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    Cars Online 08/09 Cars Online 08/09 Document Transcript

    • Automotive the way we see itCars Online 08/0910th Annual Global Automotive Study: TrackingConsumer Buying Behavior in Both Mature andEmerging Markets
    • ContentsIntroduction 3Executive Summary 410-Year Review: What a Difference a Decade Makes 6Emerging Markets: The Key to Future Growth 8 Brazil: Vehicle Buyers Know Green 8 Russia: Western Purchase Patterns Emerge 9 India: Tech-Savvy Consumers Turn to Online Tools 10 China: High-Growth Market, Demanding Consumers 11Vehicle Research: Market Maturity Impacts Behavior Patterns 12Going Green: Emerging Markets Focus on Fuel Efficiency 14Web Usage: Interest in Online Vehicle Buying Jumps 17Customer Interaction: A Holistic Approach to Building Loyalty 22Customer Satisfaction: What Needs to Change? 25The Next 10 Years: Conclusion and Recommendations 27© 2008 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without priorwritten permission from Capgemini.
    • Automotive the way we see itIntroduction Welcome to the 10th annual The research for this year’s study Capgemini global automotive study – involved more than 3,100 consumers Cars Online 08/09. in the United Sates, Western Europe (especially Germany, France and the This year’s study expands our coverage UK), Brazil, Russia, India and China. of consumer buying behavior beyond The executive summary provides an traditional mature markets such as the overview of key findings from the United States and Western Europe to research, and the sections that follow include several emerging markets: offer more in-depth data and analysis Brazil, Russia and India, in addition to on each of the emerging markets as China, which we have covered since well as key topics such as vehicle 2004. As these developing markets research, lead management and become increasingly vital for the customer loyalty. We also look at the automotive industry, companies must changes consumers expect to see in understand how consumer purchase the way they buy a vehicle in the patterns in these countries differ from coming 10 years. “The whole vehicle or mirror the behavior of car buyers in buying process will be done with a established markets. click of the mouse,” said a consumer from India, reflecting a sentiment This year we also take a deeper look expressed by the majority of at top-of-mind issues like fuel respondents in our study. efficiency and alternative-fuel vehicles, the use of new online tools such as We hope the findings of Cars Online blogs and discussion forums, and 08/09 will provide automotive customer satisfaction with the vehicle manufacturers and dealers with buying process, including consumer insights into changing consumer suggestions on what would improve dynamics in both mature and the buying experience. As this is the developing markets, and will help the 10th annual issue of Cars Online, we industry gain a better understanding have also reviewed results from the of how to successfully anticipate past decade to see just how much has evolving consumer needs and changed and what clues that can demands. provide about the decade ahead. During the past 10 years, Capgemini has surveyed almost 42,000 consumers across 15 countries, as well as 300 automotive Original Equipment Manufacturers (OEMs) and 2,500 dealers, which adds up to significant insight into vehicle buying behavior. Some of the consumer knowledge gained over the course of this research has been highlighted in fact boxes. Look for them throughout the report.Cars Online 08/09 3
    • Executive Summary “It will be as easy to buy a vehicle online consistently rated among the most as it is to buy a book or bottle of perfume important decision criteria, there are over the Internet.” significant differences beyond these common factors. In particular, “Combustion engines will be just for consumers in emerging markets put classic cars.” greater emphasis on more short-term factors such as 0% financing, cash- “I hope we will be able to buy direct from back incentives and additional the manufacturer at the cost the dealer warranty coverage. pays so as to be able to get a better model for a fair price.” All emerging automotive markets are not alike. Understanding both the “Buying a car will be like putting together similarities and differences among the a Lego kit. You will choose standardized four developing markets studied is components from different manufacturers essential to succeeding in these high- that will be assembled into your car.” growth regions. Brazilian consumers, for example, are far more likely than As these quotes from our Cars Online those in China, India or Russia to own 08/09 research make clear, consumers or have interest in fuel-efficient and have some very definitive ideas about alternative-fuel vehicles. Russian the way they expect to buy cars in the consumers demonstrate buying future. These qualitative comments, behavior that is closer to that ofAbout the Study together with the extensive respondents in western markets. For quantitative data from the study, point instance, 21% of Russian respondents to the importance of understanding said they were likely to buy a usedCapgemini worked with SmartRevenue,a Ridgefield, Connecticut-based consumer needs and behavior vehicle, the highest of the emergingresearch firm, to conduct the survey for patterns, particularly as automotive markets.Cars Online 08/09. All analysis and companies turn to new growthinterpretation of the data has been markets to offset static sales in At the same time, the researchmade by Capgemini in collaboration traditional western markets. uncovered some consistent trendswith the Car Internet Research Program among the emerging markets.(CIRP) of the University of Ottawa, Key Findings Respondents in all four developingCanada. In total more than 3,100 The research uncovered a number of economies indicated strong interest inconsumers were surveyed in eight key findings: buying vehicles over the Internet,countries: Brazil, China, France, heavy use of new online tools such asGermany, India, Russia, the United Fuel economy is as important a blogs and web forums, and higherKingdom and the United States. Thecomposition of the consumer sample in factor in a consumer’s choice of levels of customer satisfaction with theeach country was based on projectable vehicle as are safety and reliability. overall vehicle buying process. Innational samples representative of the The impact of volatile gasoline prices some respects consumers in emergingpopulation from the standpoint of can be seen in all markets, with nine markets demonstrate less sophisticatedregion, age and gender. All consumers out of 10 respondents pointing to fuel buying behavior than those in westernsurveyed were in-market (20% plan to economy as an important or very countries, but they are also extremelybuy or lease a vehicle within three important consideration in their technology enabled, indicating themonths; 25% in three to six months; vehicle choice. In Brazil, it was the potential to leapfrog established40% in six to 12 months; and 15% in 12 number one factor, cited by 97% of practices in western markets in a shortto 18 months). respondents. While reliability, safety, time. fuel economy and price are4
    • Automotive the way we see itConsumers’ latent demand for This year saw a rise in green vehicle said they were satisfied with theonline vehicle buying continues to ownership: 36% of all respondents process of buying a car. It’s interestinggrow. This year 44% of consumers said they own a fuel-efficient or to note that there appears to be ansaid they were likely or very likely to alternative-fuel vehicle, up from 28% inverse relationship between marketpurchase a car entirely over the last year. And half said they plan to maturity and satisfaction levels: TheInternet if that capability were buy or are thinking seriously about more sophisticated the market, theavailable, up from 20% last year. The buying such a vehicle. However, most lower the degree of satisfaction. Forinterest level was particularly consumers are not prepared to pay a example, in the U.S. only 40% saidpronounced in emerging markets like high premium to go green: The they were satisfied, compared withBrazil (88%) and India (67%). Interest research found that 85% of 84% of consumers in India.in online buying extended to parts respondents expect to pay less thanand accessories, with 55% of all 10% extra for a fuel-efficient or And even those respondents who areconsumers saying they were likely to alternative-fuel car. satisfied see room for improvement. Atbuy these items over the Internet. the top of the list is the vehicle negotiation Consumers are increasingly process at the dealership. Consumers saidInterestingly, the barriers to online demanding about the speed of less haggling and pressure by dealervehicle buying seem to be response they expect from dealers salespeople would increase theiraddressable. We expected respondents and manufacturers. Half of satisfaction level. Other areas forto voice concern about the inability to consumers said they expect a response improvement include better customerinteract face to face or negotiate a to a web or e-mail inquiry within four service and greater transparency intrade-in over the Internet, but instead, hours, up from 39% last year. That pricing.they cited the inability to test drive a number jumps to 60% for respondentsvehicle (43%) and the lack of full who are within three months of buying While this topline review provides aprice and product information (36%) a car. Respondents in developing summary of key findings from thisas more significant blockers. countries are particularly demanding: year’s Cars Online study, the sections Two-thirds of Chinese consumers that follow offer more in-depth dataConsumers are confident in their expect a response