Chapter 5



Chapter 5

MONEY IN ACTION

CLICKING THE TIRES

BUYING A NEW CAR IS EXCITING—RESEARCHING DIFFERENT TYPES OF CARS AND TEST DRIVING THE ONES YOU LIKE. NEGOTIATING THE DEAL CAN BE MORE OF A HASSLE. BUT NOW YOU CAN DO MUCH OF YOUR SEARCHING—AND PERHAPS EVEN BUY THE CAR—ONLINE.

Online research is increasingly popular; about 67 percent of car buyers do at least some Internet research before heading to the showroom, and 50 percent of new-car buyers said the Internet helped them decide which make/model to buy, according to the J.D. Power and Associates 2004 New Auto- study.

One option for online car shopping, the manufacturer’s Web site, is good for detailed information on the models. Another option, using independent Web sites, is best for pricing information. Most independent Web sites are comprehensive and include comparative information on new and used cars, reviews, notices of current rebates and incentives, and financing and insurance information. Sometimes you can even advertise your current car for sale.

Some independent Web sites, such as Edmunds ( .), Kelley Blue Book, (), and Autobytel (), connect you to dealers in your area who then contact you by phone or e-mail. Dealers in turn pay the Web sites for the referrals. Other independent Web sites operate differently. AutoNation () owns dealerships and sells vehicles from its inventory, so much of the car-buying process is handled online. CarsDirect () has agreements with dealers to offer guaranteed price quotes, but you must go to the dealer to complete the transaction. A newcomer to online car buying, (), offers a reverse auction. After you submit a request for a particular car, dealers bid against one another for a specified time. The dealer with the lowest bid at the end of the auction gets your contact information.

When shopping online, be aware that sometimes car-buying services don’t deliver on their promises. Dealers may not contact you with a quote, or the price may change when you go to finalize the transaction. To get the best deal, visit several Web sites. Don’t overlook your local dealers—they may match or beat the Internet offers.

Critical Thinking Questions

1. How has the Internet changed the way people buy cars? What key benefits does it offer?

2. Describe four methods of getting a price quote for a car.

3. What are the potential drawbacks to buying a car online?

Sources: Bob Tedeschi, “The World Wide Web Is Emerging as a Powerful Force in Car Sales, with Benefits for Manufacturers and Buyers,” New York Times, September 16, 2002, p. C.5; Lisa Kalis and Dana White, “Kicking the Tires, from Afar and Online,” New York Times, August 13, 2004, p. F10; Mark K. Solheim, “No-Hassle Car Buying,” Kiplinger’s Personal Finance Magazine, November 2005, p. 130.

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