While purchasing a vehicle through an online dealer can save consumers time and hassle, a new study by car search engine iSeeCars.com found that online dealerships can also save them money. Analyzing over 9.4 million used cars sold in 2018, iSeeCars found that consumers can save 0.8 percent or $185 on average by buying from an online dealership.
“Today’s car buyer wants to spend as little time as possible at the car dealership,” said iSeeCars CEO Phong Ly. “While online shopping has become commonplace in most consumer segments, car shoppers might be reluctant to purchase their vehicle online because it’s such a major purchase. However, they might not be aware that purchasing a used vehicle through an online dealer such as Carvana, Shift, or VROOM might amount to significant savings and they can still get peace of mind thanks to return policies and rigorous vehicle inspections.”
Some specific car models provide even greater savings when purchased from online dealers than local brick-and-mortar ones.
|iSeeCars Top 10 Cars With the Most Savings at Online Dealerships|
|Rank||Car||Average Savings Over Brick-and-Mortar Dealers|
|1||Chevrolet Silverado 1500||6.6%|
|4||Ram Pickup 1500||5.5%|
|5||BMW 4 Series||5.4%|
The vehicle with the biggest savings on average when purchased through an online dealer is the Chevrolet Silverado 1500, with an average savings of 6.6 percent compared to its used car price at traditional local dealerships. “If you purchase a Chevrolet Silverado 1500 from an online dealer rather than a local dealer, you could save $1,958 off the average price of $30,002,” said Ly.
The vehicles that offer the most savings are a mix of six SUVs, two pickup trucks, and two luxury cars. Ly said, “Six of these vehicles with the greatest savings when purchased online were top selling vehicles in 2018.”
Of the six SUVs on the list, five are compact with the midsize Ford Edge as the only exception. “Compact SUVs are the fastest-growing vehicle segment in the U.S., which further illustrates that online dealers competitively price popular vehicles that are in high demand,” said Ly.
Along with providing better deals and convenience, online dealers rigorously inspect all their vehicles and offer free protection plans. “For example, Carvana offers a 150-point inspection and a limited warranty of 100 days/4,189 miles, Shift offers a similar inspection and a 30-day powertrain warranty, and Vroom offers a multi-point inspection with a 90 day/6,000 mile warranty and one year of roadside assistance.” said Ly. “If you aren’t satisfied with your vehicle, you have a five-to-seven day return window, which in addition to the protection plans and inspections helps ease anxiety about not being able to test drive the vehicle before buying. The one exception is Shift, which provides consumers in nine West Coast markets with the opportunity to test drive vehicles.”
Because of the competitive pricing of online dealers, they tend to sell cars more quickly than traditional dealers do. “The average time on market for used cars sold by online dealers is 28.2 days, while traditional dealers spend 54.3 days to sell a comparable used car,” said Ly.
Cars with the Most Savings from Local Dealers
While online dealers provide more savings on average, there are some vehicles which are cheaper on average to buy from traditional brick-and-mortar dealers with savings ranging from 3.0 to 6.2 percent.
|iSeeCars Top 10 Cars With the Most Savings at Brick-and-Mortar Dealerships|
|Rank||Vehicle||Average Savings Over Online Dealers|
|6||Toyota Prius c||3.3%|
Small cars dominate the list of cars that are less expensive at traditional dealerships with subcompact and compact cars accounting for eight of the ten vehicles on the list. Included in the small cars are the Toyota Prius c hybrid and the Nissan LEAF electric vehicle.
The top two vehicles with the greatest discounts from traditional dealers are the top-ranked Chevrolet Sonic with a savings of 6.2% and the second-ranked Ford Fiesta with a savings of 5.4%. “These vehicles are comparably priced, with an average used Chevrolet Sonic costing $10,512 and the Ford Fiesta at $10,335,” said Ly.
