With the rise of online retailing, it was probably inevitable that cars would join the marketplace on the web. What it means to consumers, though, is not entirely clear. Some people love the freedom of being able to buy privately and sell vehicles, but some concern exists over the dangers of unlicensed dealerships. What is certain, however, is that online car sales are here to stay.
Earlier this year, an unlicensed car dealer in Western Australia was fined $6,000 and ordered to pay $9260 in court costs by the Midland Magistrates Court. He was found guilty of selling a number of vehicles without having the license required under the Motor Vehicles Act. What’s not clear is whether there was any harm done.
The acting commissioner for consumer protection David Hillyard says that they will continue to maintain a hard line, and aggressively pursue “backyard” car dealing whenever they find it.
His group and other industry spokespeople are concerned that consumers in Australia are in danger when involved with online car sales.
“Unlicensed motor vehicle dealers are taking away business from licensed dealers, who do the right thing by paying their licensing fees and honoring their obligations about warranties, and other protections for consumers contained in the Act,” Hillyard says.
The primary concern is that vehicles sold this way may not be up to current safety standards, and can pose a risk should there be a mechanical failure while on the road. Added to this is that consumers buying from unlicensed dealers have few ways of seeking redress if there are any problems after the sale.
It is unclear how widespread the problem is at this time, but Consumer Protection cites, at least, two instances of buyers having mechanical problems after the purchase of the vehicles through these types of channels.
“I urge consumers not to deal with unlicensed motor vehicle dealers, and to contact Consumer Protection with any information about illegal operators so we can investigate,” Hillyard says.
Consumers, on the other hand, seem to be warming up to the idea of buying cars online. Many of those people are taking advantage of the ability to bypass franchise dealerships to buy directly from main national dealers.
A UK based study first started polling the question of buying cars online in 2013. At that time, only 17.5% of people reported that the would consider buying a car this way, but the most recent poll found that number had risen to 31.3%
In the original survey more than half of the people say they would never do it, but the anti-online purchase sentiment has dropped by 21.1% to 43%.
For the time being, it is safer to stick to licensed online dealers. Unless you’re a regular on a website scanning vehicles and matching them with sellers profiles its hard to spot the operations of unlicensed dealers. Australia has a wide range websites for buying used cars including Gumtree, CarsGuide, AutoTrader, and many others. As I have posted in other articles gumtree is a favourite of mine and I have also had some success selling vehicles for a flat, pay until sold basis with carsales.com.au.
Most of the advice for the purchase of a car online is the same as the purchase of a car any other way, shop around, test drive, and check the background of the seller. The website Investopedia has put together a list specific to the online arena. Ultimately the best precautions are to check the seller’s credibility through either your local consumer protection agency or online reviews. Also, make sure to use a secure online payment method. A credit card is a good option that offers some limited liability in case the car never actually materializes.
The debate over how much to regulate online car sales will likely go on for some time. However, it still represents a good channel for Australian consumers to make sure they are getting the best prices possible.