within four hours, as and analysis, as well as a peek into theknowledge about green vehicles and do 57% of Russians and 55% of future as viewed through the eyes ofare increasingly likely to own fuel- Brazilians. Failing to respond in a vehicle buyers.efficient and alternative-fuel cars. timely manner can lead vehicle buyersMore than three-quarters of to vote with their feet: A full 75% ofrespondents said they are confident or respondents said they would switchvery confident that they have a clear manufacturer, dealer or both if theyunderstanding of what “green vehicles” don’t get the response they expect.really means. The degree of confidenceis highest in Brazil, where 92% of Most consumers are satisfied withconsumers said they understood the the vehicle buying process, but they Fact Boxenvironmental issues. This is not see plenty of room for improvement.surprising given that ethanol and The study uncovered both good news Italians see the Internet as a way togasoline/ethanol flex-fuel vehicles have and bad news for the automotive eliminate the hassles of the dealershipbeen popular in Brazil for a number of industry when it comes to customer experience and as a powerful tool foryears. Almost one-third of Brazilians satisfaction. Two-thirds of respondents comparing cars and services againstindicated that they owned or planned worldwide said they were satisfied or one another, and less for actually gathering information about specificto buy an ethanol or flex-fuel car, the very satisfied with the overall vehicle cars.highest among all the markets. buying process. While that’s encouraging, it’s a decline from 10 — Cars Online 2000 years ago, when 80% of consumersCars Online 08/09 5
    • 10-Year Review: What a Difference a Decade Makes Consumer usage of the Internet as a research tool during the vehicle buying process has had a profound impact on the power dynamics in the automotive industry. “The Internet, with its increasing In fact, by our 2005 report, more than household penetration worldwide, is 60% of car buyers indicated that they expected to be the most powerful used the Internet as a primary source“ In 10 years I would expect to see vehicles that are less polluting and communication channel to support the more demanding, better-informed of information during the purchasing process. That number climbed to 80% use cheaper fuels. Cars should and increasingly segmented in 2006 and 88% this year. [automotive] customers.”1 That also be more durable and have prediction lay at the heart of the first While consumer use of the web has simpler and cheaper technology. edition of Capgemini’s Cars Online jumped dramatically, the key drivers But at the same time, we should study, published in 1999. The behind this trend have remained be able to have intelligent speed research was launched that year to consistent. Noted the 1999 study: systems to prevent accidents. help the automotive industry “Customers state that a major Brazilian consumer ” understand the role that the Internet and electronic commerce overall advantage of the Internet is that it provides comparable data on the car might play in the way consumers market and that pressure is never put shopped for and bought vehicles. on the consumer on whether or not to buy.”2 The primary options vehicle Since that time, Capgemini has buyers look for on the web today surveyed almost 42,000 consumers (price and product information) across 15 countries (Belgium, Brazil, haven’t changed over the past 10 Canada, China, France, Germany, India, years, with those two features Italy, Japan, Netherlands, Russia, Spain, swapping position but always ranking Sweden, United Kingdom and United among the top three (with vehicle States). In addition, 2,500 dealers and comparison capability included as 300 automotive manufacturers and well). At the same time, the national sales companies were entertainment-oriented elements of a interviewed over the decade. website such as dynamic graphics have been rated low on the list of While the inaugural research focused important web options in all years. exclusively on the Internet, the study has broadened over the years to The Balance of Power Shifts to incorporate additional topics such as the Consumer brand and dealer loyalty, Viewed in a vacuum, the evolution of environmental issues and customer the Internet as a research tool is an Fact Box satisfaction. The one constant, interesting phenomenon. However, it however, has been the examination of is the industry-changing impact of For the first time in the course of our the growing impact of the web, and this technology that has truly made it Cars Online research, the Internet has this is the area where Capgemini worth chronicling over the past 10 become the number one information found the greatest changes over the years. source used by consumers when 10 years of conducting the research. researching vehicles, surpassing family A decade ago, the balance of power in and friends and manufacturer-specific The first Cars Online report noted that the vehicle buying process lay squarely dealers.” 11% of respondents used the Internet with dealers and manufacturers. They — Cars Online 05/06 to research vehicles and predicted that had the knowledge and information the web was likely to influence 50% that consumers lacked, giving them an of vehicle purchases within five years. upper-hand in negotiations. Today the 1 “Cars Online 1999: Empirical Study on the Potential for Automotive Sales and Distribution in Electronic Commerce,” Capgemini. 6 2 Ibid.
    • Automotive the way we see itThe Internet’s Rise as a Research Tool(% of consumers saying they use the Internet as an information source during the Fact Boxvehicle buying process) The Japanese stand out for their enthusiasm for the Internet: 93% of80% Japanese consumers had visited an OEM website.60% — Cars Online 200140%20% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Source: Capgeminipower balance has shifted dramatically, although it typically remains higher The amount of information availablewith many consumers one step ahead than dealer loyalty. In 2005, for to consumers on the web continues toof dealerships and automotive example, 62% of U.S. consumers said increase with the emergence of onlinecompanies. they were likely to buy the same make consumer-to-consumer (C2C) tools as their current vehicle, compared such as blogs, web forums andEarly signs of this changing dynamic with 55% this year. Internet discussion groups. In thiswere noted in the 1999 edition of Cars year’s study, 42% of respondentsOnline: “The consumer can enjoy Continued evidence of the shift in the indicated that they use automotiveunbiased online information gathering power dynamic was recorded in blogs when researching informationand purchasing, which leads to a shift subsequent years of our research. during the vehicle shopping process;in bargaining power that comes in step “The resulting pricing transparency 45% use discussion groups or forums;with a more transparent and from Internet-driven information has and 37% use information/competitive market. Empowered by accentuated the ‘buyer’s market’ encyclopedia sites with user-generatedthe web, the automotive customer is environment and shifted some of the content such as Wikipedia.better informed, diversified, heavily negotiation power to the consumer. In Consumers are relying on these newfocusing on independent information today’s environment, when a buyer tools to obtain supporting informationand test reports and less brand loyal.”3 arrives at the dealership he or she and a more objective viewpoint, all of often knows what type of vehicle he which will accompany them whenThe truth of that prediction is or she wants, where he or she can get they visit the dealer showroom – or,apparent in customer loyalty data, the vehicle and how much the vehicle increasingly, when they look to thewhich shows that in most mature will cost,” noted the 2002 edition of web – to make a vehicle purchase.automotive markets, brand loyalty has Cars Online.4been slowly declining in recent years,3 Ibid..4 “Cars Online 2002: The Adaptive Automotive Enterprise Study,” Capgemini.Cars Online 08/09 7
    • Emerging Markets: The Key to Future Growth Despite some similarities, it’s clear that complex and diverse consumer purchase patterns exist from one emerging market to another. Since 2004 Capgemini has included Brazil: Vehicle Buyers Know China among the countries studied in Green our annual Cars Online report. That In many respects, Brazil is the most“ There will be no my computer, I10 years. Sitting at car dealers in will research has offered a glimpse of how this dynamic and growing automotive sophisticated of the developing automotive markets. Adoption rates of directly order a vehicle from the market is evolving, identified the Internet and mobile phones are differences in buying behavior growing rapidly, particularly in urban maker, making design changes to compared with mature markets, and areas, leading to increased interest in my future vehicle. It will be put on offered evidence of the convergence online buying. This trend was the assembly line and I will have a that is beginning to take place as reflected in our research, with 87% of unique vehicle. Funny, maybe … Chinese consumers become more respondents from Brazil saying they but we can buy furniture that way familiar with buying cars. were likely or very likely to buy a car today so why not cars in 10 years? over the Internet if the capability were Russian consumer ” To provide a more complete picture of the markets that may hold the key to available, the highest among all countries. The same number indicated the automotive industry’s future they would like to purchase parts and growth, Brazil, Russia and India were accessories online. added to this year’s research. The findings demonstrate that there are The interest in buying