Car sales over the Internet, far from being the all-conquering idea that would dominate the market and crush traditional dealerships, is set to reach a more prosaic level.

It will be useful for finding information, but not the choice of many for completing deals, according to the report published by the Economist Intelligence Unit (EIU)."It remains to be proved whether a single extra vehicle has yet been sold because of the Internet," the report said.The report said Internet car retailing Websites have proliferated in the US. But they are now struggling to grow fast enough to survive, and to find the best formula that does not simply add an additional layer of complexity.

Automotive researcher J.D.Power-LMC, has said that only about four per cent of deals takes place in the US. In 1999 the deals were done entirely over the Internet, although about 40 per cent of prospective customers used on-line computers to trawl for intelligence.

In five years about 80 per cent of car buyers would use the Internet in some way to buy a car but only eight to 10 per cent would buy entirely from the Internet, J.D.Power-LMC said.Ian Robertson, director of the EIU's automotive group, said that until a couple of years ago there was great optimism that the Internet would become the dominant method of selling cars.

Net for gathering intelligence
"The projections were that 60 per cent of car sales would be over the Internet by 2005. In reality, the report shows people using the Internet to gather information and intelligence on prices, but to conclude the deal they are still searching for the reassurance of that traditional handshake you can't find over the Internet," Robertson told Reuters."We are looking at a much more sober projections of the Internet opportunity where it will be one of the several ways but not the only way in the future," Robertson said.Car retailing over the Internet has also been accelerating in Europe with sites like www.oneswoop.com, www.auto3000.com and www.kpn-consultants.co.uk. Autobytel.com Inc, leading US Web car seller, is now active in Europe.

The EIU report said car retailing is inefficient and crying out for reform."There remain huge in efficiencies in traditional car retailing, where up to 30 per cent of the value of a car is expended on sales and marketing and other retail costs," the report said.But the acceleration of acquisitions, joint ventures and strategic alliances among Internet players in the US shows that a successful formula has yet to appear.