Four ways buying a car is different in 2021

People checking boot of new car

Tim Nicholson

Posted June 04, 2021

How you buy a car is changing. Here are four trends driving the shift.

Much has changed in the automotive industry since Karl Benz patented the world’s first petrol-powered car in 1886, but how we buy cars hasn’t evolved at the same pace. In fact, little has changed since the franchised dealership model was born in the late 1800s.  

There have been some big shifts in recent years, including the ability to buy a new vehicle completely online. But there are other shifts in automotive retail that could impact how you get behind the wheel of your next car. 

From online car sales to car subsciption services, here are four trends shaking up the car buying industry. 

Four ways buying a car is changing

Growth in online car sales 

If you’d rather avoid a dealership altogether, some brands offer an online purchasing service. You simply identify your desired make/model/variant, select colours, trim, powertrains and options before making a payment and waiting for delivery of your new wheels.  

Subaru Australia started online sales back in 2012 with the launch of the BRZ coupe. What started as an experiment has since expanded to cover Subaru’s entire model range. 

Subaru Australia general manager Blair Read says the brand’s online sales have been successful, despite only making up a small percentage of overall sales. Blair says a broad range of people buy cars online, but the one thing they all have in common is that they are time-poor.  

While Blair sees potential for more growth of online sales, it won’t be dramatic, adding “it’s an option that complements our traditional network and offers choice for those that need it”. 

Despite several manufacturers including Tesla, BMW and Mercedes-Benz now offering online sales, Australians still prefer to buy a car in person. According to Deloitte’s 2021 Global Automotive Consumer Survey, 79 per cent of respondents said they still expect to purchase their next vehicle the ‘traditional’ way (in person), while 61 per cent would still prefer to interact with an authorised dealer.

Multi-brand car showrooms

We’ve all heard stories of terrible customer service at a car dealership, usually relating to a pushy or dismissive salesperson. Automotive website reckons it’s found a solution to this. The publication is piloting a customer-facing showroom and test drive hub at Westfield Warringah Mall in Sydney designed to help people discover, drive and compare new cars.

One of the key differences between a traditional dealership and the CarExpert Experience Centre is that it doesn’t have salespeople and it doesn’t even sell cars. It is staffed by independent car experts – including some of its writing team – who help car buyers and enthusiasts research and evaluate a collection of cars from different brands. CarExpert says the “brand-agnostic vehicle test centre” will resonate with buyers looking for independent advice and experiences without feeling the pressure of having to buy a car.

The hub includes 960sqm of floor space, as well as use of the centre’s valet car park for test drives. Approximately 40 new cars from more than 25 automotive brands (with more on the way) are available to check out or test drive, including some of Australia’s bestselling 4x4 utes, small cars, SUVs and electric vehicles.

If you find your perfect car at the centre, you’ll be directed to the nearest dealer – at your own leisure – to make the purchase. The Sydney pilot has lured more than 5000 punters through the doors already and there are plans to expand to Melbourne by the end of the year and Brisbane next year.

Person holding car keys

Subscription services

If buying or leasing a car sounds like too much of a commitment, then a car subscription service could be the answer. Unlike a car lease where you sign a contract of between two and five years, and have to wait until the end of the lease period to return or upgrade the car, a subscription allows you to pay a recurring fee to access a car for a particular period. 

Some subscription services allow you to swap into different cars as your needs change. For example, you could sign up with a small hatchback then jump into a medium SUV for a few months if you’re after more space. 

Described as the Netflix of cars, subscription services are payable weekly or monthly and they cover insurance, registration, servicing and roadside assistance, but usually exclude petrol and toll costs. There’s usually no minimum or maximum period for the service so you can cancel the subscription after a couple of weeks or a few years, depending on the notice period. 

Car subscription is in its infancy in Australia, but companies offering the service include Carbar, Carly, Motopool, Popcar and Hellocars. A new Australian start-up is adding its own twist on the subscription service. Cartel Motors will allow people to own a share in a luxury car or exotic supercar like a Lamborghini. The car will be shared with up to four other owners and the monthly fee covers costs such as delivery, maintenance and vehicle storage.

The positives are flexibility, all-inclusive fees, and the ability to try before you buy, but there are some cons. You may not be able to access the service depending on where you live, they might not have the car you want at the time you need, costs can increase depending on the car and plan and there can be rules about who, apart from you, can drive the car. So do your homework before jumping in.

Dealers shifting to agency model 

Under the current dealer franchise model that dates back more than a century, dealers have contracts with automotive brands or local distributors to sell new and used cars, provide servicing and offer other products and services. The dealer buys cars from the manufacturer and then sells this stock to customers.  

While most automotive brands still operate under the franchising model, some car makers are making the shift to the ‘agency’ model. Under the agency model, the stock remains the property of the manufacturer until it’s sold to a customer, and agents are paid a flat fee for selling each vehicle.  

Honda is the first brand to make the switch in Australia, after successfully transitioning in New Zealand in 2000. Under the new model, each model/variant has a consistent retail price, regardless of which Honda outlet you purchase from. Honda Australia says the new model ensures certainty of price, and a consistent and transparent experience across the network. It also removes some of the pressures and anxiety that can be associated with the sales process, such as haggling. 

Mercedes-Benz Australia is shifting to the agency model in 2022. Tesla famously eschews the franchise model in favour of a showrooms where prospective buyers can test a car in a shopping centre or ‘gallery’ and make the purchase online.