cars over the similarities among all four developing Internet may stem from the fact that a markets. For example, in some decade ago Brazilians were offered tax respects consumers in these markets breaks when they bought a vehicle demonstrate less sophisticated buying online. And certain cars were only behavior than those in western available over the Internet. Those tax countries. They put much greater breaks no longer exist, but the prior emphasis than do western consumers experience may make consumers on all the decision criteria when more comfortable with buying a choosing a vehicle, which is not vehicle fully online. surprising given the fact that many are first-time car buyers. Brazilians who use the Internet say it can have a significant impact on their At the same time, they are also buying decisions. More than nine out extremely technology enabled, of 10 said that having the right web indicating the potential to leapfrog features would make them more likely established practices in western to purchase a car from that company. markets in a short time. For instance, And, conversely, a similar number respondents in all four developing indicated that not having the right economies show strong interest in website options would make them buying vehicles over the Internet and less likely to buy from that company. heavy use of blogs and web forums. Brazilian consumers are particularly Despite these similarities, it’s clear that focused on fuel-efficient and alternative- complex and diverse consumer fuel vehicles, due primarily to the fact purchase patterns exist from one that ethanol has enjoyed widespread emerging market to another. The usage in the country for many years. following are snapshots of the vehicle Today, flex-fuel vehicles, which can use buying trends in each of these four any combination of ethanol and markets. gasoline or each of these fuels alone, 8
    • Automotive the way we see itaccount for nearly 90% of all new cars Brazil: High Ownership of ‘Green’ Vehiclessold in Brazil.5 Sales of flex-fuel cars in (% of consumers saying)Brazil are predicted to grow at anannual rate of 15.67% from 2007 to 100% 52010.6 6 5 8 80% Thinking seriously about buying anThe focus on green vehicles is 41 8 alternative-fuel vehiclereflected in our Cars Online research, 8 22 Thinking seriously about buying a fuel- 6 efficient vehiclewith 59% of Brazilian consumers 60% 81 02 Planning to buy an alternative-fuel vehicleindicating that they currently own a 42 4 3 42 Planning to buy a fuel-efficient vehiclefuel-efficient or alternative-fuel 40%vehicle, the highest among all the 8 42 92 Currently own an alternative-fuel vehiclemarkets studied. Almost one-third of Currently own a fuel-efficient vehicle 20%the respondents from Brazil said those 2 2 53 82vehicles were fueled by ethanol or a 91 61gasoline/ethanol combination, again 0%the highest among the countries. In TOTAL U.S. Western Brazilother markets, gas/electric hybrids or Europenatural gas vehicles and natural Source: Capgeminigas/gas hybrids were more popular. Russia: Intention to Acquire New vs. Used VehicleIn addition, 95% of Brazilian (% of consumers saying)respondents identified alternative-fuelvehicles as an important or very 100% 4 6 8 1 1 11 6 9important factor in their choice of 41 91vehicle, compared with the overall 80% 12average of 63%. Brazilian consumers 62 93also demonstrate great confidence in 60%their understanding of what green Undecidedreally means and are more willing 98 39 09 Usedthan others to pay extra for a fuel- 40% 77 17 Newefficient or alternative-fuel vehicle: 06 55One-quarter said they would pay a 20%premium of more than 10%. 0%Russia: Western Purchase TOTAL U.S. Western Russia Brazil India ChinaPatterns Emerge EuropeOur Cars Online research found that Source: Capgeminiin many respects Russian vehiclebuying patterns resemble those in emerging markets. The used car sport utility vehicles (SUVs). In thiswestern markets. For instance, despite market is expected to remain strong in year’s research, 21% of respondents inthe growth of new car sales in Russia, Russia due to the continued influx of Russia said they expect to purchase anthe country still has a significant used used Japanese and German cars. SUV, compared with the overallcar market, similar to the U.S. and average of just 8%. In addition,Western Europe: 21% of Russian Similar to U.S. vehicle buyers, Russian Russian respondents, like those inrespondents said they were likely to consumers are more likely than those western countries, are less interestedbuy a used vehicle, the highest of the in other emerging markets to buy in factors such as low financing and 5 “Brazil Flex-Fuel Cars Help Tame Gasoline Prices,” Planet Ark, www.planetark.org, March 17, 2008. 6 “Brazil Automobile Industry Till 2010,” RNCOS, January 2008.Cars Online 08/09 9
    • cash-back incentives when it comes to for customer interaction and buying. Fact Box This is evident in the fact that more their vehicle purchase decisions. And they also tend to be less satisfied with than two-thirds of Indian respondents The Dutch see the Internet primarily as the overall vehicle buying process, said they were likely to buy a car an educational tool that they can use to focusing in particular on the online, second only to Brazil among enhance their bargaining power within complexity involved in buying a car in the countries studied in our Cars the showroom. Though the Dutch have Russia. Online research. A similar number also a strong preference for dealership said they would like to buy parts and buying, this trend is driven primarily by Growing Internet penetration in accessories online. their desire to see cars first-hand and Russia has led to above-average usage confirm quality, not by the value they of information sources such as Indian consumers are heavy users of place upon personalized service. manufacturer websites, search engines, new online tools: 56% use blogs when — Cars Online 2000 information sites and online news sites. researching vehicles, 55% use web Our research also found extensive use forums and 52% use video-sharing of C2C web tools: 45% of Russian sites, the highest rates among all the respondents use automotive blogs markets. They are also more likely when researching a vehicle purchase, than their counterparts to use 49% use Wikipedia-type sites, and Wikipedia-type sites and RSS feeds. 64% use web forums, the highest among all the countries studied. Despite the growing importance of the Internet in India, consumers also rely India: Tech-Savvy Consumers on other types of information sources Turn to Online Tools when researching vehicles: 44% of The growing number of affluent and Indian respondents said they use TV educated Indians is driving increased advertising, compared with the overall utilization of the Internet and mobile average of 23%; and 39% use auto devices, which is expected to lead to shows against the average of 22%. expanded use of electronic channels India: Above-Average Use of New Online Tools (% consumers saying) 65 Automotive weblog 24 Automotive dis cus s ion 55 group/forum 54 25 Online video s ite/video- s haring s ervice 23 Informational/encyclopedia 15 s ite with user-generated content 73 India 03 Total RSS feeds 51 0% 20% 40% 60% Source: Capgemini Note: multiple responses allowed10
    • Automotive the way we see itThe Indian automotive market is Chinese consumers are particularly A similar shift is apparent in dealerdominated by small cars, so it’s not demanding when it comes to the speed loyalty. Half of Chinese consumerssurprising that 39% of Indian at which they expect to receive a said they were likely to buy a vehiclerespondents said they own a fuel- response from a dealer or manufacturer. from the same dealer where theyefficient vehicle, which is 10 Two-thirds expect a reply to a web or made their previous purchase, uppercentage points higher than the e-mail inquiry within four hours, the from 18% in 2004 and closer to theaverage for all consumers. Another highest among the countries. In dealer loyalty levels found in the U.S.35% are planning to buy or thinking contrast, consumers in the U.S. and and Western Europe.seriously about buying such a car. Western Europe were more willing toThey also indicate a willingness to pay wait 24 hours for a response.extra for a fuel-efficient vehicle,although most won’t pay more than a While China is still a developing10% premium. automotive market, there is growing Fact Box evidence of a gradual shift in someChina: High-Growth Market, buying patterns toward those more In Spain (70% of respondents), SwedenDemanding Consumers likely to be found in mature markets. (55%) and France (49%) car buyers areChinese consumers are increasingly Take brand loyalty, for example. In more attracted by the possibility of non-technology savvy, as they begin to rely 2004, just 9% of Chinese respondents stop 24-hour information over themore on the Internet as a key said they were likely to buy the same Internet than those in other countries.information source, including C2C make as their current vehicle, nottools. In fact, 70% of Chinese surprising given their lack of — Cars Online 1999respondents said they use automotive experience in owning a car. This yearblogs during the vehicle research that number stands at 48%, muchprocess, the highest among all the closer to the brand loyalty levelscountries studied. Chinese consumers found in western markets.are also showing increasing interest inonline vehicle buying. This year, 37% ofrespondents from China said they were China: Consumers Demand a Quick Responselikely to buy a car over the Internet, up (% consumers saying)from just 5% the prior year. 100% 11 2 1 1Despite the growth of the Internet in 5 01 11 21China, consumers favor the telephonefor many types of communication 80% 72with dealers and manufacturers,particularly surveys and service 93 Dont knowreminders. About half of Chinese 60% 15 45 More than 48 hoursrespondents said they want to receive 02 24-48 hourspost-sale, post-test drive and post- <24 hoursservice surveys by phone, compared 1 - 4 hours 40% <1 hourwith the average for all consumers of 22 71 Immediatelyabout 25%. The phone was preferredfor service reminders by more than 61 91 20%half of Chinese consumers, compared 41 03with the average of 26%. Chinese 11 21respondents were far less likely than 31 6 0% 5their counterparts in other markets to TOTAL U.S. Western Chinawant to receive these forms of Europecommunication via e-mail. Source: CapgeminiCars Online 08/09 11
