Key Findings
- Web usage becomes pervasive and a clear pattern has emerged.
- Consumers want to buy vehicles and parts/accessories online.
- Environmental concerns are fueling green vehicle ownership.
- Improvements in loyalty and satisfaction bode well for the industry.
- Developing markets are trending toward mature markets but differences remain.
- The shorter buying cycle means less time to influence purchases.
- Consumers want the car buying process to be easier and faster.
- Dealers are missing aftersales opportunity with in-warranty consumers.
Usage of the web as a key information source during the vehicle buying process has become pervasive across most markets.
Almost 90% of consumers today use the Internet to research vehicles, up from 61% in 2005. A clear online usage pattern has emerged, with consumers turning initially to search engines, which jumped up the list of information sources this year; then to manufacturer and dealer sites for factual information about vehicles, prices and availability; and finally to consumer-to-consumer tools like discussion sites for qualitative information and opinions.
Consumers want to buy vehicles and parts and accessories online as they look for lower prices and an alternative to the traditional dealer model.
Nearly 40% of respondents said they would like to buy a car over the Internet (the complete end-to-end process) and half would buy parts and accessories. While lower price is the leading reason, many respondents said they simply did not want to negotiate price or interact with the dealer in person. Consumers seem to be polarized in their desire to negotiate: about one-quarter wanted the ability to negotiate a better deal, but another one-quarter felt this was something they preferred to avoid.
Green vehicle ownership continues to rise as environmental concerns grow.
Consumers indicate a growing confidence in their understanding of so-called “green” vehicles. This increased knowledge is influencing buying decisions. In this year’s study, 41% of consumers said they currently own a fuel-efficient or alternative-fuel vehicle, up from 36% the year before. Another 30% said they plan to buy a fuel-efficient or alternative-fuel vehicle.
Interestingly, the reasons behind these buying decisions are evolving. While fuel economy remains the leading driver, a growing number of respondents named impact on the environment as the primary reason: 26%, up from 19% the previous year.
Improvements in brand and dealer loyalty and overall satisfaction with the buying process bode well for the industry.
With plenty of bad news for automotive companies these days, our research uncovered a bit of good news. More than two-thirds of respondents said they were likely to purchase the same make/brand as their current vehicle, up from 61% last year. Similarly, dealer loyalty also rose, with 63% of consumers saying they were likely to purchase from the same dealer where they bought their current car, up from 59% the year before.
Satisfaction with the overall buying process was also up somewhat. However, consumer approval was more muted in the mature markets, demonstrating that there is still work to be done to improve the customer experience in the U.S. and Western Europe.
Developing markets show early signs of trending toward mature markets, as consumers in the BRIC countries become more familiar with buying cars.
For example, this year the gap between the factors that impact vehicle decisions in mature vs. developing markets was much smaller. Greater convergence will likely still take a number of years, and market differences will remain for some time. For instance, mature markets increasingly look for information online, whereas developing markets are still keen to get information from more tradition sources such as TV advertising and trade shows. And mature markets focus on permanent value when choosing a vehicle, whereas developing markets show greater interest in more transactional marketing such as cash-back bonuses.
As the duration of the vehicle buying cycle contracts, automotive companies have less time to influence purchases.
Consumers today can quickly and easily get vast amounts of information about the vehicles they are interested in, resulting in a shrinking buying cycle. What used to take six months is now likely to take only four, with showroom visits coming ever closer to the point of purchase. More than two-thirds of respondents begin the research process two to four months before they plan to buy and 60% visit the showroom for the first time within two months of purchase.
Connecting with shoppers during the research period and providing them with the right tools and information is critical in influencing buying decisions. By the time they visit the showroom it is often too late.
Consumers want the car buying process to be easier and faster.
A number of indicators point to a growing desire for improved ease and speed of transaction. For example, more consumers expect a dealer or manufacturer to respond to an online inquiry within four hours. In China, consumers are even more demanding, with more than half expecting a response within an hour.
In addition, almost one-quarter of respondents point to ease and speed of transaction as the key reason for buying a vehicle online, and 30% say it is the driving factor behind their desire to purchase parts and accessories over the web. It is important to note that most of these factors leading to consumer frustration seem to be down to poor basic management and are in the industry’s own hands to resolve.
Less than half of consumers with cars still in-warranty have their vehicles serviced at the purchasing dealership.
This represents a significant missed aftersales opportunity for dealers. And it may also impact repurchase decisions, as consumers tend to be more likely to buy their next vehicle from the servicing dealer rather than the prior purchasing dealer.
Here's what companies need to do to better understand and respond to consumer behavior in a volatile market.
