Will all cars one day be sold this way?

We’ve written a lot recently about how the internet is changing the way cars are presented, marketed and ultimately sold. It’s possible that one day, perhaps in the not too distant future that all cars may be sold online. Does this sound a fanciful concept? Does it require a massive leap of faith to envisage a time where we can buy a car with a couple of clicks? Well not really because it has already started happening. Autoquake (www.autoquake.com) is currently the only UK based company selling used cars direct to the public via the internet. We’re not talking about marketing cars to the public on behalf of dealers, where the real business ends up being done in the showroom. No, you do your research, browse the stock on the site, look at the detailed images, make your choice and buy it. You can then pay a fee to have the car delivered or arrange to collect the car from one of the holding centre’s. If you want a test drive before you buy you reserve the car and make an appointment and if you don’t like the car then the deposit is refunded “no questions asked”.

Autoquake source their cars from UK leasing companies, 12 of which are in the UK top 20 and receive 1,000 cars per month which they anticipate doubling by the end of 2009. You won’t find many high end models but the de-fleets they do sell will always have a full service history and no more than 2 previous owners. Their core stock will all have less than 50,000 miles on the clock and will be less than three years old. Like most of the used car trade there have been stock issues of late, with their average of around 600 cars available on the site having been somewhat depleted in the first months of 2009 but they hope to be back up to this figure again by the end of April.

Autoquake is predicting rapid growth in this sector and we have seen over the last year that eBay and Autotrader are upping their game. What a game it is with approximately £1.2billion worth of cars transacted on eBay each year. Autoquake sold 700 cars in 2007, 4,700 last year and predict 15,000 for 2009 which is pretty spectacular growth even without a recession. A recent report by CapGemini stated that 20% of consumers were “likely” or “very likely” to purchase a car online, which was up from a figure of just 2% in 2001. However Autoquake take the whole process much further than eBay, Autotrader and the like and seem to have discovered a formula that enables potential customers to buy with confidence, which really is vital to their business model. If a car is not as described in the minutest of detail the whole concept falls down. They are backed by some £10 million of venture capital investment so they certainly mean business when trying to exploit this gap in the market.

It seems that the cars listed are generally cheaper than main dealers and supermarkets (10% cheaper than supermarkets and 17% cheaper on average from franchised dealers according to Autoquake) and their focus on absolute transparency and quality of information is obvious when you visit their site, which also offers a rewarding user experience (you can see where a lot of the investment capital went!). It will be interesting to see how long it is before they are seen as a real competitor to traditional car sales outlets. As companies observe the success of Autoquake will they be able to keep this market for themselves or even remain the market leaders once other, major players decide to throw their hat in the ring. With the rapid growth in advertising of cars generally on the web, which in turn has virtually wiped out the competition from newspaper and magazine advertising, could this really be the future for selling cars?

However a stumbling block to the Autoquake model could be their inability or unwillingness to deal with trade-ins. If we look at the amount of cars traded in to car dealers every month (which is reckoned to be somewhere in the region of 1 part exchange to every 2 cars sold) they are potentially losing out on a huge amount of sales and this could ultimately limit the growth of the concept. As you can imagine most buyers don’t have the time, confidence, knowledge or inclination to sell their cars privately so are prepared to sacrifice a few hundred pounds by trading their old car to a dealer and in their minds this far outweighs the struggle to sell privately. Autoquake argue that they can only offer the low prices they do by eliminating the costs a normal car dealer would incur such as employing sales staff and dealing with part-exchanges and the best they can offer is some tips on their website on “how to sell a car”. It may be difficult to quantify how many potential customers fall at this first hurdle but we’re sure the figure is significant. That said with the advent of other car sites such as www.webuyanycar.com amongst others, there will surely be companies who will take up the slack. As with anything the easier and cheaper you make it the more customers you will attract.

The Autoquake concept seems elegantly simple and robust and as one day all cars may be sold this way we thought we’d better put the system to the test. So what happened when MTI bought it’s very own used car from Autoquake?

We first of all decided on the car we wanted and after a small amount of deliberation plumped for a Seat Leon. We browsed through the available Leon’s on the Autoquake site and found just 4 so the choice became a little easier. We quite liked the look of the 1.9TDi Sport which at £9,198 for 07 57 example with 26,000 miles seemed reasonable (price new £13,880 trade approx £8,500).