Another reason why some of the cars on this list are more likely to have greater discounts at local dealers may be because of their declining popularity. “Automakers have dropped small cars from their lineups due to their decreased demand,” said Ly. “The Ford Fiesta has been discontinued, and the Chevrolet Sonic is rumored to be discontinued in the near future.”
The lone mid-size sedan on the list, the Buick LaCrosse has also ceased production. “The Buick LaCrosse is a slow-selling used vehicle, and its discontinuation further shows that it’s not popular with consumers,” said Ly. “Dealers likely deeply discount these less popular and discontinued cars to move them off their lots.”
Geographic Analysis By Metro Area
In addition to finding the cars with the best deals from online dealers and traditional dealers, iSeeCars examined the top 50 most populous metropolitan areas to see where consumers should shop to get a better deal.
When looking at the metro areas where it’s cheaper to buy from an online dealer than a traditional one, the top ten markets had average savings ranging from 0.9 to 3.1 percent.
|Top 10 Metro Areas for Online Dealer Discounts|
|Rank||Metro Area||Average Savings|
|1||Albuquerque-Santa Fe, NM||3.1%|
|8||Raleigh-Durham (Fayetteville), NC||1.1%|
“The metro areas where online dealers offer greater discounts than traditional dealers tend to be in the markets where used cars are more expensive,” said Ly. “This could be because the supply is low in some of these mid-market areas in the case of Albuquerque or Memphis, or because car prices tend to be higher on the West Coast.”
Meanwhile, the metro areas that offer greater savings at local dealerships than online dealers provide discounts ranging from 1.2 to 5.8 percent.
|Top 10 Metro Areas for Brick-and-Mortar Dealer Discounts|
|Rank||Metro Area||Average Savings|
|1||Miami-Ft. Lauderdale, FL||5.8%|
|2||West Palm Beach-Ft. Pierce, FL||4.4%|
|3||Tampa-St Petersburg (Sarasota), FL||3.4%|
|4||Cleveland-Akron (Canton), OH||3.1%|
|5||Orlando-Daytona Beach, FL||2.9%|
|6||New York, NY||2.2%|
|8||Hartford & New Haven, CT||1.5%|
|10||Dallas-Ft. Worth, TX||1.2%|
“Five out of the ten markets are in Florida, where there is a higher concentration of used car dealers,” said Ly. “Also, there is a high supply of off-lease cars in areas where leasing is popular like Miami,” said Ly.
iSeeCars also analyzed the vehicles in each metro area to determine the car with the greatest savings when purchased from an online dealer or traditional brick-and-mortar dealer.
|Vehicles with Most Savings from Online and Local Dealers by Metro Area|
|Metro Area||Vehicle||Savings from Online Dealer||Vehicle||Savings from Local Dealer|
|Atlanta, GA||Chevrolet Silverado 1500||5.6%||Volkswagen Jetta||11.2%|
|Boston, MA-Manchester, NH||Ford Edge||8.6%||Chevrolet Sonic||9.8%|
|Charlotte, NC||Ford Mustang||5.4%||Chevrolet Sonic||6.4%|
|Chicago, IL||Jeep Grand Cherokee||6.8%||Chevrolet Sonic||10.7%|
|Cleveland-Akron (Canton), OH||BMW 4 Series||6.6%||Chevrolet Sonic||14.2%|
|Dallas-Ft. Worth, TX||GMC Sierra 1500||6.5%||Volkswagen Jetta||9.3%|
|Denver, CO||Chevrolet Equinox||10.9%||Hyundai Accent||4.0%|
|Detroit, MI||Audi Q7||7.7%||Chevrolet Sonic||8.2%|
|Houston, TX||Chevrolet Silverado 1500||5.9%||Nissan LEAF||8.4%|
|Los Angeles, CA||Mercedes-Benz C-Class||6.3%||Volkswagen Jetta||8.8%|
|Miami-Ft. Lauderdale, FL||Porsche Cayenne||0.8%||Chevrolet Sonic||16.5%|
|Minneapolis-St. Paul, MN||Ford Edge||8.8%||Chevrolet Sonic||9.5%|
|New York, NY||Ram Pickup 1500||7.2%||Volkswagen Jetta||12.9%|
|Orlando-Daytona Beach, FL||BMW 4 Series||4.1%||Chevrolet Sonic||11.1%|
