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During a time when automakers are discounting new vehicles and slashing interest rates, two recent studies conducted by researchers at UC Berkeley and Yale University show that online vehicle shoppers who buy through Autobytel Inc. will buy their vehicles for less - on average, up to $420 less than if they shopped and purchased a vehicle in the traditional manner. The initial study, titled "Consumer Information and Price Discrimination," was conducted by Florian Zettelmeyer, marketing professor at UC Berkeley's Haas School of Business, Fiona Scott Morton, economics professor at Yale's School of Management, and Jorge Silva-Risso of University of California, Los Angeles. It revealed that shopping on the Internet, and specifically at an Autobytel Inc. website, eliminates factors that increase the price of a new car. As part of the project, researchers studied 700,000 vehicle purchase records from 1999 and followed up in 2002 with a post-purchase survey to 1,500 buyers. The study utilized car purchase data provided by J.D. Power & Associates and Internet usage data by Autobytel.
Findings from the follow-up 2002 survey of 1,500 car buyers confirmed the initial findings. The survey revealed that:
The online price advantage is exclusive to third-party web sites. Purchasing a vehicle through a manufacturer web site does not have the same impact on pricing.
Shoppers who use the Internet for automotive research enjoy a slightly lower price, especially among buyers who don't enjoy negotiating. Buyers who avoid negotiating pay 1.7% less when they use the Internet to inform themselves.
Purchasing a vehicle via an online dealer referral system, such as Autobytel, keeps prices lower because of competitive pressure. Requesting a referral from an online buying service lowers prices 0.8% to all buyers.
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