We browsed the information and photographs of our chosen car. The information is very detailed and the photos are clear and sharp with some 50+ images in total which give a good indication of the cars general condition. Autoquake themselves consider the USP’s of their operation to be “trust and transparency”, “hassle free” and “low prices” and judging by the information available on each car, the fact you can buy from the comfort of your own home and the prices quoted they may have a point.

OK pleased so far with what we’d seen we decided that this particular Leon was the car for us and clicked on the “reserve” button. We were then taken to a secure part of the site in order for us to leave our refundable deposit of £100.00 by credit card. Now although the price advertised for our car was £9,198 there is a “transaction fee” of £59 added for “administrative costs” which took the actual price of our car up to £9,257. In the event of us deciding we didn’t want the car within the 7 day refund period and after having paid in full, we wouldn’t actually get the £59 back. This is not terribly clear on the site and you have to click through to the “money back guarantee” page for an explanation (of sorts) “We’ll have to hang on to the cost of delivery and transaction fee” is all it says. It doesn’t mention this on the FAQ page (which is otherwise quite good and well thought out) and in fact states the following; “All our cars have a 7-day money back guarantee – No questions asked. If you are not satisfied with your car, you can return it up to 7 days after pick up or delivery and claim a full refund.” Except it’s not quite a full refund is it? That is the first negative so far but we feel this could and should be made a clearer. I suppose if you’ve been driving the car for seven days £59 seems quite reasonable but some people will feel caught out and if it’s not a full refund it should say this.

The car is now reserved for three days only so we’d better get our skates on (although we could have opted to extend the reservation period by upping the deposit to 10%). With the reservation process now complete we received an email giving us all the details of our car and the contact details to take the reservation further, which we, of course did and arranged a date for the collection.

Fast forward to d-day and the insider who drew the short straw received a call asking how he would like to pay for the vehicle, whether he wanted to book a test drive and informing him that he would have to bring both parts of his driving licence. There are various payment options available and the pros and cons are listed on the site. Credit card payments incur a 2.9% premium as do bankers draft and, believe it or not cash and there is a cash limit of £9,000 (something to do with European money laundering rules). So don’t go up to Autoquake and ask “how much for cash?” as you’ll end up paying more! BACS, CHAPS and debit card have no additional fees so we opted for debit card.

There are two collection centre’s one in Birmingham and the other in Leeds and as Birmingham was closer we chose that one. Our man travelled up from London by train and after a small amount of confusion (apparently there are a lot of similar looking industrial estates in the area) he made it to the entrance. After telling a slightly confused security guard who he was, a young lady appeared from a pre-fabricated hut to greet him. He was then taken to another hut where he was told to wait. After a short while another employee came through and asked for our man by name and showed him to our Leon. He was asked to have a good look around it and someone would be out to see him shortly. Well he certainly had plenty of time to investigate the car, and in fairness it was exactly as described, as it was about half an hour before he saw anyone again. This time another male employee came over, apologizing for the delay (something to do with having new offices built). He took our man back to the pre-fab, photocopied his licence and asked whether everything was OK with the car. And it was, apart from some mist inside the rear lights which our man was assured was just from the pressure wash and would dry out.

The test drive was literally around the block and our man hardly got out of 3rd gear. He enquired as to whether all the test drives were that short and was told that longer ones could be “arranged” but was left with the feeling that this guy was in a hurry. At the end of the day that suited us fine but some people may want a bit more “touchy feely” and if that is the case then they may be better suited to the full dealer service rather than “no-frills”, whether they would be prepared for the extra cost that is another question.

Back in the hut to do the paperwork our man was given the extended warranty and GAP insurance sales talk, which is fair enough and it was by no means a hard sell.
One thing we should point out is that they do not have road tax on the cars but do offer a 10 day cover note facility so that you are able to get the car taxed as soon as possible. It is obviously not practical to keep all the cars taxed, and as they are on private land this is OK, but taxing the car is obviously the responsibility of the new owner so unfortunately it means you either have to search out a local post office or drive home without tax, and if you do get stopped there is a chance you would be prosecuted for failing to display a tax disc. A traffic cop known to us says that they usually see if you “Fail the personality test” – in other words they use their judgement and discretion and of course you would be armed with your cover note and the hand-over documents for the car so we doubt it would be a problem.

