Name: Pandemic revs up race for U.S. online car sales
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Pandemic revs up race for U.S. online car sales

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By (This August 3 story corrects name of Vroom CEO in paragraph 12 to Hennessy)DES MOINES, Iowa (Reuters) - After years of being part of a future that never quite arrived, the coronavirus pandemic has put U.S. online car sellers on the map.Now comes a race to spend vast sums on digital commerce platforms specifically designed to handle auto sales. Without deep pockets, many startups and others trying to join the online game will likely be left in the dust.“The pay to play on this thing is in the hundreds of millions and the early journey is hard, especially building out the technology,” Russell said.Online sales still only account for around 1% of the roughly $840 billion Americans spend annually on around 40 million used cars. But after numerous U.S. states went into COVID-19 lockdowns in March, the advantage of socially-distant online sales has come squarely into focus.“With coronavirus we’ve seen an additional shift in desire to purchase vehicles online,” said Carvana CEO Ernie Garcia, whose company has grown by triple digits for six years running.Selling vehicles online with no physical showrooms requires more than just a nifty app though.The $2 billion Carvana has spent since 2013 rolling out its digital network has included payments for technology to evaluate trade-in vehicles, financing for car loans, switching car titles across U.S. states with different rules and a logistics network to recondition, store and deliver thousands of vehicles to customers’ homes.Slideshow “It’s expensive to build up an entirely new supply chain that’s nationwide and supports tens of thousands of cars,” Garcia said.Rival Vroom has spent around $1 billion on its online platform and inventory so far. It hopes some day to also use the platform to sell auto parts or insurance, or to serve as a marketplace for smaller auto retailers, CEO Paul Hennessy said.Vroom could provide smaller dealers with reconditioning services, logistics and a vast pool of potential car buyers -- for a fee.Shift’s Russell, meanwhile, also hopes to host other dealer’s vehicles on his company’s platform.over $300 million rolling out a digital platform to accompany its 200 U.S. stores. It is still working through the logistics of serving America’s vast geography.“It’s not for the faint-hearted,” said CarMax Chief Marketing Officer Jim Lyski.Lyski and other executives say other major brick-and-mortar auto retail chains will likely roll out online sales, but the huge investments involved will limit digital competition.“I think the largest players are the only ones that can actually afford to build that capability,” Lyski said.“This isn’t something we’d speculate on,” said Amazon spokeswoman Lori Torgerson.CarMax launched “contactless” curbside pickup during the pandemic, a popular choice for online customers. It also offers free home delivery up to 60 miles (97 km) from a dealership, a service available to most customers.But home delivery is cost-prohibitive in some areas, or state regulations prevent it, CarMax said.CarMax’s Des Moines store, for instance, does not offer home delivery, though general manager Brandon Parram said some customers have asked about it.“I know it takes time to figure out how to make it work,” Parram said, “but I’m a fan of any new way to give customers the options they want.”Major automakers have been pushing for more online new vehicle sales, especially after COVID-19 shuttered many dealerships.But automakers face a big potential challenge from dealers, a powerful lobbying group. Laws restrict direct online sales by auto manufacturers in some parts of the country with franchised dealers.Reporting by Nick Carey; Editing by Tom BrownOur Standards:

By (This August 3 story corrects name of Vroom CEO in paragraph 12 to Hennessy)DES MOINES, Iowa (Reuters) - After years of being part of a future that never quite arrived, the coronavirus pandemic has put U.S. online car sellers on the map.Now comes a race to spend vast sums on digital commerce platforms specifically designed to handle auto sales. Without deep pockets, many startups and others trying to join the online game will likely be left in the dust.“The pay to play on this thing is in the hundreds of millions and the early journey is hard, especially building out the technology,”...

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Nick Carey

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Pandemic revs up race for U.S. online car sales

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