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How Consumers Are Shopping for Cars Today and How the Automotive Industry is Responding

The Coronavirus pandemic has radically changed how consumers shop for products and services and how brands are positioning themselves.  The automotive industry is certainly no exception. Consumers are heading online to shop and buy, and dealerships and OEMs are putting protocols in place to make the experience as low-risk and frictionless as possible.

In the Market for Vehicles

With the economic downturn, purchase intent is not what it used to be.  In a September 2020 survey by McKinsey, purchase intent is 14 percent below pre-COVID-19 levels. However, people are still in the market for vehicles, especially so with options such as ride-sharing and public transportation becoming riskier. In a survey by Cars.com, 43% of consumers said they’ve stopped using public transportation and 42% of respondents said they’re using less ride-hailing services. Additionally, 93% of people said they were using their cars more and 20% of people who didn’t own cars before the pandemic are now considering car purchases. (source)

The McKinsey survey also revealed that a third of consumers value constant access to a private vehicle more than before COVID-19. This is especially true among younger consumers.

For people who are in the market, the expectation of good deals is top of mind for consumers looking for new vehicles. Shoppers are looking for deals on the final sales price (62%), interest rates (49%) and amount required for a down payment (42%). (source – Autotrader)

Car Shopping Coronavirus

Consumers are also increasingly searching out used vehicles. This is due to car production being slowed down in the early months of the Pandemic and concerns over the economy or lower incomes.

An article by Car and Driver reports that J.D. Power calculated that auto dealers sold 2.1 million used vehicles in May and June, 9 percent more than they did in those same two months in 2019. Edmunds found franchised car dealers sold 1.2 million used cars and trucks in June, which was more than in any month since 2007.

Online Car Shopping

With social distancing firmly entrenched as a way of life for the near future, people are more open to shopping and purchasing vehicles online.  A Cargurus.com report revealed that 55% of shoppers now say they prefer NOT to visit the physical dealership. Capgemini reported similar findings, with 49% of US shoppers preferring to avoid the dealership for financing and deals.

In another survey by KPMG, 75% of respondents said they’d prefer to complete the paperwork and take delivery of a vehicle outside the dealership. Additionally, while 83% said they’d never buy a vehicle without test driving it, 51% said they’d like that test drive to happen either at their homes (33%), offices (13%), or virtually (5%).

As life reverts to a new normal, shoppers will return to visiting dealerships in-person, but these numbers are likely never to be the same as those pre-pandemic.

The study also found that nearly 30% of US car shoppers who weren’t originally open to buying a car digitally have since changed their minds and 9% of respondents who were previously open to doing so are even more interested than before.

Automotive Marketing in Today’s New Normal

Consumers will always want to test drive, touch, and feel a car before they purchase but the COVID pandemic has certainly accelerated the need for digital transformation within the dealership.  The goal of marketing has traditionally been to drive consumers into the dealer for a test drive, but vehicle marketing is likely to forever be altered and dealers need to be aware of the new, digital shopping journey.

Research has always shown that buyers “intensely dislike” the car buying process.  One study even reported that millennials said they would rather clean their homes, wait in line at the DMV or do their taxes instead of visiting a dealership and nearly a quarter of Gen X respondents, ages 35-44, said they would rather get a root canal than negotiate with a car dealer.  Ouch!

So it was probably time that the car buying process got a rehaul. Dealerships are responding by accelerating digital adoption and implementing solutions such as online digital platforms that allow consumers to select vehicle options, complete financing paperwork and negotiate the prices of trade-ins. Other dealers are using Zoom meetings and online chat.  Sixty-one percent of recent car buyers stated they want their newly purchased car delivered at home from their local dealership. Cadillac has implemented Cadillac Live, which allows shoppers to take a one-on-one video tour of any Cadillac vehicle and have their questions answered by a live agent.

According to Cars.com research, demand is growing for home delivery and virtual car-buying options from dealerships. As consumers get more comfortable with online and digital tools, dealerships will need to keep up, get creative and make the new, online journey as frictionless as possible for shoppers.  

Interested in learning how V12 can help boost your dealership’s success?  Complete this form for additional information.

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