ABOUT SHIPCARSNOWShipCarsNow is a subsidiary of Insight Network Logistics and part of the
Union Pacific Corporation.
Formed in 2006, ShipCarsNow was created to provide the used car industry with affordable multimodal auto shipping services. The company brings nationwide transportation resources and technology to the auto remarketing industry as a natural extension of Insight’s logistics and transportation operations for new car distribution. ShipCarsNow.com provides used car shippers (e.g. auto manufacturers, auto auctions, dealers, finance companies, fleet operators, etc.) with a fast and easy way to book affordable vehicle transportation online.
SUMMARY
ShipCarsNow conducted its second annual Dealer Survey in January 2010. The survey was sent to more than 5,000 new and used car dealers. ShipCarsNow conducts the dealer survey as part of its annual market research into dealer attitudes about auto transport and online trading of used cars. While a lot of information is available about the used car industry, not much to date has been focused on auto transportation. As a company specializing in auto transportation services for the remarketing and used car industries, ShipCarsNow uses its survey results to understand and respond to customer requirements for shipping pre-owned and wholesale vehicles, especially when buying online through Internet auctions.
Why is auto transportation becoming a critical component of the wholesale used car industry? Auto dealers are increasingly turning to the Internet to find inventory for their lots because they find shopping online to be a more cost efficient use of their time. A buyer can look at literally thousands of cars online and search for the specific models he needs, as opposed to looking at a few hundred cars in the auction lane that may or may not be right for his dealership. Recent shortages of quality late model used cars has only encouraged more online trading as buyers need to search more widely for good inventory. As online trading increases, Internet auctions are becoming global markets with upstream, simulcast and 24/7 online sales capabilities.
When buying most other items online, location of the product is generally irrelevant to the online buyer; people rarely concern themselves with shipping details related to their purchase, other than delivery time and cost. However, when dealers buy used cars online, they often have to worry about shipping and where the cars are located because shipping is not usually included in the purchase transaction. The 2010 Dealer Survey suggests that some dealers actually restrict their Internet trading based upon their ability to coordinate transportation for their purchases.
Survey data suggest that if Internet auctions integrate better auto shipping options with the purchase transaction, dealers will buy more cars online. Why? Because dealers said they trust the auction to offer quality transportation service that is coordinated with their purchase(s). One dealer commented “…I would be more comfortable with the transaction.” Dealers, just like any other online shopper, want shipping options: expedited delivery to protect a customer order or meet financing deadlines, or low cost delivery to fill inventory needs while protecting their bottom line.
Respondent Demographics
170 dealers participated in the 2010 survey from franchised (90%) and independent (10%) dealerships in the U.S. Almost half (41%) of the respondents represented medium-sized dealerships selling 500-1000 cars per year.
RESULTS SUMMARY
ShipCarsNow - Dealer Size In Total Volume
Question: What is the size of your dealership in terms of total new and used vehicles sold annually?
41% of dealers responding said they sell 500-1000 cars per year. 26% sell less than 500 and 34% sell between1000-2000 vehicles annually. (Figure 1)
Question: In 2009, what percentage (%) of your wholesale vehicle purchases were made over the internet from online and/or simulcast auctions?
On a weighted basis, results show that dealers bought more of their wholesale inventory online in 2009 compared to 2008. (figure 2)
Question: What factors influence your decision to buy used vehicles online?
Dealers ranked the factors as follows, in order of importance:
(1) Less time, travel and expense
(2) Easy to do
(3) Better inventory selection
(4) Better vehicle quality
(5) Better deals available
(6) Transportation is easy to arrange
Question: In 2010, do you expect to buy more, the same, or less vehicles online compared to 2009.
50% of respondents said they expect to buy more; 45% said they planned to purchase about the same amount; and 5% said they planned to buy less online. (figure 3)
Question: If you said your internet purchases would remain the same or decrease for 2010 please tell us why. (select your top 3 reasons from the list below)
The dealers who expected their online purchases to remain flat or decrease ranked the weak economy/demand as their top reason for not increasing their online purchases (28%) in 2010. (Figure 4)
Close behind, the second highest ranked reason (26%) was that they’re finding the inventory they need at the local level and don’t need to expend their buying on the Internet.