    • Vehicle Research: Market Maturity Impacts Behavior Patterns The vehicle research process varies considerably between mature markets and developing markets and even from one emerging country to another. The bottom line: Know your markets as not all car shoppers are created equal. Most consumers today do a significant countries. Search engines are used by amount of research, using a wide range 39% of consumers in the U.S. and of information sources, prior to buying Western Europe, but by just 24% of a car. While the Internet is the main those in the developing markets.“ I anticipate a more ‘virtual’ experience when buying a car; source relied on by respondents in all countries studied, diverse patterns In contrast, consumers in the less computer simulations, projections emerge by country. Distinctions are mature markets are likely to rely more of the car in our living rooms, etc. U.S. consumer ” particularly pronounced when comparing mature and emerging heavily on sources such as family and friends, the automotive press, auto markets. Understanding these shows and TV advertising. For differences is essential in order to example, 27% of consumers from the determine the most effective developing nations said they would advertising/marketing mix for each use TV advertising during the research market. process, compared with just 13% of respondents from the U.S. and Consumers in the U.S. and Western Western Europe. Europe are heavier users of manufacturer and dealer sites, search Interestingly, while the use of most engines and information websites. types of websites is lower in emerging Dealers sites, for example, are used by markets than in mature markets, 44% of respondents in the developed respondents from the developing markets and by 23% in the emerging countries showed a higher usage rate for web forums, blogs and discussion Expected Use of Information Sources – Mature vs. Emerging Markets groups. (% consumers saying) Dealer websites 82 44 Manufacturer Internet sites 14 43 Search engine 42 93 83 Family and friends 24 Information websites 03 63 Fact Box Independent car valuation services 21 33 Manufacturer-specific franchise dealer 13 23 Specialist motoring/automotive press 52 43 Only 18% of consumers said TV Used car dealer 01 42 advertising was likely to be influential Internet news sites 32 72 when choosing a vehicle. In contrast, Print advertising 91 76% of dealers and 57% of OEMs 71 believed that TV advertising would Auto shows 51 52 31 influence consumers’ buying decisions. TV advertising 72 31 Independent e-tailer sites 41 — Cars Online 2003 Web forums, blogs or Internet discussion groups 21 91 TV news 8 12 Mature markets Non-specialist motoring/automotive press 8 8 Emerging markets Radio advertising 3 8 Website banner ads 3 9 Radio news 2 6 Financial services broker 2 7 0% 20% 40% 60% Source: Capgemini 12
    • Automotive the way we see itImportance of Factors in Consumers’ Choice of Vehicle — Mature vs. Emerging Markets(% consumers saying “important/very important”) Reliability of brand 94 92 Safety 91 93 Fuel economy 90 90 Price of vehicle 90 89 Quality of interior styling 70 84 Brand name of vehicle 70 82 Extra options at no cost 70 73 Vehicle availability 68 80 Aftersales service 67 86 Low emissions 67 81 Ability to research information on the Internet 65 74 Product features/options 64 81 0% or low financing 58 73 Additional warranty coverage or service credit 51 79 Hybrid or other alternative-fuel cars 48 70 Mature markets Cash-back incentive 43 67 Emerging markets Coupons/options for third-party providers 41 63 0% 20% 40% 60% 80% 100%Source: CapgeminiBut that doesn’t tell the whole story. Consumers in China rely more heavily markets, which is not surprising givenThe patterns vary significantly from on family and friends and consumers’ lack of experience inone emerging country to another. For manufacturer-specific dealers than do buying cars. This trend has beenexample, Russia again more closely those in the other emerging markets. apparent in China since we beganresembles the western countries, with Almost two-thirds of Chinese including that country in ourhigher usage of dealer and respondents turn to family and research, and is also evident in Indiamanufacturer sites and search engines friends, compared with the average and is particularly pronounced inand less reliance on TV advertising. for all emerging markets of 42%. Brazil.More than half of Russian respondentssaid they would use OEM websites as Key Factors in Vehicle Choice Again Russia looks more like thean information source, compared with The volatile state of gasoline prices western markets, particularly the U.S.,an average among the emerging today was reflected in the fact that fuel where there is less emphasis placed onmarkets of 24%. By comparison, economy jumped in importance as a short-term factors such as lowBrazilians were much less likely to decision criterion for consumers when financing and additional warranty. Inrely on manufacturer and dealer sites. choosing a car. In this year’s study Russia, 61% of consumers said 0% orIn fact, the use of all types of 90% of respondents said it was an low financing was an importantinformation sources among Brazilian important or very important factor in decision criterion, the same numberconsumers tended to be below their choice of vehicle, up from 83% as in the U.S., but lower than theaverage. last year. That puts it on par with average of 73% for the emerging safety and reliability, the perennial markets as a whole.Usage of dealer and OEM sites by leaders among decision criteria. In pastIndian consumers was somewhat years, fuel economy tended to lag In general, consumers in developingabove the average for all emerging behind these factors in importance. markets placed much moremarkets. Respondents in India were importance on aftersales service,also more likely to rely on family and Interestingly, the four most important additional warranty coverage,friends, TV advertising and auto considerations – reliability, safety, fuel hybrid/alternative-fuel cars and lowshows: 44% of Indian respondents economy and price – are consistent in emissions than did those in maturesaid they would turn to TV both developing and mature markets. markets.advertising as an information source, Beyond that, however, there are somecompared with the average of 27% for significant differences. For example,all the emerging countries. all factors matter more in emergingCars Online 08/09 13
    • Going Green: Emerging Markets Focus on Fuel Efficiency Consumers are increasingly focused on fuel-efficient and alternative-fuel vehicles when making car buying decisions, especially in developing markets. Volatile fuel prices and shifting vehicle Do Consumers Understand preferences have pushed green issues What Green Means? into the spotlight. Increasingly, fuel Given the current emphasis on fuel“ Ion a rechargeable batterythat runs would like to buy a car (like efficiency and environmental considerations are impacting consumer efficiency and alternative-fuel vehicles, we wanted to gauge the confidence mobile phones) and can be buying decisions and are also level consumers had in their becoming important elements in understanding of what green really recharged by solar energy. Such automotive companies’ growth means. More than three-quarters of an eco-friendly car may cost more strategies. consumers said they were confident but it will be economical in the or very confident that they had a clear long run. The focus on green issues led us to understanding about green vehicles. ” Indian consumer delve more deeply into consumer behavior regarding fuel-efficient and The overall number was heavily alternative-fuel vehicles. Early interest influenced by the higher degree of in hybrid cars was apparent in our confidence exhibited by consumers in 2003 edition of Cars Online, when India, China and especially Brazil. It’s nearly one-third of consumers said it not surprising that Brazilians are more was an important factor in their choice comfortable with green issues given of vehicle.7 In this year’s report, the country’s history with ethanol- almost half of respondents in western powered cars. The confidence levels markets said hybrid/alternative-fuel drop in Russia and the western cars was an important consideration in countries. In the U.S., for example, their choice of vehicle. The number 60% of consumers said they were jumped to 70% among consumers in confident in their green vehicle emerging markets, driven by Brazil, knowledge, compared with 92% in where it was the number three factor Brazil. named by respondents, and India, where 80% of consumers considered it For most consumers, the web is the a key decision criterion. primary source for information about green vehicles: 44% said they use Once again, Russia stood out as more information websites (such as third- closely resembling the western party reviews of vehicles), 40% use markets. Only 36% of Russian manufacturer sites, 30% use dealer respondents named hybrid/alternative- websites and 22% turn to blogs and fuel vehicles as an important factor in web forums. Other key sources for their choice of vehicle. In Western this kind of information include Europe the number was 46% and in dealers, family and friends and the the U.S. it was 50%. automotive press. Many consumers questioned how much they should trust green-focused advertising and marketing. Others suggested that consumers need to take a more holistic view of what truly makes a vehicle green. One consumer from the UK summed up the 7 “Cars Online 2003: Unlocking Hidden Value,” Capgemini. 14
