U.S. Car Buying Trends
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The car buying experience has changed and continues to change in fundamental ways due to the current pandemic affecting all aspects of the car buyer’s customer journey. Most prominently, the addition of a complete digital experience, from initial research through home delivery and beyond, is transforming the experience in many positive attributes. Many transformative digital offerings made by car manufacturers, local dealers and direct to consumer online auto platforms are projected to be here for the long-term, even after the pandemic comes to a close sometime next year. In addition, almost every region of the globe is accelerating a transformation to complete digital experiences for car buyers.

1. Increase in Ownership

  • Quite simply, the pandemic has forced people away from rideshare and public transportation. As a result, people in general are looking to car ownership as the alternative. Prior to the pandemic, the general trend was away from car ownership and towards rideshare, car-share, and public transportation. In recent years, Millennials were dubbed the ‘rideshare generation‘.
  • A Cars.com survey conducted in the U.S. in March showed a decrease of 40% in people’s desire to use rideshare alternatives, as 93% of those surveyed explained they are using personal vehicles more often. The survey also found almost “20% of those surveyed who didn’t already own personal vehicles claimed that they were considering buying one”.
  • The Capgemini Research institute detailed “45% of people under 35 are considering buying a car in 2020.”
  • Car sales decreased 80% in Europe in April of this year, 71% in China in February, and 47% in the United States in April. However, a September survey done by McKinsey detailed a significant recovery in car purchases, with intent to purchase a new car within the proceeding 12 months increasing 10% from July, and used cars increasing 7%.
  • According to BCG research, “8% of European consumers say they are more likely to buy a car because of the pandemic”; 16% in the US and 60% in China.
  • In China, Ipsos conducted a survey in late February that showed “non-car owners have higher intention to acquire new cars”.
  • In fact, the China Passenger Car Association reported “sales of sedans, SUVs, minivans and multipurpose vehicles jumped 7.4 per cent in September from a year earlier”, while August’s shipments were up 11.6% on a year-over-year basis.
  • The Economic Times India explained ride sharing services received the lion’s-share of the decrease in mobility, while car-ownership is on the rise. The article stated car sales are rebounding but shared mobility has been negatively impacted.
  • According to Maruti Suzuki India, “The percentage of first-time buyers and additional car buying have increased in the midst of the COVID-19 pandemic as customers prefer personal mobility over public transport “.
  • Figure 2 of a Capgemini Research Institute shows 61% of consumers in China and 57% in India plan on buying a car in 2020.
  • According to a Kantar report, “9% of South African respondents had no plans to buy a car before Covid-19 but would now consider it”, the identical number of those polled in Poland. Similarly, 13% of respondents in Thailand had no plan to buy a car before Covid-19, but would now consider it.
  • Globally, McKinsey reported a decrease of 70% to 90% in public transportation usage, while private cars are trending. Understandably, reducing the risk of infection has become the most important mobility factor, leading to an increase in private car usage and purchases. Thirty-two percent of those surveyed said they will travel more frequently by car instead of by air or rail. McKinsey’s article does concede the increase in car-ownership may be short-lived as they predict a decrease in private-car usage in major European cities by 2030.
  • One caveat to the decreased demand of ridesharing is the level demand for car-sharing. While car-sharing initially received decreased demand, it has rebounded and has become a viable option for those that do not wish to purchase an auto.

2. Seamless Online Car Buying Experience

  • The transformation to online car buying began before the pandemic. COVID-19 has excelerated consumer’s demand for further digital options and a seamless car buying experience. Many auto dealers now offer “contact-free solutions for browsing, customization, test-driving, and delivery”.
  • At a minimum, car buyers want to begin the car buying process online. Ninety percent of those recently surveyed confirmed the preference.
  • In addition, 46% of car buyers want to minimize visiting dealerships to compare deals and mainly use online channels for information search and purchase, through prevalent contactless and touchless experiences.
  • Many U.S. based car dealers are now offering a seamless buying process, mostly online, and virtually contactless. These dealer programs “include convenient and contactless test drives, virtual showrooms or video-based car walkarounds, and home delivery or contactless pickup.”
  • BCG explains, “Many consumers find car buying to be a confusing and sometimes frustrating experience. That makes it especially important to clearly communicate the process to shoppers looking to avoid brick-and-mortar dealerships.” Particular aspects of a seamless online buying experience should include searchable inventory, accurate pricing, flexible delivery and returns, and online financing.
  • The Internet Advertising bureau stated “84 percent of consumers in the UK use their mobile to research a car.”
  • Today’s consumers “expect automotive e-commerce platforms to be easy-to-navigate and comprehensive, something more than an online catalog.” Integration of online and ‘at-dealer’ buying experiences are also increasing. In a recent survey, 63% of German car buyers are willing to purchase their vehicle online directly from car makers, while 50% are willing to purchase from third-party sites.
  • Chief strategy officer of Cars.com Matthew Gold proclaims the entire car buying process will be fully online by 2030; the entire customer journey from discovery and research through delivery. He stated dealers must build “a digital-portal-type experience, that starts with targeting and discovery and ends with delivery, and that is seamless and easy and all works together” which will be a vital requirement to stay competitive in the future.
  • A McKinsey survey showed digital’s importance will increase and become “more important along the entire purchase funnel; less than a third of younger consumers prefer conducting car sales & aftersales in person at a dealership; Respondents are even more interested in contactless services, approximately half of respondents willing to pay extra for this service.”
  • Another recent survey showed 18% of people reported they’d buy a car sooner if they could do it online.
  • “Before COVID-19, only 32 percent of consumers expressed willingness to buy a vehicle online, but now a majority (61 percent) of consumers are willing to purchase sight unseen.”

