Online shopping trends were on an
upward trajectory long before the pandemic and enforced national lockdown saw
South Africans investigating how to buy toilet paper and pool chlorine from the
comfort and safety of their couches.
The rise in popularity of many
existing and new online shopping platforms has, in turn, fuelled the notion
that buying cars in similar manner will soon be a reality. Is it possible to
buy a car online from start to finish and have it delivered to your driveway
without ever leaving home? Yes, but it was also possible prior to COVID-19 –
although only under exceptional circumstances.
According to Mark Dommisse, Chairman
of the National Automobile Dealers’ Association (NADA), there is both good and
bad news for those hoping to click a webpage button and see a new car magically
appear a few days later.
“Many local car brands are currently advertising new methods for South Africans to browse, and in some cases even buy, their next car from home,” says Dommisse. “While these tools are very handy, there are limitations to how far you can travel along this buying journey, despite clever wording which may imply otherwise.”
The fact is these new services offer
an elegant way for Original Equipment Manufacturers (OEMs) and dealers to cast
a wider net over a bigger audience, together with convenient solutions for
willing participants within that audience. But the progression of any deal will
ultimately trickle down to a final transaction between buyer and seller at dealer
level.
For most, a new or used car is the
second highest expense after housing costs, so committing to a large purchase
such as this is obviously a bit more complex than ordering a new kettle from
Takealot. If your kettle arrives by courier a few days after you enter credit
card details and click Buy on your laptop, and you’re not happy with it for
whatever reason, you simply return it and get a refund.
Besides the fact that kettles don’t
come with a myriad upholstery options, optional features, engine choices and
paint finishes, they also don’t often come with mandatory insurance, finance
plans, FICA requirements and large price tags. More importantly, it’s unlikely
you’d be trading in your old kettle, and this process would certainly require some
physical interaction to facilitate – as it does with vehicle trade ins.
“While new digital technologies have, and will continue to accelerate and streamline car buying in South Africa, there are some simple reasons why ecommerce and car sales just don’t gel as a realistic option in the foreseeable future,” says Dommisse.
“While there’s no doubt that for some a car is just an appliance, and the smell of leathers, face-to-face interactions and the feel of steering and gear shifts on test drives don’t rank very highly on importance scales, the vast majority of car shoppers would prefer the touch, feel and smell of a genuine showroom experience, or at least to inspect the goods they’re committing to.
“Then there are the nitty-gritty regulations which take the wind out of the sails of the pure online car buying fantasy. Technically all transactions in South Africa, other than for property, can be concluded with a simple offer and acceptance. But online transactions are governed by the Electronic Communications and Transactions Act (ECTA) and it is here that matters such as offer and acceptance, as well as final delivery are regulated”.
The Act is
designed for items that are extremely standard and understood by customers –
such as a kettle. When it comes to special orders or anything where
specifications are set by the consumer, the goods will only be suitable for use
or enjoyment by that consumer in particular. Cars often come with many
specifiable options, accessories and bolt-on value add products, which would
force number of protections
generally afforded to consumers by the Act to be excluded.
“Imagine an outrageous paint selection combined with an unusual interior colour. It would be unreasonable to expect a dealer to accept the return of this vehicle for any reason other than that it was not supplied to requested specification,” said Dommisse. “Though that is an extreme case, the same would apply to any vehicle with customer-specified fitments no matter how big or small.”
Items covered by the ECTA have a
universal cooling off period which cannot be waived via the contract. This
allows a consumer to cancel any transaction without reason and without penalty
for goods or services within seven days of receipt. The only charge that can be
levied is the cost of returning the goods and payment of the refund must be
made within 30 days of cancellation. This is obviously an unrealistic situation
when it comes to the value of motor vehicles and the natural depreciation they
face as second-hand goods, and this protection would be excluded if a vehicle
has been altered in any way through client specifications.
“South African OEMs and dealerships are certainly working frantically to offer new ways of engaging customers via online portals and platforms, and NADA believes these developments will roll out thick and fast in the wake of the pandemic,” says Dommisse.
“Creating deals, building transactions, and exploring finance options, vehicle specifications, accessories and value-added products can all happen online and these processes will become slicker and more efficient. But the bottom line is that the final stages of the deal should be facilitated through a dealership together with a Sales Executive and qualified F&I Manager.”
In other regions, and the US in
particular, the online car sales concept is nothing new. But despite how simple
TV ads and websites make the process seem, this channel does not come without
some fine print. The successes and profitability of American services such as
Carvana and Vroom are also under question. They may paint an alluring picture
of laptop purchases and shiny new wheels being delivered shortly afterward, but
the reality is that car dealers and showrooms are here to stay.
