Oct 18, 2000

Huge Growth Predicted for Online Used Car Sales

According to a top market intelligence and research firm, car dealers are in for a shock. IDC, a Framingham, Massachusetts-based information technology source, says the online used car market in the United States is on the brink of explosive growth, and the big losers in this shift are likely to be car dealers. IDC estimates the online share of all used car sales will jump from under three percent last year to almost 40 percent in 2004. However, the firm warns brick-and-mortar car dealers could put up a roadblock in the market’s development.

“For the online used car-buying market to reach its full potential, online used car firms will need to work hard to provide an integrated system and a full range of vehicle-related services, including financing, insurance, and trade-in services,” said Jonathan Gaw, research manager for IDC's eAuto program. “Because traditional car dealers make their largest profits from finance and insurance services, they may withhold inventory if online auto dealers threaten this part of their business.”

If the online used car market can steer around this obstacle, IDC believes its revenues will accelerate from less than $10 billion in 1999 to over $164 billion in 2004. The bulk of that growth will come at the expense of traditional new and used car dealers.

“Used cars tend to be high-consideration products for consumers, and the Internet helps to bring clarity to the process and transparency to the market, which would lend greater efficiency to both buyers and sellers,” Gaw said.