CarGurus
CarGurus study reveals how pandemic has impacted the automotive industry in 2020
Nine months in and the Covid pandemic continues to sweep the globe, impacting nearly every industry, including automotive. To keep a pulse on the virus’s impact on car shopping sentiments, CarGurus has surveyed over 2,000 car shoppers across three separate studies. Our most recent November COVID-19 Sentiment Study benchmarks and compares the previous CarGurus studies that were run in both April and June, and explores topics such as digital retail, vehicle inventory, affordability, and ridesharing/public transit.
At the start of the pandemic, shoppers expected they’d return to their normal shopping habits fairly quickly—which most have come to accept is no longer the case. Instead, as the pandemic continues, comfort and familiarity with online shopping tools have grown and shoppers are increasingly considering digital retail options when looking for a vehicle. This includes shoppers’ increase in openness and preference for digital retail. Before the pandemic, 35% of respondents said they were open to buying online. Now, 60% are open to the idea—and this openness hasn’t wavered since June (60%) or April (61%).
As buyers continue to enter the market, it’s crucial that dealers offer innovative online shopping solutions to address evolving consumer needs. Even if it’s providing just a portion of the process online. For example, shoppers are more likely to prefer online price negotiation (61%) and online financing (52%) than online purchase (41%).
Inventory and pricing perceptions vary among shoppers
Between the closure of in-person auctions, the drop-off of trade-ins as sales slowed, and a wave of consumers choosing to extend their leases so they wouldn’t have to deal with getting a new vehicle during the pandemic, wholesale vehicle levels in the US have been dramatically reduced. While buyers have felt Covid’s impact on inventory, they’ve had very different perceptions of selection and price depending on the months when they bought.
It’s the shoppers who bought from July through November who have really felt the crunch—17% of buyers during this time said the selection of available vehicles was much worse than expected, compared to only 8% of those who bought during the early months of the pandemic from March through June. The reduced supply was also reflected in prices. Those who bought later in 2020—July through November—were half as likely to say prices were much lower than expected, compared to those who bought from March through June (16% vs. 31%).
Affordability concerns have shoppers staying open-minded about key decisions
Affordability concerns have impacted those who’ve already bought during the pandemic and those still shopping today: 44% of total respondents said they’re less confident in their ability to afford a vehicle due to the pandemic (down slightly from 48% in June). This is only compounded by the fact that many shoppers assume the great deals during the early days of the pandemic are over. In fact, 26% of current shoppers expect prices to be higher due to the pandemic. As a result, many are staying open-minded about what vehicles to consider: 62% are considering more than one brand and 42% are considering more than one type of vehicle.
These widespread affordability concerns have led to an increase in demand for financing. Before the pandemic, 48% of shoppers were planning to finance their vehicle purchase—now, 62% plan to (or did). In addition to an overall surge in demand for financing, 52% of shoppers would now prefer online financing options. This includes easily getting pre-approved for financing on a dealer’s VDP, which a shopper can do through programs like CarGurus Pre-Qualified Leads.
People are rethinking how they travel from place to place
The pandemic has disrupted many facets of people's lives and that includes how they get from point A to point B and how they view vehicle ownership. As of November, 34% of previous rideshare users and 45% of public transportation users expect to decrease or stop their use of these services. This has remained fairly consistent over the course of the pandemic (39% in June, 39% in April for ride-sharing; 45% in June and 44% April for public transportation).
Additionally, vehicles have offered people an entertaining diversion during the pandemic with 47% using their car more for road trips or longer drives, and 43% agreeing that they see their cars as a source of escape or fun during this time.
Resilient dealers continue to adapt
As the US weathers the current wave, dealers must continue to adapt to shoppers’ new buying preferences, increased openness, and additional financial stress. Consumers still need to buy cars, pandemic or not, and dealers will need to find a way to adjust to the new reality to keep selling cars.
Madison is a passionate marketing researcher with over 10 years of experience in the automotive industry. At CarGurus, user insights help us build a top-notch site experience that attracts 40M users each month. Before joining CarGurus, she studied Marketing and Cognitive Science at the University of Virginia, spent 8 years understanding vehicle shoppers and the car dealership business inside and out at CarMax, and completed her MBA at IE Business School in Madrid, Spain.
CarGurus
What sets Millennials apart: understanding and engaging this growing generation of car shoppers
Millennials, the people born between 1981 and 1996, are set to become the biggest population group in the country sometime this year. And they’re setting themselves up for future financial success—and for being able to buy a car when they need one. In fact, Millennials are expected to make up 40% of sales of all new cars by 2020.
As Millennials make up a growing segment of today’s car buyers, car dealers need to know what they care about and how they shop to be able to reach them throughout their shopping process.
We delved into Millennials’ car-buying habits in the CarGurus 2018 Buyer Insight Report. Here are the top three things we observed about how they compare to others in the auto market.
1. They're eager, engaged buyers
Millennials are more likely to say their purchase is urgent. In fact, 30% are purchasing very or extremely urgently. They’re also more likely to be purchasing due to a major life event.