|Philadelphia, PA||BMW 4 Series||7.0%||Volkswagen Jetta||8.3%|
|Phoenix, AZ||Kia Optima Hybrid||4.1%||Volkswagen Jetta||10.5%|
|Portland, OR||Ford Edge||13.5%||Hyundai Accent||6.9%|
|Sacramento-Stockton-Modesto, CA||Chevrolet Silverado 1500||10.1%||Nissan LEAF||5.6%|
|Salt Lake City, UT||Chevrolet Silverado 1500||7.6%||Nissan Versa||9.7%|
|San Diego, CA||Toyota Corolla||7.6%||Volkswagen Jetta||7.9%|
|San Francisco-Oakland-San Jose, CA||Toyota RAV4||5.8%||GMC Sierra 1500||9.5%|
|Seattle-Tacoma, WA||Mazda CX-5||12.0%||Chevrolet Impala||8.0%|
|St. Louis, MO||Chevrolet Silverado 1500||7.3%||Chevrolet Sonic||7.2%|
|Tampa-St. Petersburg (Sarasota), FL||BMW 4 Series||4.9%||Chevrolet Sonic||14.9%|
|Washington, DC||Mercedes-Benz C-Class||4.3%||Ford Fiesta||11.2%|
The Chevrolet Silverado 1500, which is the top vehicle with the greatest savings from online dealers, is also the best deal when purchased online compared to traditional dealers in five markets. Similarly, the Chevrolet Sonic, which is the vehicle with the best deals at traditional dealerships, is the most discounted car at brick-and-mortar dealers in 10 markets.
Geographic Analysis By State
In addition to finding the cars with the best deals from online dealers and traditional dealers in the top 50 populous metro areas, iSeeCars examined state data to do a similar comparison.
When looking at the states where it’s cheaper to buy from an online dealer than a traditional one, the top five states had average savings ranging from 3.0 to 3.7 percent.
|Top 5 States for Online Dealer Discounts|
|Rank||Metro Area||Average Savings|
“The state where online dealers offer the greatest discounts is New Mexico, which is unsurprising given that Albuquerque-Santa Fe was the top metro area for online deals,” said Ly.
When looking at the states where it’s cheaper to buy from a traditional brick-and-mortar dealer, the top five states had average savings ranging from 2.5 to 5.1 percent.
|Top 5 States for Brick-and-Mortar Dealer Discounts|
|Rank||Metro Area||Average Savings|
“Florida is the top state for deals from brick-and-mortar dealers, which echoes the metro area data,” said Ly.
“When purchasing a used car, consumers should always do their research to find the best deal whether it’s from a local or online dealer,” said Ly. “Online dealers are relatively new to the marketplace, and it’s important for consumers to understand that they can save time and money by purchasing a vehicle online.”
iSeeCars.com analyzed over 9.4 million used model year 2012-2018 cars sold in calendar year 2018 with 5000-80000 miles. The cars were identified as sold by either local brick-and-mortar used car dealerships or from online-only dealerships Carvana, VROOM, and Shift. The pricing of each car was mathematically modeled to account for differences in location, dealer type, and mileage. The reported data measure the effects of location and dealer type, controlling for mileage. Discontinued cars as of the 2019 model year, heavy-duty vehicles, and low-volume models were excluded from further analysis.
iSeeCars.com is a car search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars VIN check report. iSeeCars.com has saved users over $190 million so far by applying big data analytics powered by over 25 billion (and growing) data points and using proprietary algorithms to objectively analyze, score and rank millions of cars and thousands of dealers. Based in the Boston area, iSeeCars.com was founded by TripAdvisor and SAP veterans determined to improve the car shopping experience for consumers.