01 March 1998

MANAGEMENT CONSULTANCY KPMG yesterday warned traditional car dealers that they must embrace the Internet without delay if they are not to lose out to powerful cyber-rivals. James Rodger, KMPG automotive specialist, predicts that more than 20% of all new and used car sales in the UK will be via the Internet within the next two years. His prophesy comes hard on the heels of a decision by Auto-by-Tel, which claims to be North America's largest Internet car sales operation, to set-up shop in the UK at the year end. AbT's main US rival Autoweb also plans to invade the European market, although it is not yet certain that the UK will be its first port of call. Both companies' Web sites enlist partner-dealers and point potential customers to the nearest showroom stocking a vehicle that meets their stated specification. KMPG's research indicates that over three million new vehicles were sourced via the Internet in the USA last year. According to Rodger, who has been researching North American car marketing trends for the past three years, UK dealers must act now and ally themselves with one of the specialist automotive Websites, of which there are several in the UK including Autolocate, Auto Trader, Car Shop and Virtual Showroom. However, the majority of the UK's 6,000-plus dealerships are sceptical about the value of the Internet as a marketplace [much like the UK motorcycle industry which in the early '60s airily dismissed its Japanese rivals as risible upstarts.] Rodger accepts that the Internet has much higher penetration in the US - about 50% of all American homes - compared with around 1m in the UK. He believes, however, that it will be only 18 months before UK usage hits the same percentage penetration as the US.