Imagine for a moment getting through your holiday shopping without the ability to buy anything online. Hard to fathom, isn’t it? These days, you can order and pay for just about anything on your computer, tablet or phone—and sometimes get it delivered the same day! Buying a car online though? Not so fast.

We all know buying a car is a complex process. Buyers don’t always know what they want or what they can afford and often it takes a physical visit to the dealership to work through the variables and test drives to find the right fit. Then the actual purchase process starts from agreeing to terms, contracting, and F&I. Who could confidently want to do this online? A lot more people than you’d think.

Root & Associates was hired by CDK Global to conduct research to understand consumers’ desire to buy a car online. We surveyed 1,000 consumers who were planning on purchasing or leasing a new car within three months and presented them with realistic and detailed concepts around the purchase process to assess how much they want to conduct digital retailing verses purchasing in the dealership.

We found that 53% of consumers said they were “extremely” or “very” likely to conduct the entire car purchase online. This includes selecting a specific car, negotiating and arriving at a final agreed price, submitting their credit information and getting approved, reviewing final paperwork, and transacting—only going into the dealership to do a final review of the vehicle and drive off with the car.

We also learned that younger consumers signaled they are much more likely to buy a car online if the technology is available than older buyers. This is noteworthy because the desire to transact online will only grow as younger generations, who expect to buy everything online, age and make up a larger percentage of the car buying population.

So why do people want to buy a car online? Most cited reasons of efficiency and convenience. If the process can be transferred to an online environment, they see it as gaining efficiency and winning back time they don’t have to spend waiting around in the dealership. They also like the convenience of conducting most of the process on their own time and away from what is perceived as a high-pressure environment in the dealership.

So, if consumers want it, why isn’t digital retailing widely available today? Some argue the technology isn’t there yet. This isn’t true. Currently, the leading technology companies in the industry offer online transaction solutions for dealerships. Also, Silicon Valley Start-up Drive Motors, which is backed by Y-Combinator and Khosla Ventures, is also in market with their “Buy Now” offering.

We suspect the real reason these solutions are not more widely adopted is in a strong market, dealership management is reluctant to change. Implementing an online buying capability means significant process changes, training, and investment in the dealership. Dealers are fearful of losing control of a sales process that is steeped in tradition and highly managed—especially when they’re making money.

In a follow-up CDK study on this topic, we found that only 35% of dealership management said they were likely or very likely to offer a digital retailing solution on their website. Reasons cited included concerns over losing control of the sales process and not having the customer in person to sell to. Most interesting, however, was when dealership management were told that consumers were very interested in buying a car online, their perspective changed and interest increased to 53%.

Dealers and manufacturers should understand that consumers want to buy online today and the technology is available now. More importantly, car buyers are starting to expect that dealers will be able to transact online. Fifty-nine percent of car buyers said they expect to be able to buy a car online on a dealership website compared to 34% and 32%, respectively, on manufacturer and third-party website. This is good news and means consumers continue to see the dealer as the natural conduit to their new car.

And here’s the clincher: car buyers want this capability so much, 86% said they would choose a dealership with an online buying capability over one without.

Dealers looking for a way to tangibly differentiate themselves from the competition, here is your answer.

Cheers, Kevin

Dealership Executives - Interested in participating in research like this and get paid for it? Learn more about the joining the dealership research panel here.

New Research Measures Emotions During Purchase

Eight steps of the sale evaluated with the emotions most frequently used to describe each step. Used with Permission of Cox Automotive ©2016

The complexities of automotive retailing are well-known to those of us in the business. Starting with merchandizing all the way to delivery, getting a car into the hands of a customer and watching them drive off the lot happy and satisfied is a tremendous amount of work. There are many opportunities to win or lose a customer at any point in the process. Their decision to finalize the deal is fueled in part by the vehicle but more and more, the experiences they have in the dealership are becoming a more important aspect of the sale.

From the customer’s perspective, different emotions are in play depending on where they are in the process. In fact, emotions can swing substantially while buying a car. In most cases, you won’t see many visual ques yet more and more we’re finding that these emotions are what drive purchase decisions or cause shoppers to leave your dealership before the sale. Understanding what events or points in the process potentially trigger positive or negative emotions can help dealerships adjust their strategies and processes and make the experience less “painful” and even more enjoyable for them and profitable for you.

Cox Automotive hired Root & Associates to gain new insights into new and used car buyers and the emotions associated with steps in the sales process. We examined the experiences the dealer has control over so we focused on the car buying process that typically happens while they’re at the dealership starting with engaging with a sales person through to delivery of the vehicle. This insight can be used to develop products that improve the overall consumer experience while shopping for a vehicle.

Using an advanced question strategy called competitive topography, we asked participants to rate positive feelings or attributes like “excited” and “hopeful” and negative attributes like “fearful” and “anxious” to specific steps of the car buying process. These steps included “comparing multiple vehicles and payment options before making a final selection” and “finalizing vehicle financing after negotiating the deal.” Competitive topography gives us rich

2D visual mapping of the points and all of the emotional attributes both in absolute relation and comparing the emotions across all of the steps.

Our participants had bought a new or used car at a franchise car dealership within the last 6 months so their recall and memory of the process was pretty fresh. The good news is for most steps in the buying process, consumers are generally satisfied, hopeful and excited. That’s good because it shows they look on the process of getting a new car with mostly positive emotions, making it an exciting and enjoyable experience.

The steps that are associated with the highest positive emotions such as excitement and satisfaction had to do with the interacting with the vehicle. This includes the test drive and, not surprising, taking delivery of the vehicle. Delivery had the highest empowerment, excitement and satisfaction ratings, and the lowest disappointment and fear.

At the other end of the emotional spectrum, we expected the negotiation to have relatively high ratings for anxiety, fear, confusion and disappointment. But what is surprising is that it wasn’t the most negative part of the process for most people. The step that elicited the strongest negative emotions was evaluating F&I and other add-on products.

Evaluating F&I products emerged as the most frustrating step and ranks very high in confusion, disappointment, fear and boredom. Used with Permission of Cox Automotive ©2016

And it makes sense. They’ve just arrived at what should be the end of a long process. They’ve test driven the car, negotiated the deal and terms and they’re now told they’re going to work with the F&I Manager to finalize the bank paperwork. They’re relaxed and coming down from some anxiety around finalizing the negotiation. And then they’re hit with a sales pitch for add-on products they don’t understand and haven’t had time to research. Frequently these are sold by pointing out all that can go wrong with the vehicle they just agreed to buy before they have even taken ownership of it.

For many, it’s a mental sucker punch at the end of a long experience. And it comes right before the most enjoyable part taking ownership – this creates an emotional roller coaster. So what should dealers do? Here are three suggestions you can employ that will take the sting out of F&I while still giving your dealership opportunities for additional gross.

1. It’s more important than ever that dealers provide consumers with information about pricing/payment early in the process and be as transparent as possible. Consumers do much of their pricing research online across multiple devices at home, so dealers should allow customers to complete their F&I education (definitions and cost) in advance, on your website, prior to arriving at the dealership.
2. Don’t save it all till the very end. Utilize some of the in-dealership waiting and idle time that is inevitable throughout the process to give your customers information about add-on products that are designed to protect their investment they can read at their leisure. This can be on paper, on a tablet or on your website.
3. Have your sales staff trained and ready to discuss the F&I add-ons at any time not just in the F&I office.

Cheers,

Kevin

Dealership Executives. Interested in participating in research like this and get paid for it?

Learn more about the joining the dealership research panel here.