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US survey shows consumers decide on car purchases before entering the dealership

Published: 13 August 2014

The AutoTrader Automotive Buyer Influence Study 2014, in co-ordination with IHS Automotive, explores consumers' internet shopping habits and highlights the specific shopping trends of the millennial generation. The study has found that only 48% of consumers have a specific make or model in mind when they begin their research, but by the time they get to the dealership, 70% buy what they had in mind.



IHS Automotive perspective

 

Significance

Among the most significant trends highlighted by the survey is that once consumers start visiting dealerships, 76% of new-car buyers stick with their originally intended models; only 24% change to another. Additionally, AutoTrader identified several trends specific to the millennial generation: they need more time to decide on a vehicle; traditional media is ageing out, and is used less frequently; social media is not helpful in the shopping phase of the car-buying process; mobile access to shopping information is growing and "rules" millennials' shopping experience; and poorly executed mobile experiences can hurt brand reputation.

Implications

Relative to the car-buying process versus the awareness or consideration stages, automakers and dealers need to focus their resources on the pre-dealer experience. The study found that only 48% of new-car buyers have a specific make or model in mind when they begin their research, with as many as 70% completely undecided.

Outlook

The amount of information available online is vast enough to drive the vehicle shopping process, and creates a variety of opportunities for reaching buyers during this process. By the time the consumer enters a dealership, they are already educated on vehicle pricing, content, and basic features. Therefore, there is more opportunity to capture consumers while they are researching vehicles. The power of mobile shopping and an informed buyer mean dealerships can be more effective with transparent, inclusive, and relationship-oriented approaches.

The 2014 Automotive Buyer Influence Study, commissioned by AutoTrader through IHS Automotive data and the third of its kind, takes an in-depth look at the habits of car shoppers, specifically focusing on internet use. AutoTrader presented the results to the automotive media at an Automotive Press Association event in Detroit, Michigan (United States) yesterday (12 August 2014). Of total car buyers, 79% use the internet as a shopping tool, up from 71% in 2011; within the millennial population, this equates to 95%.

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Consumer Decision Journey, as presented by AutoTrader.com

AutoTrader identified the consumer decision journey as transitioning from awareness to a catalytic event (life change, vehicle breakdown, etc) that would drive an immediate purchase, to consideration and evaluation through to the purchase event. The company sees awareness and the catalytic event as largely offline events, with consideration and evaluation happening online, while the purchase event must, by nature and under US law, happen offline. The data in this study focuses on the consideration and evaluation stages rather than awareness.

Relative to the car-buying process versus the awareness or consideration stages, the study concludes that automakers and dealers need to focus their resources on the pre-dealer experience. Only 48% of new-car buyers have a specific make or model in mind when they begin the shopping process, while as many as 70% of millennials are undecided. However, by the time they enter a dealership, new-car buyers are likely to stay with the make and model they originally intended. Furthermore, the study noted that 46% of all buyers spend the most time on third-party sites, compared to 51% of millennials. Third-party sites that enable comparisons between vehicles and pricing are significant tools for car shoppers, although they also spend 19% of their time on dealers' websites (15% millennials) and 13% on OEM sites (10% millennials). Therefore, for automakers, a strong presence on third-party sites is critical.

The study also found that millennials differ from other generations in that 95% use the internet to shop versus 79% of the total shopping population (including those looking for new or used cars). Millennial shoppers tend to be female and more diverse; they buy more used vehicles, likely related to having less income; and they have less automotive experience, but are more connected, mobile and socially.

Of interest, the study found that only 1% of all buyers and 5% of millennial buyers find social media to be helpful in the shopping process. A social media presence can be significant for the awareness and post-purchase relationship phases, but, as AutoTrader's Isabelle Helms, vice-president of research and market intelligence, pointed out, social media cannot answer three key questions in the buying process: Is this vehicle right for my needs? How much does it cost? How does it compare to other vehicles? The same principle drives the lack of efficacy of TV and newspaper advertising to the shopping process – only 67% of millennials and 37% of buyers found newspapers helpful, and 49% of millennials and 41% of all buyers found TV content helpful at the shopping stage. It is as important to note that these mediums are significant in awareness and post-purchase reinforcement as it is to recognise that they do not necessarily provide the information buyers need to make a purchase decision.


