Online sales of used cars reached 500,000 in May and could hit 1 million a month by the end of the year, making the Internet accountable for a quarter to a third of all used car sales nationally, says an industry analyst.
Four years ago, Ken Topham viewed eBay as an online garage sale where hobbyists bid on Pez dispensers and eight-track players. The longtime car salesman never imagined making a living off the Internet auction site.
“If you’d said, ’Sell a used car on the Internet,’ I’d say you couldn’t do it,” said Topham, a sales manager at Magic Auto Group in Arlington, about 20 miles west of Dallas.
But when people started selling cars on eBay, he tried it. Since October 1999, Magic Auto Group has sold more than 5,000 vehicles on eBay.
In New York, Galaxy Auto Mall started offering vehicles on eBay about two years ago. Now, eBay accounts for 75 percent of business.
“It was a little bit slow at first, but over the last six to eight months, it’s really picked up,” sales manager Regina Fedorenko said.
Nationally, online sales of used cars topped 500,000 in May and could hit 1 million a month by the end of the year, industry analyst Art Spinella said. That would make the Internet responsible for one-quarter to one-third of all used-car sales.
“It’s in the early stages, so growth is dramatic,” said Spinella, president of CNW Marketing Research in Bandon, Ore.
eBay Motors, a unit launched in late 1998, got more than 2.8 million visitors in a recent week, making it the No. 1 online auto site, according to Nielsen/NetRatings. But it’s facing increasing competition from companies such as Autotrader.com, owned by Atlanta-based Cox Enterprises Inc.
A wide selection and quick responses are two major advantages of Internet sales, Spinella said.
“People think they’re getting a better deal,” he added. “In reality, the deal is OK, but it’s not necessarily cheaper than you would get if you just haggled with somebody locally.”
Topham’s dealership transports cars and trucks to buyers throughout the United States for an additional cost. Some, such as Mike Moran, of Livingston, Tenn., fly to Dallas-Fort Worth and drive their purchases home.
“I feel I got a fantastic deal,” said Moran, who paid $8,950 for a teal 1995 Chevrolet Silverado.
Moran figured that he saved a few thousand dollars from what he would have paid at home, even with $440 in airfare for himself and his wife, Cathy.
eBay is also a resource for vehicle parts and accessories. The San Jose, Calif.-based company said its automotive sales topped $3 billion on eBay in 2002, double its 2001 volume.
“I almost went out of business three years ago,” said John Walls, owner of John Walls 4 Wheel Drive Center in Memphis, Tenn. “Now, because of eBay, if I have a grill guard for an old-model truck, I may get 300 people to look at it.”
If customers have their hearts set on a red Ferrari with 20,000 miles on it, they can probably find a handful quickly on eBay, said Brian Pollock, general manager of Deals Discount Auto Wholesale in Jacksonville, Fla.
“Whereas if you’re in a small town in Iowa, that’s going to be pretty hard to do,” said Pollock, whose company has sold more than 3,000 vehicles on eBay.
Unless buyers hire someone to inspect a vehicle, they’re generally bidding based on photographs on the auction site. They can, however, send e-mails to sellers to inquire about a vehicle’s condition.
Joseph Bain, a friend of Spinella’s, said the buyer should beware.
He paid more than $7,000 for a used Jaguar advertised on eBay as in “unbelievable condition.” The pictures online looked good, and he felt comfortable after e-mailing questions to the seller in Missouri, he said.
But when the car, which he paid $1,000 to ship to Oregon, rolled off the truck, he couldn’t believe what he saw.
“There were dings, rust in certain spots all the way through the body,” Bain said.
In a CNW Marketing Research survey of 4,276 eBay buyers in March, 53 percent rated the vehicles they bought as either exactly as described or better. However, 40 percent said their vehicles were slightly worse than described, and 7 percent said it was significantly worse.
Individuals and dealers who list a vehicle on eBay pay an initial $40 fee and an additional $40 when it’s sold. Buyers use online forms to provide negative or positive feedback on sellers — comments visible to everyone in cyberspace.
“It is like a scorecard,” said Stephanie Tilenius, eBay Motors general manager. For a dealership, she said, “it is their national reputation, so they are very careful to make sure their listing is absolutely accurate.”
Still, buying a used car online requires faith.
“They don’t know me from Adam,” said Ken Bayles, a sales director at Hollingsworth Motorcars Suzuki, a Dallas-area dealer that sells 20 to 50 upper-end cars a month on eBay. “But they’re taking my word and they’re sending me a $70,000 check.”