Buying cars using the Internet
Everyone likes to save money when buying something, and the way we do this has changed. Many people think using the Internet is a way to lower the price of what we are buying. Is there any evidence to support this belief? N.C. State University economist Mike Walden weighs in.
“Indeed there is. … We have a new study from the well respected National Bureau of Economic Research that shows on average if you buy a car using the Internet, you will save about on average 2 percent of the purchase price versus buying the traditional way of going to a dealer and working with a salesperson.
“And there are two reasons given for this. One, the Internet is a fast and easy way to gather information about vehicles from many dealers, so you can be armed with that information and say to Dealer One, ‘Hey, Dealer Two down the road will give me a better deal.’ And so it is a good way to haggle, if you will, electronically.
“And then secondly the Internet has referral services that can send you — if go on and you are looking for a particular car, you may get referred to a particular dealer who is having a good deal — who is having a big sale for the car that you are looking for. And obviously that will save you money.
“So the bottom line here is that it looks like today using the Internet to buy a car is a way both to save money for the buyer as well as it reduces the dealers’ profits by a little bit.”Category: Economic Perspective