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Mobile device car-shopping usage, as presented by
AutoTrader.com

Related to social media questions, the study found that 78% of millennials say there would be no impact on brand perception if the brand does not use social media, but that 35% report a negative impact if the brand does not have a mobile site. However, AutoTrader warned that a poor site is worse than no mobile site at all; 59% of millennials said that a poor mobile experience has a negative impact on brand perception.

Mobile internet shopping is a significant opportunity. Buyers shop differently depending on the device (laptop, tablet, smartphone) they are using, but tend to use all three. The study found that many shoppers use their tablets and smartphones at the dealership to check pricing and other information on the spot, as well as transitioning their research to whatever medium is convenient in a given space. While 74% of buyers use their desktop to research car pricing, only 65% use their tablet for this purpose and 58% their smartphone. However, 59% of buyers used their smartphone to locate a dealer or get dealer information. When looking to compare current models or options, usage of desktop is 72% and smartphone 41%. When asked, "Prior to purchasing your vehicle, which of the following devices did you use to access automotive information, either through the internet or by using a mobile device?", the 2014 study showed that 88% of car buyers used their laptop or desktop, compared to 91% in 2013. The increase in tablet and smartphone use is more dramatic: both increased from 19% in 2013 to 28% in 2014. Within the millennial demographic, AutoTrader reported that 78% use their desktop or laptop, 32% their tablet, and 50% their smartphone. AutoTrader forecasts that multi-device adoption rates will increase from 32% for the total car-buying population to 80% for all car-buyers by 2020.

The study also found that internet car-shoppers are spending less time researching overall. In the 2011 study, car buyers spent 17.5 hours shopping versus 15.5 hours in 2014. Millennials spend 16.4 hours shopping on average, which AutoTrader attributes largely to the fact that they simply have less automotive experience than older buyers. However, the indication for automakers and dealers is that catering to their needs by providing the right content at the right time can pay off as consumers work through making a decision.

Outlook and implications

In its third iteration, the study has layers of implications for how automakers and dealers should approach consumers in the shopping phase of the purchase lifecycle process. The amount of information available online – mobile or desktop – is vast enough to drive the vehicle shopping process, and creates a variety of opportunities for reaching buyers during that process. Consumers are also using these mediums to research and support buying decisions. By the time the consumer reaches a dealership, they are already educated on vehicle pricing, content, and basic features – and they are likely to stick with their decision.

Furthermore, consumers use a variety of devices to shop, for different tasks, and in different locations. Understanding this, OEMs and dealers can create marketing messages that match the device and increase the likelihood of capturing the buyer's attention.

The internet and mobile devices provide a good opportunity to capture consumers while they are shopping and researching vehicles, before they begin visiting dealerships. The power of mobile shopping and an informed buyer means dealerships can be more effective with transparent, inclusive, and relationship-oriented approaches. Capturing consumers while they are shopping and researching, but before they visit the dealer, can pay off.

By implication, the role of the dealership is also poised to shift from providing basic information and the opportunity to 'kick the tyres' to an environment poised to reinforce the research decision already made. Buyers are armed with more information than ever, yet can also still benefit from education about vehicle features, from safety to technology. Feedback from initial quality and satisfaction surveys indicates consumers are often unhappy with the performance of their telematics and infotainment devices, while systems like stop-start and dual-clutch transmissions are difficult for consumers to adjust to, similar to the reaction of some buyers to the first anti-lock-braking systems. Some of this is certainly due to design and integration, but some due to poor training on the features. The situation only gets more difficult as advanced powertrain solutions – including systems unfamiliar to US buyers, like start-stop and dual-clutch transmissions – are employed to reach CAFE requirements. Connected cars, advanced driver assistance systems, and ultimately self-driving cars are all technology areas in which consumers will need training to use them to maximum effectiveness. The situation suggests dealers could benefit from shifting the focus from pushing hardware to engaging buyers in learning the benefits of their vehicles.

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