We can make some simple inferences here: as Millennials reach life milestones—landing a new job, moving to a new city, getting married, having kids—they often need to purchase their first car or a car with features to match their new lifestyle. And at this stage of life, these changes can come pretty quickly.
Despite the urgency of the purchase, Millennials enjoy the car shopping process. Perhaps because they associate a car purchase with exciting life changes, they’re more likely than other groups to:
- Think car shopping is fun (21% higher than others)
- Say they enjoy negotiating (31% higher than others)
2. They're always connected
Surprise, surprise: Millennial shoppers use technology to research cars and engage dealers. Compared to others who used digital resources when car shopping, Millennials are 20% more likely to use only digital resources. This consists of watching videos, looking for recommendations on social media, searching the web for digital resources as they shop, and more.
They’re also more likely to do each of these activities from a mobile device than a computer—Millennials are 32% more likely than other groups to do mostly mobile research. Even at the dealership, they’re using their mobile devices more than prior generations to fact check and compare information to what they saw online.
Millennials aren’t just using technology to do research though. They’re also using it to get in touch with dealers. Compared to other groups, Millennials are 40% less likely to visit a dealership in person without contacting the dealer in advance. And when they do reach out, it’s via the internet. Millennials are:
- 45% more likely to reach out to a dealer via a listing or research website
- 35% more likely to make contact via a brand website
3. They think they’re certain, but later change their minds
Millennials’ minds aren’t always made up from the beginning. From buying or leasing, dealership, type and make of vehicle, new or used, they’re more likely to change their minds about certain decisions than other groups. And while they’re doing plenty of research online, they also let feedback from peers influence them— Millennials are 30% more likely to rely on the opinions of friends and family when shopping for a car.
So how can you take these observations about Millennials into account in your business?
Don’t push them too hard
Millennial shoppers are excited about the prospect of buying a car. Keep their enthusiasm up, and avoid giving them the third degree when they first make contact. It’s unlikely you’ll sell a car on the first phone call. Instead, find out what they’re looking for when they first reach out, then use the time you have to prepare for their in-person visit.
Optimize your digital presence
Make sure you’re investing in your dealership’s online presence. This could mean improving your own website, diversifying your presence across third-party sites, and maintaining your presence and advertising on social media. Consider how you can use these platforms to reach more Millennials and to stay top of mind. With a larger digital presence, you also need to be prepared to handle web forms, emails, texts—and calls.
And it probably goes without saying, but, if your website isn't mobile-friendly and your inventory isn't available on platforms that attract lots of mobile users, you may be missing out on Millennial shoppers. With mobile internet use on the rise among car shoppers of all ages, your digital strategy must accommodate mobile.
Present options, propose alternatives
Millennials are more flexible at the beginning of their car buying journey—and they’re having a good time shopping. Start a discussion with them early in the process when they’re considering buying vs. leasing, new or used, type of vehicle, and which dealership they’ll buy from. Presenting options early on also gives them a chance to consult family and friends as they narrow their options. Don’t wait until they’re on your lot to start a conversation because chances are, they’ve already made up their mind at that point.
Millennials, uniquely, have an affinity for brands whose values match their own. In other words, identifying what Millennials value—and adapting accordingly—will help you attract their business.
For more information, read the full CarGurus 2018 Buyer Insight Report.
Madison is a passionate marketing researcher with 10 years of experience in the automotive industry. At CarGurus, user insights help us build a top-notch site experience that attracts 36M users each month. Before joining CarGurus, she studied Marketing and Cognitive Science at the University of Virginia, spent 8 years understanding vehicle shoppers and the car dealership business inside and out at CarMax, and completed her MBA at IE Business School in Madrid, Spain.
4 Comments
Slipstream Creative
Madison, this is a great post! I 100% agree that if a dealer does not have a reactive mobile site with high-speed load times and functional features, they will lose Millennials to a dealer that does. Millennials are by far the most educated consumers that this world has ever seen and they crave engaging content to learn about the vehicles they want to purchase! If your dealership is not catering to this new generation of car-buyers you will fall behind...
Hooks Lincoln of Ft Worth
Thank you for a great post Mallory. I have been watching this trend for the past six years and can confirm from the trenches that this information is credible for the most part. The CarGurus article matches up with a similar article I kept from Carsdotcom dated September of 2013, The Seven Digital Sins.
Be ready to react when a client reveals themselves to you. They are oftentimes 90% finished and simply want to move forward with a purchase. I was surprised to read only 6% prefer text to voice calls or emails. Remove the painful barriers and closing the sale is now easier than ever before. Just yesterday I sold and delivered a new car in just over an hour. We met through her initial email, then sent her a link to work her own deal, then she arrived already pre approved and ready to sign up on her lunch hour. Yes, on her lunch hour. They were Millennials.
To combat attrition, remember to focus on the introduction to a service advisor during the client's visit either before or directly after contracting. I find that people want to feel like their salesperson actually cares and that they know who the service person will be when the time comes. The car sale is just the beginning of a client/dealer relationship, not the end.