Considering our man arrived at the Autoquake pickup point at about 2.45pm, and actually left at about 5.15pm, it seems the process can be a little slow but the service was polite, friendly and generally efficient all the way through. Their site in Birmingham is obviously being renovated so we’re sure that things will be a lot more efficient in the future.

As for the car itself, as we said it was exactly as described and was in excellent condition throughout. Please draw your own conclusions from our description of Autoquake’s service but I think it’s safe to say that there is very little to poke holes in. Of course we did not ask for a refund and cannot tell you what you might experience should you request one but if all the other aspects of the service are anything to go by we feel confident that you shouldn’t have any problems.

Is the internet the future for used car sales? Well we might not be quite there yet but one thing’s for certain Autoquake takes us a good deal closer.

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10 Responses to Will all cars one day be sold this way?

  1. becky b March 19, 2009 at 2:34 pm #

    I wouldn’t spend £9k of my hard earned on a car that I had to feel guilty over wanting a proper test drive!
    The value of this type of transaction deserves care and time from the company selling, the internet is an excellent meeting place, not a tool to keep your customers, spending thousands of pounds, at arms length.
    Autoquake’s website looks cheery and helpful, the reality from this article looks like its the same old ‘take your money and run’ outfit. No frills, no service, no care, no effort eqauls short term high profit for the dealer and leaves the customer feeling rather empty after what is (like or not Autoquake) an emotional event.
    There are a few operations like Autoquake around who basically want lots of sales but limited interaction with their customers. Its not a ‘new concept’ its easy to cut the cost of any product when your not investing any time and effort with your potential customer.
    Buying a car for a very high majority of us is not the same as ordering a book from Amazon or groceries from Ocado and with Ocado I don’t have to travel up to a hut in the middle of nowhere to wait for my potatoes.

  2. pc brown March 19, 2009 at 3:45 pm #

    What happens if you have an accident on your way home and you have no tax?? Its seems outrageous that they charge £59 for admin and are happy to let you drive off illegally.

  3. Cameron March 19, 2009 at 5:03 pm #

    Take a look at the the managment team and board members on their site, there ‘bios’ have all been on there for 2-3 years. How did they all get paid by the sale of just 700 cars in 2007 Hmm? I’ve watched this company for some time, they’ve got more cars around them and they’ve invested alot of money on the website with beautiful happy people on the home page, cheap marketing slogans and lengthy egotistic statments about how new and exciting it all is. Its just a facade because at the end of the day they’re nothing new, they’re just selling cars like the rest of us. There are very few shortcuts in this industry particulary at the moment. So called business academics always fancy the motor trade as a quick easy buck, I’ve seen it all before-seduced by turnover. The bottom line is selling used cars is a hard and dirty job with little reward. It doesn’t matter how much front end marketing you throw at it the end job is just the same-you can’t sanitise it. Most people use the internet as a starting point to look for cars but then will head to a dealer to see the car and meet the buyer before making a decision. Stock control is massively important too, they were probably better off keeping it small, thats why many of the car supermarkets come and go. They may have an arrangement with their suppliers for stock but that won’t last if they don’t shift depreciating assets quickly. This company will struggle in the same way as we all are now to make a living from used cars. In the motor trade these days there’s no subsitute for hard work and effort, no matter how many CEO’s you bring to the table.

  4. Mark Robbins March 19, 2009 at 7:47 pm #

    As for taking the money and running, No frills, No service, No care, the cars they offer ARE cheaper than Main Agents and Supermarkets, its like everything in life isnt it? you cant get “Business Class” service for “Economy Seat” money !! When will the car buying public understand this?

