Automotive industry’s move online

Working closely with multinational manufacturers and automotive retailers, consumer and automotive specialists from Shoosmiths have been at the forefront of supporting the automotive sector’s move towards e-commerce and online sales.

Recent years have seen a notable trend from automotive manufacturers and retailers - for new and second-hand vehicles - towards developing their online presence and direct online sales. This route to market is leading to new opportunities, but also challenges for businesses looking to take advantage of the opportunity to sell online.

This is especially noticeable when considering the requirements a business must meet to market and sell vehicles to consumers. 

Consumer rights in the automotive sector can be complex. Legislation that is primarily designed to protect customers in a simple goods or services transaction is applied to the purchase of a vehicle. There are also often associated finance arrangements to consider, and compliance with regulatory requirements when offering finance products to consumers online is a key challenge for any business looking to develop an e-commerce offering. 

Shoosmiths’ automotive team has advised several automotive manufacturers on their move towards direct online sales. This has included the development of comprehensive online sales offerings, the implications of cross-border e-commerce offerings, the impact of geo-blocking and website accessibility rules, as well as addressing issues that can arise around the purchase of a consumer’s existing vehicle as part of the overall transaction.

As part of each project, Shoosmiths has prepared tailored contractual documentation for use in relation to cash and financed purchases online. The online sales implementation also required a thorough analysis of the information a consumer receives and the wider experience as they progress on the journey to completing a purchase.

Compliance with consumer protection law is driven by the principles of fairness and transparency, and in each project, it was vital that consumers purchasing a car online were provided with all of the details of their purchase at the right time. 

The particular characteristics of a vehicle also requires careful consideration, whether this is practical limitations on the maximum speed and where the vehicle can be driven, information relating to the previous use of a second-hand vehicle, or the status of the vehicle for taxation purposes. Failing to factor this into the consumer journey and provide the required information could - in a worst-case scenario - lead to enhanced cancellation rights for any purchaser of a vehicle, jeopardising the commercial viability of an online sales model.

The in-depth approach taken by Shoosmiths’ experts involves an exhaustive assessment and testing process for each consumer journey - from entering the e-commerce site through to aftercare. This ensures that each client effectively communicates the required information to customers, while delivering a positive customer experience throughout the sale process.