Coming in third at 22% was that some dealers just find it easier to buy at their local auctions as opposed to buying from an Internet auction. Comments suggest the dealers like to inspect the cars physically because they’re suspicious that the vehicles might be misrepresented online. One dealer said “It seems arbitration is further complicated with greater distance.”
Question: When buying online, from which auctions do you source the majority of your used vehicles? (select all that apply)
Manheim, SmartAuction and Adesa were the top three Internet auctions dealers used for sourcing inventory over the Internet. (figure 5)
Question: Which statement best describes how you buy used cars online?
ShipCarsnow asked this question to identify trends in where dealers were sourcing used inventory for their dealerships.
27.2% said they shop locally (within 200 miles), a dramatic decrease from 60% in 2008. (figure 6)
47.8 % shop regionally 200-500 miles away vs 30% in 2008
25% said they shop nationwide vs only 10% a year ago.
The trend shows that dealers are beginning to source inventory from farther away, perhaps due to shortages of late model used cars or due to more comfort with online trading.
Question: What factors discourage you from buying cars farther away (<200-500 mi) from your dealership? (Rate in order of importance)
Other than having their inventory needs met locally, transportation issues seemed to dominate the list of reasons why dealers restrict their buying zone. Dealers rated factors in order of importance, as follows:
1. Needs met locally
2. Shipping cost too high*
3. Delivery time too long*
4. Unknown shipping costs at time of purchase*
5. Hassle arranging transportation*
6. Don’t trust online vehicle description
7. Lack of information about shipment progress
*transportation related
Question: If internet auctions were to expand their transportation options, what would you tell them is most important to you?
In the survey, respondents contradicted a common view of some industry pundits – that delivery speed matters more to car dealers than delivery cost. 64% said that if Internet auto auctions offered shipping, they wanted the option to choose between expedited delivery or lower cost standard service depending on their business needs. Until now, the primary transportation service offered by auto auctions has been exclusively truck, which could be categorized as ‘expedited’. Only 17.4% responded that “Speed is all that matters. I’ll pay more for faster delivery”; 18.4% said “I want lowest cost delivery.” (figure 7)
Question: If internet auctions offered integrated shipping options with better tracking of your vehicles, would you buy more vehicles online?
When buying most other items online, people rarely concern themselves with the shipping of their purchase other than delivery time and cost. However, shipping is not usually built into an auto auction purchase. The ShipCarsNow survey results suggest that dealers actually restrict their Internet trading based upon their ability to coordinate transportation for their purchases. 67% of the dealers said they would buy more vehicles online if auto transport were more integrated with the purchase transaction. (figure 8 )
This is down from 2008 but still suggests shipping is important to dealers. It also suggests that arranging auto transportation online has gotten easier over the past year. Some Internet auctions now offer links to auto shippers and there are more auto transportation companies providing shipping transactions on their web sites.
CONCLUSION
The Solution Is Multimodal Transportation
In response to these shifting trends in the used car market, ShipCarsNow is working with Internet auto auctions and used car dealers to offer multimodal auto transportation services that include both truck and rail options. In the past, a multimodal (truck and rail combination) delivery option for autos was limited to auto manufacturers and high-volume shippers. With the introduction of ShipCarsNow and its vehicle logistics technology, used car dealers – even those shipping single units – can now take advantage of rail’s economies of scale. Rail transport offers lower cost, higher efficiency and less damage over longer distances – and is more environmentally-friendly than truck transportation.
“Why box yourself into a 200 or 500 mile trading radius?” says Sarah Harvey, Director of Business Development for ShipCarsNow. “We make it easy and affordable to ship cars nationwide, so auto dealers can expand their markets and buy the cars they need, wherever they can get the best deal. Location should be irrelevant.”
For more information about using a combination of transportation modes to lower your shipping costs, contact ShipCarsNow Toll Free (866) 207-3360, or visit
http://www.ShipCarsNow.com and Register at no obligation to check out our competitive nationwide shipping options.
2010 Dealer Survey: Online Wholesale Used Car Buying & Shipping
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