  5. Keith Holland March 19, 2009 at 8:01 pm #

    I think you have to hand it to them, their site is very slick and you can see where they have spent a lot of the money. I personally believe that with mediums like these it is purely a case of customer perception

    ”Am I saving money? “Is it a great deal?’ and I’m happy I don’t have to engage with a salesperson who may try and fool me around and try to trip me up”

    It’s basically doing exactly what is says on the tin, however if someone was to really look a little harder at the operation are their cars really much cheaper? Or is it an illusion? This takes us back to overall perception. Whatever the case they are certainly offering a viable alternative for some customers, and let’s face it the one stumbling block appears to be no part-exchanges then the type of buyer who will go to an industrial estate in the back-end of beyond and collect their car will most likely be the same people who want every last penny for their existing car. So my guess is they would rather put up with the aggravation of having lots of tyre kickers come round their house if it means they will get a few hundred pounds extra for their old car and then take themselves up to Autoquake.

    I feel the operation will continue to be very successful as long as they can keep locating stock because, we in the trade all know the auctions are having a field day at present and most fleet/leasing companies can sell their stock at auction and get their money back far quicker than the 40 days it may take Autoquake to move their cars on. I could see this being a real problem for them and certainly may prove to be a firewall to their companies’ further growth.

  6. Mark Robbins March 20, 2009 at 9:53 am #

    Last month they had a New Shape 06 Ford Focus TDCi at £1,000 less than any other medium on the net, no matter how hard i tried (and it was very !) i simply could not find cheaper anywhere, it was the right colour, spec, and mileage, needless to say it wasnt there long, no matter what the public says about service, expectations, quality etc: they always want a bargain / or lower prices, look at the success that is Tescos, Asda, Morrison, Easy Jet, Ryan Air, all of these companys have their share of critics, but still they continue to grow, Why? Price and nothing else…………………………….

  7. cameron March 20, 2009 at 12:59 pm #

    They’re not actually that cheap, we regularly just under cut them on Autotrader, maybe they are compared to an old school used car showroom but they are fewer and fewer these days. Autoquake’s cars tend to be bog standard stock ex-lease cars, there’s only a limited number of people who want these in the first place, have manged to sell there existing car and are happy to make the buying decision without driving, seeing and touching first. I agree with Keith, they’ll only survive if they continue to get access to stock with the help of a strong stocking plan, they have to keep the numbers up and must be able to dispose of them quicker than the auction houses can, which at the moment is no mean feat. If their limited market dries up unfortunately for them they’ll soon be the wrong side of things. I agree with you Mark price is a major factor but as you know retailing cars is a very different ball game to cheap flights and groceries otherwise Tesco and Easyjet would be doing it! At this level and in this climate absolute control and high volume is the only way to suceed and even if you can get forward in the motor trade the fruits of success will not compare with business’s selling every day consumables.

  8. Mark Robbins March 20, 2009 at 5:47 pm #

    Fair and good point Cameron, and as Keith rightly says its all down to perception, however the one thing i still dont get about this business (and ive been in it for more years than i care to remember) is why when the “doom laden bells” are chiming for our industry both in the press, on the nightly news and indeed here on the net, are cars making silly money at auction!!!! even the usual unwanted low spec stuff is making bundles? we are hearing about shortage of stock, but theres no shortage of cars, just the right ones! as MTI recently stated, are dealers going to be left with egg on their faces? a resounding yes looks lightly.

  9. cameron March 20, 2009 at 8:26 pm #

    I know Mark, its mad out there, I’ve never seen it like this before and much the same have been in it for too many years. The massive shift in values and supply over the last year is no good for any of us and ultimately no good for the punter. I too get fed up with hearing the bad news, as I type this the motor manufacturers are again in the headlines on the radio in the background for all the wrong reasons. The lack of new cars produced and sold is going to have a direct affect on the used car market at every level. Autoquakes projections above are simply unrealistic in this market place but I guess if you’ve managed to convince others to let you have cars sale or return, then you have to keep the front up by talking big talk in the hope that it all comes good. Personally I’m downsizing for a while-back to basics for the time being, its not all bad news and it doesn’t mean a going backwards, its just trying to adapt to an different marketplace. This is no time for bluff and bull.

  10. Rob - Hornchurch October 24, 2009 at 9:42 pm #

    I bought my current car from autoquake.

    Pros – cheap price, good range

    Cons – no tax

    I would say that the car could have done with a bit of clean, but apart from that I can’t really complain.

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