3. Contactless Home Delivery

  • As of March, only 59% of surveyed U.S. car dealers offered home delivery of newly purchased autos. However, 29% more intimated they were adding the service, which would result in a total of almost 90% of dealers offering home delivery.
  • Cars.com’s Gold stated, “10 percent of CarMax’s sales recently were done via delivery“, but questioned how much more will stick after a full recovery from the pandemic, concluding it is probable some aspects, such as home delivery, will become commonplace.
  • In response to the pandemic, CarMax offers home delivery from many of their U.S. locations, “where customers complete the car-buying experience from home and have the vehicle delivered by a CarMax associate.”
  • Home delivery also includes contactless purchasing, a high priority for people during the pandemic. Digital focused auto companies were already offering contactless home delivery options prior to the onset of the pandemic. Since then, other traditional car manufactures have implemented this preferred offering, including Fiat Chrysler’s Online Retail Experience, Honda’s Shop Simple program and Porsche’s Online Retail Pilot.
  • In addition, UK based Carwow launched contactless home delivery of cars purchased through their platform.
  • Likewise, third-party platform CarGurus reported an uptick of 43% in dealers offering contactless delivery through their online service. In fact, 76% of current prospective buyers surveyed would now prefer to shop from home and make use of contactless buying tools.
  • CarGurus also reported “66% of those intending to buy in 2020 would prefer to use contactless services”.

4. Brand Specifics

  • BMW began an online digital showroom in China that integrates with the social media platform WeChat, allowing consumers to interact with BMW product experts. “They can also interact with salespeople while being guided through a store, browsing cars and understanding pricing.”
  • BMW moved most of an intended in-person program online after the Geneva International Motor Show 2020 was canceled due to the COVID outbreak. This included the world premiere of its BMW Concept i4, which was subsequently live-streamed during a press conference instead.
  • Also, as a result of the COVID-19 pandemic, “Volkswagen in China conducted a three-day online training course on digital channels for 50,000 salespeople across thousands of dealers. This ambitious program, in partnership with Taobao University, trained staff on social media use, video creation, live-stream events for cars, and feature presentations to reach customers at home. On March 9, Chery, a leading automaker in China, launched its newest model, the Tiggo 7/ 7 PRO, exclusively via live stream. According to the official data, this online event attracted more than 700,000 viewers.”
  • Cadillac implemented online digital tools to make their customer’s journey more similar to the buying process for most products offered through other e-commerce platforms. The company began offering early in the year “an opportunity to check out vehicles through online-video sessions with brand representatives, so they can virtually explore different cars and ask questions.” The result: a 5-fold increase in digital engagement and eventual increased sales.
  • All General Motors vehicles are now available online through its ‘Shop. Click. Drive.’ program, which allows potential buyers a complete online digital experience, including home delivery.
  • Honda launched its Shop Simple initiative earlier this year, expanding from two cities to a nationwide presence in a matter of weeks. The online platform allows customers to search the company’s inventory, filter for desired features, and obtain details about colors, trim levels, packages, and options. It provides a discounted internet price, calculates the value of trade-ins, and adjusts the price accordingly. After selecting a vehicle, the customer picks a finance or lease option and, if desired, adds a protection plan such as a limited warranty or extended-service contract. Once the order has been submitted, the customer is directed to a local dealer, who delivers the vehicle and the paperwork. “
  • Local car dealers across the brand spectrum implemented new sales strategies in the car buying journey this year, such as solo test drives and ‘no-pressure’ buying, a common and much complained aspect of the car buying process prior to the pandemic.
  • In addition, the shift to online-only car platforms such as Carvana, Shift and Vroom continues to accelerate at an increasing velocity. The direct to consumer digital platforms “collectively sold 125,411 vehicles at retail in the first half of 2020, a 36% increase from the same period a year earlier” in spite of the pandemic’s negative effect on car sales.
GLENN TREVOR
Glenn is the Lead Operations Research Analyst at The Digital Momentum with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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