    • Automotive the way we see itsentiment expressed by many others Consumers Show Confidence in Green Vehicle Knowledgethroughout the eight markets: “The (% consumers saying)assessment of a car company’s greencredentials must be based on thewhole life of the car, including 100%manufacture and disposal, not justemissions and miles per gallon.” 52 22 72 13 23 53 80% 34We also asked consumers to tell ushow they define fuel efficiency.Overall, more than half said the 60% 5 (Very confident)vehicle must get more than 15 km per 53 4 3liter (more than 35 miles per gallon) 14 63 74 45 2to be considered fuel efficient. 40% 07 1 (Not at all confident)However, the responses varied by 34country. For example, U.S. consumers 92had lower expectations regarding fuel 20% 02 22efficiency, while those in Western 71 51Europe and Russia had the highest 8 21 5 5 8expectations. 0% 1 4 3 2 2 1 2 4 TOTAL U.S. Western Russia Brazil India China EuropeOwnership of Green VehiclesGrowsThis year 36% of consumers said they Source: Capgeminicurrently own either a fuel-efficient oralternative-fuel vehicle, up from 28%last year. Most of that increase is dueto the inclusion of Brazil in this year’s Primary Reason Behind Green Vehicle Decisions (% consumers saying)study: 59% of Brazilians own a fuel-efficient or alternative-fuel vehicle.The numbers were also higher than 100% 1 3average in India and China, compared 21 01 01 15 9 51 32 1 3with Russia and the western 2 1 6 80% 9 41 62countries. About half of consumers 91 2 22overall said they were planning to buy 91 Other 22or thinking seriously about buying 60% Costeither a fuel-efficient or alternative- Tax creditfuel car. 40% Impact on the environment 77 57 66 86 66 Fuel economy 06Fuel economy is the primary reason 35 20%driving these buying decisions: 66%of consumers identified fuel economyas the main reason they own, plan to 0%buy or are thinking seriously about TOTAL U.S. Western Russia Brazil India China Europebuying a fuel-efficient or alternative-fuel car. That’s up from 57% last year, Source: Capgemini Base: Those who own/are interested in/thinking seriously about buying a fuel-efficient or alternative-fuel vehicleCars Online 08/09 15
    • no doubt due to the volatility in gas alternative-fuel car. However, most Fact Box prices. Concern about the impact on were unwilling to pay a premium of the environment ran a distant second. more than 10%, and the majority of Two topics that the industry should Chinese were only willing to pay 5% keep on its radar screen are on-board Gas/electric hybrids are the primary extra. This is consistent with similar navigation and hybrid cars, which were type of alternative-fuel vehicle that research Capgemini has conducted in named as important factors by roughly consumers currently own or plan to the retail and consumer goods one-third of consumers. Yet, both buy, particularly in the U.S. and industry where consumers were dealers and OEMs significantly Western Europe. The emerging willing to pay only a small premium underestimated their importance. markets are more focused on natural for products that offered sustainability gas or natural gas/gas hybrids, except aspects.8 — Cars Online 2003 in Brazil, where ethanol or flex-fuel vehicles top the list. Whether consumers’ behavior matches their stated intentions The Cost of Going Green remains to be seen as an increasing Consumers show some willingness to number of small fuel-efficient and put their money where their mouth is alternative-fuel cars make their way to when it comes to fuel efficiency. the market. Nearly three-quarters of respondents said they were willing to pay a higher price for a fuel-efficient vehicle and 80% said they would pay extra for an How Much Extra Will Consumers Pay for Fuel Efficiency? (% consumers saying) 4 3 100% 3 2 3 3 4 3 8 11 8 12 13 22 12 80% 42 60% 47 55 More than 15% extra 52 56 54 11%-15% extra 56 6%-10% extra 40% 1%-5% extra 54 20% 39 33 35 28 26 19 0% TOTAL U.S. Western Russia Brazil India China Europe Source: Capgemini Base: Consumers who are willing to pay a higher price for a fuel-efficient vehicle 8 “Future Consumer: How Shopper Needs and Behaviour Will Impact Tomorrow’s Value Chain,” Capgemini, 2007.16
    • Automotive the way we see it Web Usage: Interest in Online Vehicle Buying Jumps Frustration with the dealer negotiation process and consumers’ increasing web sophistication are driving the growing interest in buying cars over the Internet. Across all countries, content-related India were more interested than those features such as product and price in other markets in finding information continue to be the most information online about the latest“ Iprocess – everything buyingbe think the whole car – will important options consumers look for on the web, followed by customer promotion from a dealer or manufacturer. And emerging markets, done on the Internet from start to service-related features like the ability to except Russia, were also more likely to compare and configure vehicles. want to communicate online with the finish. ” French consumer Communication-related options are growing in importance, including the dealer or manufacturer, especially to help solve problems and buy ability to get guidance and advice over accessories. In contrast, consumers in the web and to communicate with the western markets were much more dealer online. Least important are interested in cost calculators and presentation-related features such as vehicle comparators than respondents zippy graphics. The exception is easy site in emerging markets, except Russia. navigation, which ranks around the For instance, 20% of those in the U.S. middle of the list of website features that and 19% in Western Europe place consumers said are most important. importance on cost calculators, compared with just 7% in Brazil and Differences emerge, however, 12% in China. depending on the country. For example, consumers in Brazil and Most Important Website Options (% online consumers saying) Price information* 35 Full range of product information 93 Transaction price available online 22 Ability to compare vehicles 81 Retail list price available online 71 Full vehicle configurator 61 Cost calculator 51 Ability to get guidance and advice 51 Ability to communicate with dealer/manufacturer online 41 Dealer invoice price available online 41 Easy site navigation 31 Ability to contact dealer sales staff 31 Ability to have open dialogue with other consumers/owners 21 Online information on latest promotion 21 3-D product presentation 11 Website in native language 01 Ability to get a quote 9 Trade-in information 9 Ability to locate a car anywhere 8 Ability to schedule test drive 8 One-step or partial configurator 5 Zippy graphics 3 Owners’ club or bonus program 3 Ability to check dealer inventory or central stock in Europe 1 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% * Price includes transaction price, retail list price and dealer invoice price Source: Capgemini Base: All consumers who use the Internet Note: Multiple responses allowed Cars Online 08/09 17
    • The presence or lack of important 2% in 2001. The 2000 report noted Fact Box web options can impact consumer that: “The Internet remains, primarily, buying decisions. More than three- an information/research medium [for The main motivator to use the Internet quarters of respondents said that car buyers] and is not an important is price transparency: general price having the features that matter to purchasing point.”9 information (named by 61% of them would make them more likely to respondents), finding the dealer with the purchase a vehicle from that company. These low numbers led us to stop best price (57%), access to Conversely, more than half said that if asking the question until last year, independent used-car price lists (55%) the features they care about are not when we reintroduced it to the survey and information about the trade-in price available they would be less likely to to gauge whether consumer sentiment for the used car. buy from that company. This pattern had changed. In fact, it had. In 2007, is consistent across all markets, 20% of consumers were looking to the — Cars Online 1999 although it is particularly pronounced web as a channel to purchase vehicles, in Brazil. and this year the number jumped to 44%, driven by significant interest Growing Interest in Online from consumers in Brazil, India and Vehicle Buying China. In Brazil, for example, 87% of In the early years of the Cars Online respondents said they were likely or study, the number of consumers very likely to buy a car over the interested in buying a vehicle over the Internet if the capability were available. Internet was low: just 1% in 2000 and In India, the number was 68%. Likelihood to Purchase Vehicle Over the Internet (% online consumers saying) 100% 4 6 5 21 9 31 91 71 72 80% 61 23 23 52 60% 72 5 (Very likely) 73 41 4 14 3 12 22 86 40% 2 52 72 1 (Not at all likely) 02 71 71 20% 63 02 32 7 22 81 9 3 8 0% 1 TOTAL U.S. Western Russia Brazil India China Europe Source: Capgemini 9 “Cars Online 2000: Global Consumer Survey,” Capgemini.18