3E Business Consulting
Madison... As my 7th-grade Industrial Arts Teacher used to say, "You can hit it hard, you can hit it a lot; but you won't drive it home unless you HIT the Nail on the Head!" In this post you definitely DROVE-the-NAIL!!!
Hooks Lincoln of Ft Worth
Madison, please excuse my careless error in addressing you as Mallory. All I can offer is my most sincere apology.
CarGurus
Making contact–and keeping contact–with in-market car shoppers
Before the internet burst into the picture, consumers started their car shopping process with a visit to the dealership. In many cases, these shoppers knew little about the models on the floor, which car would best fit their lifestyle, and what deals were being offered. They’d visit multiple dealerships to gather information and compare the offers.
That’s a stark contrast from today’s digital-driven car buying journey, where the average number of dealership visits is down to 2.1—a steep decline from over 5 visits just a decade ago. But, the good news is that the majority of car shoppers contact dealers in advance. In fact, 68% contacted the seller they purchased from via phone or email before visiting in person. This gives dealers time to prepare and nurture the conversation with potential customers in advance.
Building on the findings from the CarGurus 2018 Buyer Insight Report, we’ve highlighted some best practices for making contact—and keeping contact—with different segments of low-funnel shoppers.
Prompt, relevant follow up engages more shoppers
It probably goes without saying, but timely and engaging responses are important right off the bat. Especially when 30% of Millennials are purchasing very or extremely urgently—do you think they’re going to wait days (or even hours!) for a response? Conversion rates increase by 391% when companies respond within a minute of receiving a lead. Attack every lead as quickly as you can to ensure you’re getting the conversation started.
Of course, it’s frustrating to reach out and not get responses, but the truth is, the majority of shoppers are just trying to get a sense of what’s available, what the purchase process is like, and who they feel the most comfortable doing business with. So, respond right away and start building their trust—even if you don’t hear back.
Provide multiple ways to get in touch—and respond on the platform shoppers choose
Different shoppers prefer different ways to get in touch with dealers. For example, Millennials are 45% more likely to reach out to a dealer via a third-party listing or research site, compared to other age groups. 46% of Hispanic shoppers use mostly mobile during the shopping process, making them more likely to text or chat with a dealer. You need to offer a variety of ways for potential customers to get in touch—without them, you could be missing out on sales.
Of course, offering different ways for customers to reach out means you have to be prepared to respond across all of those contact methods. For example, if a shopper sends an email asking about a vehicle, reply with an email. If they call to find out more information, then call them back. But don’t answer an email with a phone call, or a phone call with an email. Find out what the shopper wants and how they want it; then deliver it to them. By making contact in the way they’re most comfortable, you make them more likely to choose your dealership.
Whether it’s inventory availability, trade-in offers, or financing, answer shoppers’ questions
A lot goes into buying a car: researching vehicles, comparing prices, selecting a dealership—the list goes on! And when shoppers have questions along the way, it’s your job to answer them. For example, about half of those who finance do so through the dealer, and 44% of those replacing a vehicle trade it in. If a shopper asks questions about those transaction elements, go ahead and answer them. Just be careful not to jam this information into your first conversation if it’s not asked.
Need more reason to answer shoppers’ questions? Shoppers contact three dealers on average. Hispanics contact even more: four dealers on average. If you’re not giving shoppers the information they want, they’re likely to move on to their next option.
To make the sale, stop stressing about the sale
Whether confident, stressed, or excited, car shoppers experience one constant: emotion. Serving them and winning their trust requires that you not only fulfill their tangible needs, but their emotional needs, as well. 63% of shoppers find car shopping stressful, so don’t overload them with information or force a hard sales pitch into your first response. Instead, explain the process at your dealership and answer all of their questions as clearly as you can. This will put them at ease and keep them in your funnel.
Making contact with shoppers quickly and across different platforms is so important—and it’s completely within your control. Tailor your responses appropriately, and you’ll be on your way to winning more shoppers in all different segments.
For more information, read the full CarGurus 2018 Buyer Insight Report.
Madison is a passionate marketing researcher with 10 years of experience in the automotive industry. At CarGurus, user insights help us build a top-notch site experience that attracts 36M users each month. Before joining CarGurus, she studied Marketing and Cognitive Science at the University of Virginia, spent 8 years understanding vehicle shoppers and the car dealership business inside and out at CarMax, and completed her MBA at IE Business School in Madrid, Spain.
5 Comments
Automotive Title Connections
Wow Madison, excellent points and article. And your facts and numbers are quite accurate. .
DrivingSales
Great points Madison. A quick, quality response is extremely important today. I feel that it's all about engagement.
closemore by STAT Analytics
Great insights and great research. The implication of visits dropping to 2.1 means if the prospect doesn't buy from you, they're going down the road to a competitor (there's the second visit) and likely not coming back. As you stated, the prospect has done the homework, know what they want, and they're in your store and ready to buy. It's so critical to close them ASAP.
Beltway Companies
Great article! Trust is imperative, and the better we understand our customers needs the more trust we have. The stronger the trust is the better the rapport is - I think we are often desensitized to the car buying experience because we do it on a daily basis. No excuse, but we have to remember that this often the second most expensive purchase that a customer makes!
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