down to the color and features -- but she was in no mood to haggle.

So the 30-year-old Edmonds resident chose to take an alternative route to her silver 2011 Volkswagen Tiguan. The Internet, which for years has facilitated private-party car sales, is now providing more ways to buy from dealers outside of the traditional showroom setting.

Volk used the Costco Auto program, which promises a "no-haggle experience." She began the process by entering the make and model of the car she wanted, along with her ZIP code, on the program's website. Within a day she was contacted by a local VW dealership. She stopped by that day, took the Tiguan for a test drive, and then sat down to sign the papers to trade in her old car.

Although the program ultimately did lead to a dealership, it eliminated the part of the experience that made Volk nervous. "We didn't throw numbers back and forth -- it was take it or leave it, and I was fine with that," she says.

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A Volkswagen Jetta SE is advertised at the Issaquah Costco. (John Gleason / Costco)

Volk estimates that she saved a couple hundred dollars off the MSRP, as well as an additional $300-$400 by getting a special rate on an extended warranty. Costco Auto's Rick Borg says that members bought 220,000 cars through the program last year and saved an average of $1,000 off the MSRP.

For their part, dealers might not be making as much as they would off of a negotiated sale. Rose Pederson of Campbell Nelson Volkswagen in Edmonds, which partners with Costco, says that the additional business Costco sends their way makes it worth it financially. It also helps them dispel the stereotype of the shady car dealer, she says.

"People have always been very suspicious of car salesmen, and [the Costco Auto program] allows them to feel like they have some control over the price," she says. "They feel like someone's got their back."

Other online sites have thousands of people purchasing cars sight-unseen, completing the entire process by computer or even on their smartphones. Sites such as NWautos.com and eBay Motors (motors.ebay.com) list thousands of cars, including rare collectibles from private sellers and brand-new models posted by brick-and-mortar dealerships.

"Buying a car online is something we can do now because of the wealth of information we have," says Famous Rhodes, senior director of eBay Motors.

Ian Schmucker, business development director of Auburn Valley Kia, says that whether through third-party sites like eBay or through its own website, online sales have become an essential part of the dealership's success. In fact, online sales now make up about 50 percent of its business.

"We have to be a part of that market trend or we don't survive," Schmucker says.

Bethany Johnson, Internet manager at RBM of Atlanta-North, a Mercedes dealership in Atlanta that sells nationally through eBay Motors, says that eBay works particularly well for pre-owned car sales because the eBay buyer is a special kind of customer.

"They're very loyal to eBay," Johnson says. "They do a lot of their other shopping there, they're further down the buying cycle, and they're ready to pull the trigger."

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