    • Automotive the way we see itBarriers to Online Vehicle Buying(% consumers saying) Inability to test drive vehicle before making final decision 34 Inability to receive full product/price information 63 Inability to see photos/video of the vehicle inside and out 63 Inability to negotiate pricing online 32 Inability to receive a report detailing the vehicles history 12 Inability to contact and interact with a representative 91 online or by phone Inability to match a vehicle to my exact specifications 81 Inability to conduct final negotation online 71 Inability to negotiate trade-in of old vehicle online 41 Inability to apply for financing and conduct 01 financing approval process online Inability to have vehicle delivered to your home 8 0% 10% 20% 30% 40% 50%Source: CapgeminiNote: Multiple responses allowedConsumers were equally interested in Conclusion and Recommendations.”) addressed: by bringing a vehicle to apurchasing vehicle parts and Some consumers in this year’s study consumer for a test drive and byaccessories online. More than half said estimated that 80% to 90% of all vehicle increasing the product and pricethey would be likely to buy these purchases will be conducted over the information available online.items over the Internet. The research Internet 10 years from now.indicates a particularly strong latent A few differences between mature anddemand for this service among It’s too early to tell whether consumers’ developing markets were apparent.consumers in Russia, Brazil and India. expressed desire to buy cars over the For example, consumers in mature Internet translates into their actual markets were more concerned aboutThe growing interest in online vehicle behavior. Nevertheless, this trend the inability to test drive a vehicle,buying stems from frustration with represents potentially hundreds of while those in emerging countriesthe dealer negotiation process, thousands of vehicles and points to were more focused on the inability toconsumers’ increasing web the importance of implementing a get full product and price information.sophistication and their greater fully integrated multichannel strategycomfort level with making online that ensures a consistent consumer New Online Tools Popular inpurchases. Said one U.S. consumer: experience across all channels. Emerging Markets“I’ve purchased my last two new This year’s research showed a noticeablevehicles online using an independent Barriers to Online Buying jump in consumer use of new onlinesite, having the vehicle prepared and What would stop consumers from consumer-to-consumer tools such asdelivered to me at a local dealership. I buying a car over the Internet? automotive blogs, web forums andenjoyed the process much more Interestingly, the barriers seem to be informational/encyclopedia sites withwithout the participation of the pushy addressable. We expected respondents user-generated content. For example,salesman. I always feel screwed by the to voice concern about the inability to 45% of consumers said they use webdealer, but I feel great after purchasing interact face to face or negotiate a forums, up from 37% last year.a new car online at a specified trade-in over the Internet, but thatpercentage over invoice.” was not the case. Instead, they said The increase was fueled largely by the inability to test drive a vehicle consumers in Russia, China and, inIn fact, online buying is viewed as the (named by 43% of consumers) and particular, India, who are turning toleading change consumers expect to see in the lack of full price and product these new tools in a big way. Aboutthe vehicle buying process over the coming information (cited by 36% of half of respondents from the emergingdecade. (For more on respondents’ view of consumers) were more significant markets said they use blogs,the future, see “The Next 10 Years: blockers. Clearly, both can be compared with 25% of consumers inCars Online 08/09 19
    • Use of New Online Tools for Researching Vehicles Grows Fact Box (% online consumers saying) Twenty percent of consumers said they were likely or very likely to buy a vehicle 45 Automotive discussion over the Internet. In 2001, only 2% of group/forum 37 consumers were looking to the web as a channel to purchase vehicles. 42 Automotive weblog 30 — Cars Online 07/08 37 Informational/encyclopedia site with user-generated content 23 2008 32 Online video site/video- 2007 sharing service 17 15 RSS feeds 10 0% 20% 40% 60% Source: Capgemini Base: Those who use the Internet to research vehicles Note: Multiple responses allowed Reasons For Using New Online Tools (% consumers saying) Opinions/reviews about specific car brands/makes 53 Discussions with automotive experts 92 Discussions with other consumers 82 News about new vehicles 82 Information about vehicle recalls 62 Helpful hints 52 Opinions/reviews about specific car dealers 22 Discussions about a specific automotive topic 02 Personal stories 91 Information about automotive events/auto shows 61 Other car images/videos 11 Spy photos/videos 8 0% 20% 40% 60% Source: Capgemini Base: Those who use new online tools to research vehicles Note: Multiple responses allowed20
    • Automotive the way we see itthe western countries. And half of Keeping a close watch on these newthose in the developing markets use tools is critical, as these sites have thediscussion groups/forums, compared potential to impact buying decisions.with one-third in the mature markets. Almost three-quarters of consumersOverall usage of these tools in the said they would be more likely toU.S. remained fairly constant this purchase a vehicle from a particularyear, while small increases were manufacturer or dealer if they foundapparent in Western Europe. positive comments on blogs and forums. This was consistent across allThe use of C2C tools is driven largely countries, although particularlyby a desire on the part of consumers pronounced in the emerging markets.for more objective opinions and Sixty percent of respondents said theyreviews about specific car brands. would be less likely to buy if theyAdditionally, users are looking to found negative comments on blogsengage in a two-way dialogue with and forums.automotive experts and otherconsumers rather than just listening toothers offer their opinions. Other keyfactors include news about newvehicles and information aboutvehicle recalls.As consumers search for sources ofobjective information about vehiclemakes and dealers, new types of sitesare emerging that focus on aggregatingand streamlining the information-gathering process. Take vLane.com,for example. The U.S.-based siteaggregates automotive informationfrom many sources, particularlyconsumers, in one place. The siteallows users to select parameters suchas the type of vehicle they areinterested in, the amount they want tospend and fuel economy and makecomparisons among different vehicles.Other consumers and owners providereviews and user ratings.“The site should help consumers makemore informed decisions by helpingthem leverage the information andpeople in their own network andbeyond,” says Herman Paek, founderof vLane. “Every discussion contributesto the total body of automotiveknowledge contained on the site.”Cars Online 08/09 21
    • Customer Interaction: A Holistic Approach to Building Loyalty If automotive companies hope to reverse the trend in declining loyalty they need to increase their speed of response, improve their segmentation approach and target communications using consumers’ preferred channels. In recent years automotive companies Lead Management: Speed Is of have focused significant attention and the Essence resources on achieving cost reduction Increasingly, the initial – and often“ I would like to be able to put together my new car online and and operational efficiency. But to realize real growth those efforts must most important – point of interaction with customers occurs on the web send this configuration to a large be matched by an emphasis on during the research process. Over the customer intimacy and customer care. years, our Cars Online research has network of dealerships, who would Companies must interact intelligently highlighted the importance of reacting then make offers from their end. German consumer ” and consistently with the vehicle buyer at all possible touchpoints – on quickly to online requests from vehicle shoppers – and this year is no the web, through call centers, in the exception. dealer showroom. Almost half of respondents said they This requires a greater focus on expect a dealer or manufacturer to integrated lead management, respond to an e-mail or web inquiry improved consumer segmentation and within four hours, up from 39% last targeted customer communication year. Consumers in emerging markets with a goal of building loyalty. This are the most demanding: 30% of type of approach extends beyond the Chinese respondents expect a purview of traditional Customer response immediately and two-thirds Relationship Management (CRM) and said within four hours. More than half requires customer relevancy, process of respondents from Russia and Brazil excellence and a more holistic view expect a reply within four hours. across the entire vehicle lifecycle. Required Speed of Response From Dealer/Manufacturer to Consumer Query (% consumers saying) 100% 1 1 1 1 1 1 2 1 2 2 5 5 01 11 21 61 41 80% 72 63 93 72 Dont know 04 More than 48 hours 60% 45 15 02 24-48 hours <24 hours 82 1-4 hours 40% 72 22 71 <1 hour 71 Immediately 61 91 20% 41 21 22 31 03 11 21 31 61 31 6 5 7 0% TOTAL U.S. Western Russia Brazil India China Europe Source: Capgemini 22
