Frost Radar™: North American New Car Online Marketplaces, 2023

Frost Radar™: North American New Car Online Marketplaces, 2023

New and used vehicles can be purchased in a variety of ways in North America, whether through franchised car dealerships, original equipment manufacturer (OEM) agency sales channels, or third-party online marketplaces. The need for an online marketplace came into focus in the early months of the COVID-19 pandemic as many companies selling cars did not offer fully digital services and OEMs had to temporarily close physical dealerships to the public.

Consumers’ demand for more buying choices and intra-brand competition among dealerships drive the growth of online marketplaces, which facilitate the sale of new cars between a variety of brands’ dealers and car buyers. A marketplace partnership can help automakers and dealerships expand their reach to a wider customer base.

The emerging market still has potential for evolution with the development of more value-added, customer-oriented digital services. For example, some marketplaces do not yet allow seller and buyer interaction through a chat interface. Marketplace providers will have to focus on digitalizing their web portals for all aspects of the customer journey, including vehicle tours, configuration, digital signature, and the ability to facilitate transactions digitally.

Millennials and Generation Z made up more than 40% of the North American population in 2021. As they become the largest car-buying group,
they will expect a seamless and digital purchase journey. With high-speed 5G internet becoming more common, marketplace providers will be
able to offer metaverse experiences that include sophisticated augmented and virtual reality that can superimpose images on a real-world view or simulate a 3D image.

The Frost Radar™ reveals the market positioning of companies in an industry using their Growth and Innovation scores as highlighted in the
Frost Radar™ methodology. The document presents competitive profiles on each of the companies in the Frost Radar™ based on their strengths, opportunities, and a small discussion on their positioning. Frost & Sullivan analyzes hundreds of companies in an industry and benchmarks them across 10 criteria on the Frost Radar™, where the leading companies in the industry are then positioned.