Car buying goes the way of Amazon: 'Customers are ready'

Imagine buying a new car, at your home computer, in 19 minutes. That’s what MINI, the funky British marque, says is now possible.

The brand recently introduced MINI Anywhere, a pilot program in California where MINI enthusiasts can choose their vehicle, apply for financing and sign all necessary paperwork in under 30 minutes. The majority of credit applications are approved instantly, according to MINI executive Patrick McKenna.

MINI Anywhere is headed next to Florida and Texas and a nationwide rollout to MINI’s 115 dealers is planned by year-end.

“This definitely is the future,” McKenna, who oversees MINI’s marketing and product teams, told ABC News. “We’re making dealers digitally savvy in the marketplace.”

The program was designed to make the car buying process easy: Shoppers can see what the car looks like in their driveway or parking garage via augmented reality. Virtual test-drives and walk-arounds are possible too, said McKenna, who helped spearhead the program last July.

PHOTO: MINI Anywhere launched this summer as a pilot program in California with plans to go nationwide.

Plus, buying a car with a few clicks of a button is not too different from shopping for groceries on Amazon, McKenna noted.

“The younger generation is fine doing a transaction online without driving a car,” he said.

Karl Brauer, executive analyst at iSeeCars.com, said many consumers would be happy to eliminate the dealership experience — the haggling, the long hours — entirely. The pandemic forced shoppers to be independent and choose vehicles without sales assistance, a scenario that has been largely positive and beneficial, he said.

“We have a new awareness of how much easier it can be to buy a car online with minimal to no physical requirement to visit a dealership,” he told ABC News. “Digital options existed for years. Automakers were ready. The pandemic pushed it along.”

There are drawbacks, of course. Higher prices. Zero negotiating. The inability to see or touch the new vehicle in person. Even impulsive decisions.

“You could end up with buyer’s remorse,” Brauer explained. “Car purchases can be highly emotional and it’s not wise to make a big financial decision based on emotion.”

McKenna acknowledged MINI Anywhere may not be the cheapest way to buy a car. The program could also potentially impact MINI’s sales associates, or “motoring advisers” in MINI speak. But dealers can “reinvent” the delivery, he said.

“They have a chance to build [a customer] relationship by making it a personal, exciting delivery — a ‘wow’ experience,” he explained.

PHOTO: MINI executive Patrick McKenna says 60%-70% of credit applications get approved instantly.

Carvana, an online dealer for used cars, has sold more than 750,000 vehicles since its launch in January 2013. Last quarter it moved 107,815 retail units, an increase of 96% year-over-year. Second-quarter revenue topped $3.3 billion, a rise of 198% YoY.

“For most customers, buying a car online is simpler and a better experience,” Eric Garcia, CEO of Carvana, told ABC News. “The biggest hurdle for online is establishing trust.”

PHOTO: Vehicles sit inside a Carvana Co. car vending machine in Westminster, Calif., May 28, 2020.

Carvana gives customers seven days to return a vehicle if they’re not completely satisfied. The return rate is the mid- to high-single digits and more than half of returns are swapped for another vehicle, Garcia noted.

“We found undoubtedly that customers are ready and willing to buy cars this way,” he said. “That’s what’s driven our growth year after year. COVID accelerated people’s willingness to try new experiences.”

And the test-drive that’s missing when buying a vehicle online? Not a huge factor in the buying decision, according to Garcia.

“Consumers don’t even know what they are trying to learn in a test-drive,” he said. “People don’t have a great sense of how cars feel differently. Consumers are looking for a deal, a good price and a seamless experience.”

PHOTO: A Carvana vehicle inspection center in Phoenix, Arizona.

Lincoln, like MINI, has been vocal about sending consumers online to buy its SUVs. Not every automaker though is ready for the digital shift. Genesis, the 6-year-old Korean luxury brand from Hyundai, has been ramping up its dealership presence in the U.S., building new “permanent residences” in various U.S. cities and markets to boost sales.

“Many people still want to go into a dealership and compare vehicles and test-drive them and shop at their convenience,” Tedros Mengiste, executive director of sales operations at Genesis North America, told ABC News. “You can’t buy a [Genesis] car online yet but can send exact specifications to a dealer.”

PHOTO: The Genesis GV70 SUV. The Korean automaker is expanding its dealer network in the U.S.

Mark Takahashi, senior reviews editor at Edmunds, has not heard of any online car buying horror stories. Going to a dealership can be “an ordeal,” he argued, adding, “There really aren’t any disadvantages to buying online.”

“Dealers are trying to do better … but it’s still unknown if the dealer model will survive,” he told ABC News. “I don’t think shoppers are going back to dealerships 100%.”

Brands that tout their personalized service and intricate customizations can also move the entire process online, Takahashi said.

“This model can apply to every automaker,” he said. “Online shopping is getting more ubiquitous and consumers are trusting it a lot more for larger purchases. But there will always be holdouts who want to see the car and samples in person.”

MINI of San Diego formally launched the MINI Anywhere program on Monday after a “dress rehearsal” and is busy notifying current clients about the online tool. So far one customer has purchased a MINI online with the help of Lisa Mitchell, the dealership’s finance director.

“We did it together [on Zoom] and it took about 45 minutes,” she told ABC News. “We’re letting guests be more empowered now — they get to do it their way. I am excited.”

Whether it’s via a computer screen or in person, Brauer applauds the moves automakers are implementing to improve the shopping experience.

“Buying a car should be one of the most enjoyable things you do,” he said.

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