    • Automotive the way we see itBehavior if Dealer/Manufacturer Took too Long to Respond The challenge for automotive(% consumers saying) companies is implementing a segmentation program that identifies a 100% 1 1 5 7 4 1 4 5 2 consumer’s position in the buying 1 7 2 21 3 process. It’s a challenge worth 51 61 81 61 addressing, however, as the price of 80% 31 62 3 1 22 not responding fast enough is high: 3 2 5 75% of all consumers said they would 91 51 61 91 4 Dont know /Other switch dealer, manufacturer or both if 60% 2 42 Call the m anufacturer a company took too long to respond 5 3 Call the dealer 21 13 02 Look for neither to their query. Again, the closer a Look for both vehicle buyer is to the sale the more 40% Look for another m anufacturer 01 71 Look for another dealer likely they are to switch. 65 35 45 Brazilians were the most fickle. This 20% 44 83 43 may be due to the fact that dealers 92 there are more apt to be single-brand franchisees so consumers may view 0% the dealer and OEM as one and the TOTAL U.S. Western Russia Brazil India China Europe same. Respondents in the western markets and Russia were also highlySource: Capgemini likely to walk away if they were Understanding what constitutes an dissatisfied with the response time. acceptable response time for an Consumers in India were the most individual consumer is a key element forgiving. of effective lead segmentation, notes R. L. Polk. In a recent study on Communication Channels: The Internet lead marketing, the company Importance of Staying in Touch found that “Identifying the response Consumers in all countries time expectations when the lead is emphasized the importance of post- submitted may help to prioritize sale communication. “I would like to which leads to follow up on first.”10 see friendly service after the sale of the vehicle, instead of salespeople just Fact Box Response time is particularly critical getting the commission, and then as consumers get closer to the point of forgetting the customer,” said a U.S. purchase. Among consumers planning respondent. Sixty-one percent of Chinese to buy a car within three months, respondents expect to receive a 60% expected a response within four A key to successful consumer response immediately or within one hours, compared with 44% of those interaction is understanding how hour when they submit an inquiry to a not planning to purchase until 13 to consumers want to be communicated manufacturer or dealer via e-mail or the 18 months. This pattern was repeated with at different points throughout the company’s website. in all the countries studied, with the vehicle lifecycle. R. L. Polk’s study — Cars Online 06/07 most pronounced jump occurring in found that 70% of respondents who Brazil, where 82% of respondents purchased from the responding dealer who planned to purchase within three were contacted in their preferred months said they expect a reply in communication method.11 four hours. 10 “Consumer Expectations for Internet Lead Marketing,” R. L. Polk & Co., 2008. 11 Ibid.Cars Online 08/09 23
    • It’s clear from our Cars Online research Country differences were quite slowly declining over the past few yearsthat preferred channels vary depending widespread. For example, consumers in many markets. In Western Europe,on the type of communication and on in the western markets and China for example, 50% of respondents saidthe country. Overall, consumers prefer prefer the post for brochures, but a they were likely or very likely toe-mail for many forms of communication, substantial number of respondents in purchase the same make as theirespecially newsletters, surveys and Russia, Brazil and India want to current vehicle, down from 57% twoinvitations. However, many like to receive these materials by e-mail. years ago. A similar drop was seen inreceive materials such as brochures and Consumers in all markets except the U.S. and China. (No comparisonwelcome packs by postal mail, but China strongly prefer e-mail for data is available for Brazil, Russia andwant to be contacted by phone after newsletters; in China, respondents India as this is the first year theselodging a complaint. A growing prefer to receive newsletters via postal countries have been included in thenumber prefer to receive service mail. For a number of other materials, Cars Online study.)reminders via SMS/text messages. such as surveys, invitations and personalized repurchase offers, Dealer loyalty has remained fairly Chinese consumers said they prefer steady in recent years but is typically communication by phone. somewhat lower than brand loyalty. For instance, 38% of Western Brand Loyalty Slowly Declines Europeans said they are likely to buy Effective lead management, segmentation their next car from the same dealer and channel communication can be they bought from previously, weapons in the battle to halt eroding compared with 37% two years ago. customer loyalty. Brand loyalty has been Preferred Consumer Communication Channels (% consumers saying) Brochures about the vehicle that you bought/leased 45 38 5 12 Newsletters 26 55 5 14 Post-test drive survey 15 52 7 26 Welcome pack after purchase/lease 46 32 7 15 Customer satisfaction survey after purchase 15 51 7 27 Fact Box Service reminders 15 43 16 26 Belgians like the fact that they can get Customer satisfaction survey after service 15 51 9 25 information via the Internet without any Personalized communication/gift after a complaint 31 28 8 33 commitment or need to provide personal data. There are large numbers Invitations to special events, clubs, open-house days 24 46 10 20 of Belgian automotive portals on the Personalized repurchase offer/promotion two years Internet. The growth of these services, 27 41 9 23 after purchase as well as more sophisticated distributor 0% 20% 40% 60% 80% 100% websites, means the Belgian consumer is becoming one of the best equipped Postal mail E-mail SMS/text message Phone call in terms of information. — Cars Online 2000 Source: Capgemini24
    • Automotive the way we see it Customer Satisfaction: What Needs to Change? Consumers are fairly satisfied with the overall vehicle buying process, but there’s plenty of room for improvement – starting with the dealer negotiation process. How satisfied are consumers with the India. Once again, the exception is vehicle buying process? That depends Russia, where 53% of consumers said on the country. they were satisfied with the buying process, similar to Western Europe, Overall two-thirds of respondents where 55% of respondents indicated a worldwide said they were satisfied or good degree of satisfaction. very satisfied with the overall process“ Isees me as afeel thatratherdealer a sometimes victim the than of purchasing a car. While that’s encouraging, it’s a decline from 10 Of particular concern, one in five U.S. respondents said they were not customer. I’ve heard customers years ago, when 80% of consumers satisfied with the car buying process. being referred to by salesmen as said they were satisfied with the Said a consumer from the U.S. “I’m punters and that about sums it up. buying process. just glad that car shopping isn’t A punter is a gambler and buying something I have to do often.” This year’s Cars Online research a new car should not be about uncovered what appears to be an Consumer concerns fell into three gambling. UK consumer ” inverse relationship between market maturity and satisfaction levels: The main areas, which were consistent across markets and focused largely on more sophisticated the market, the the dealer experience: the negotiation lower the degree of satisfaction. For process, dealer honesty/customer example, in the U.S. only 40% of service and pricing. consumers said they were satisfied, compared with 84% of consumers in How Satisfied Are Consumers With the Vehicle Buying Process? (% consumers saying) 100% 9 11 11 7 41 71 92 80% 13 44 24 5 (Very satisfied) 60% 35 86 4 3 47 2 55 40% 93 1 (Not at all satisfied) 83 93 20% 52 61 41 41 6 7 5 8 9 9 0% 2 2 TOTA L U.S. Western Russia Brazil India China Europe Source: Capgemini Cars Online 08/09 25
    • Dealer Negotiation Process: Concerns about the negotiation Respondents across countries felt thatLess Haggling, Less Pressure process were also apparent in dealers should focus more onWithout question, the dealer emerging markets, especially Russia. customer appreciation and customernegotiation process was the primary According to a Russian respondent: attention, and that they should takearea where consumers want to see “First, I want to see the real price of the time to understand a consumer’schanges made. In all countries, the vehicle so I can avoid paying needs. “Even though you may not buyrespondents complained about the extra; and second, I’d like salespeople at the moment, a customer should feelpressure from salespeople and the who know about the models they are like they would come back toamount of haggling necessary to reach selling.” purchase at that dealer due to thewhat they viewed as a fair price. Said great customer service,” said a U.S.a U.S. consumer, echoing similar In Russia and China significant consumer.comments made by other emphasis was placed on speeding uprespondents: “Give me the best price and simplifying the transaction and Pricing: Fairness, Clarity andup front. Don’t waste an hour of my vehicle registration process. Said a Transparencytime talking about the car; I already respondent from China: “The process Pricing was a common topic raised byresearched it. I won’t pay sticker of purchasing a vehicle is very consumers when asked about changesprice. Many salespeople insist that is complex and takes much too long.” they would like to see. In somethe only price; they won’t come down. markets, notably the UK, Brazil,I may be a woman, but I’ll walk out.” A U.S. consumer went so far as to Russia and Germany, the focus tended suggest that the industry “eliminate to be on lower or fair prices andOther consumers complained about dealers in their current form. I would discounts. However, in the U.S.,the way they were treated by dealer much rather buy from a France, China and India consumerssalespeople during the negotiation manufacturer.” were more likely to emphasize theprocess. “I sometimes feel that the lack of price transparency.dealer sees me as a victim rather than While consumer comments tended toa customer,” said a respondent from focus on the dealer, it’s important to Consumers said they want dealers tothe UK. “I’ve heard customers being keep in mind that a customer’s be more upfront about costs, taxesreferred to by salesmen as punters and experience at a car