Online Car Buying and the Rise of Digital Dealerships

Car buying is moving from the showroom to the living room. Once considered the domain of brick‑and‑mortar dealerships, the automobile purchasing process is increasingly taking place online. More than ninety percent of consumers now research vehicles and read reviews on the internet before setting foot in a dealership. Even before the pandemic accelerated digital adoption, surveys showed that more than four‑fifths of shoppers wished they could save time by completing their purchase online.

The shift to digital is driven by convenience and transparency. Traditional car purchases often involve lengthy negotiations and hours spent in a dealership’s finance office. Digital platforms allow buyers to browse inventory, compare prices, arrange financing and even trade in their old vehicle without leaving home. Pre‑pandemic, only around four percent of car sales occurred online, but that share has grown as dealers and manufacturers rolled out new digital tools. Online‑only retailers such as Carvana demonstrate the appeal: the company sold over 400,000 vehicles in 2022, more than 37 percent higher than two years earlier, and attracts millions of website visitors each month. Tesla went even further, closing its physical showrooms and selling all its vehicles online.

Digital retail is also reshaping the broader automotive ecosystem. Third‑party marketplaces give consumers access to thousands of listings and user reviews, while manufacturers are experimenting with direct‑to‑consumer models. Remote test‑drive services and virtual reality showrooms let shoppers experience a vehicle from afar. Meanwhile, the automotive parts market has shifted online as well — nearly all consumers now check manufacturer websites before buying parts, and the ecommerce aftermarket is valued at tens of billions of dollars.

There are hurdles to overcome. Regulations around direct sales vary by jurisdiction, and many customers still prefer to test‑drive a car in person. However, as digital platforms improve financing options, offer transparent pricing and integrate home delivery, online car buying is poised to gain an even larger share of the market. For consumers, the ability to purchase a car with the click of a mouse heralds a new era of convenience in the automotive industry.