dealership can and extras that are already “installed”that about sums it up. A punter is a impact their loyalty to a brand or before purchase. A respondent fromgambler and buying a new car should manufacturer. In an earlier study France noted: “There should be morenot be about gambling.” published by Capgemini and the Car clarity, transparency and information Internet Research Program (CIRP),12 about vehicle prices and options. And consumers indicated that their there should be more opportunity to experience with dealer salespeople compare the vehicles and the brands had a direct influence on their with each other.” Fact Box satisfaction with the OEM. Some consumers focused on price- Dealer Honesty/Customer related issues such as rebates, In terms of car prices, OEMs are more Service: ‘Don’t Rip Me Off’ warranty coverage and special offers. cautious than dealers, believing the Consumers in a number of markets In many cases, they wanted to see impact of the Internet on margins and said they would like to see improved normal “wear-and-tear” items such as discounts to be less than dealers. Only honesty and customer service on the brakes and tires covered under 23% of OEMs believe there has been a part of dealerships. “I want to do extended warranties. Others suggested decrease in margins, while 42% of business with dealers who are honest special offers for loyal customers. dealers, who are better placed to know, claim a decrease. and don’t rip me off. The experience with the dealer should give me the — Cars Online 2002 feeling that both sides got a good deal,” said a respondent from Germany. 12 “Am I Being Taken? Inside the Dealership: The Impact of Consumer Negotiation Preferences and Strategy,” Car Internet Research Program (CIRP) and Capgemini, 2008.26
    • Automotive the way we see it The Next 10 Years: Conclusion and Recommendations Consumers expect significant changes to the vehicle buying process in the coming decade. Will automotive dealers and manufacturers be ready? If the rise of the Internet as a research Online Vehicle Buying: ‘With the tool has been the most significant Click of a Mouse’ change in the automotive buying The number one change consumers in“ Iglobally,like to as a aGerman engine, would such buy vehicle process over the past decade, what can be expected in the next 10 years? all markets anticipate is the widespread adoption of online vehicle a Japanese vehicle carriage, We posed this question to our Cars buying. “The whole vehicle buying American windows and doors, etc. Online respondents and got some process will be done with a click of The manufacturer would contact interesting feedback. the mouse,” said a respondent from all the suppliers to produce the India. The majority of consumers expect vehicle. ” Chinese consumer changes to come in several areas: online buying, fuel economy/ Consumers predict that online buying would help eliminate the arduous alternative-fuel vehicles, the role of dealer negotiation process and the dealer and OEM, and new buying simplify the purchase of a vehicle. models. “Most likely, it will be as easy to buy a vehicle online as it is to buy a book or bottle of perfume over the Internet,” said a Russian consumer. “That’s how it will be in 10 years. A vehicle will stop being a symbol of prestige and luxury, and replacing a vehicle will be no harder than buying pantyhose.” Respondents expect to see new technology that will enhance the online buying process. Said a respondent from the U.S.: “I anticipate a more ‘virtual’ experience when buying a car; computer simulations, projections of the car in our living rooms, etc.” A Russian consumer agreed, saying: “In the future there will be a single information space, and a person will be able to take a virtual tour of the showroom, select and pay for a vehicle without leaving home.” Some consumers expressed skepticism about making a large purchase like a car over the Internet. A U.S. respondent summed up the concern: “I think the balance that will need to be met – as the Internet becomes more pervasive with durable-goods purchases – is for dealers and manufacturers to maintain the relationship with the consumer, while delivering on their promises online. A Cars Online 08/09 27
    • serious level of distrust remains with the next 10 years we need a true ‘no potential online shoppers who are still emission, no petrol’ vehicle in view of leery of making any type of purchases the rising cost of petrol. The best via the Internet.” option is a battery-operated electric vehicle,” suggested a consumer in Fuel Economy/Alternative-Fuel India. Vehicles: ‘No Emissions, No Petrol’ A number of Russian respondents Consumers across all markets expect hope that the process of buying an to see greater emphasis on fuel alternative-fuel vehicle will be simpler efficiency and a significant shift to in the coming years. “I would like to alternative-fuel vehicles in the coming buy a hybrid or hydrogen vehicle decade. Electric/battery, water, without foot-dragging at the State hydrogen and solar were among the Traffic Inspectorate,” said a Russian anticipated fuel sources for cars of the consumer. future. A consumer from India suggested another, perhaps less And what will happen to the realistic, option: “I will purchase a traditional gasoline-powered vehicle? vehicle that will make no pollution at A German consumer offered the all as it will run using air.” following suggestion: “Combustion engines will be just for classic cars.” While most respondents anticipate that the majority of cars will be The Role of Dealers and OEMs smaller than those on the road today, Will Change some are looking for a way to improve Given the frustration with the fuel efficiency and reduce emissions dealership experience expressed by without giving up their larger many consumers across all countries, vehicles. “I hope that vehicles will be it’s not surprising that respondents better for the environment and that had some definitive ideas about how there will be a way to have a full-size the role of dealers may change in the SUV that is electric or runs on coming decade. Many expect to see alternative fuel,” said a U.S. consumer. fewer, larger multi-brand dealers focused more on servicing rather than Although our quantitative research sales, as the industry shifts to online found that most consumers are buying. confident in their knowledge of green vehicles, the open-ended comments “The Web will be used to compare revealed some concerns. “I think we vehicles, select the model to buy, still need to improve our understanding configure it and get a quote, select the Fact Box about the real differences and benefits financing (credit or lease quote on of the different fuel types,” said a UK site), and make an appointment with OEMs agree with the dealers’ view that respondent. the dealer for a test drive,” said a the Internet will lead to further growth in French consumer. “The role of the the number of multi-franchise dealers, Consistent with the quantitative data, dealer will be to allow test drives, customer experience centers and consumers in emerging markets were wrap up the sale and the financing, alternative retail channels in the future. very focused on the role of and maintain the vehicle.” alternative-fuel cars in the future. “In — Cars Online 200228
    • Automotive the way we see it A consumer from India expected a which are then assembled at one Fact Box more extreme change: “In 10 years location, maybe a dealer’s workshop,” there will be no role for dealers. There suggested a consumer from India. Half of respondents say that having the will only be service centers.” web features they consider important A similar idea was expressed by a will make them more likely to buy from Others felt dealers could succeed in Chinese consumer: “I would like to that car manufacturer. This is the coming decade, but only by buy a vehicle globally, such as a particularly true in North America, where making changes to their business German engine, a Japanese vehicle the number jumps to more than 60%. model. “To avoid becoming a carriage, American windows and commodity, auto dealers will have to doors, etc. The manufacturer would — Cars Online 04/05 provide customer service that treats contact all the suppliers to produce people like individuals rather than as the vehicle.” e-mail addresses,” said a U.S. consumer. “I would anticipate such And a respondent from the U.S. things as bringing the car to you for a offered an interesting comparison: test drive, finding out what extra “Buying a car will be like putting services (free service for the first year, together a Lego kit. You will choose for example) they could offer to stand standardized components from out from the crowd.” different manufacturers that will be assembled into your car.” Consumers also expect changes to the manufacturer’s role. Said a U.S. Recommendations: Meeting the respondent: “I think we’ll see central Needs of Today’s – and manufacturer hubs where new Tomorrow’s – Vehicle Buyers vehicles are staged until sold.” This year’s Cars Online research offers both a quantitative and qualitative Many respondents anticipate dealing view of changing consumers needs directly with OEMs: “I hope we will and buying patterns. Following are be able to buy direct from the recommendations to help companies manufacturer at the cost the dealer better meet consumer demand and pays so as to be able to get a better anticipate the changes that will come model for a fair price,” said a in the next decade. consumer from the UK. Understand that all emerging New Buying Models: ‘Like markets are not created equal. Putting Together a Lego Kit’ When it comes to developing Consumers proposed some interesting automotive markets, it’s clear that the new approaches for the vehicle buying devil is in the details. While the four process, such as vehicle-sharing developing countries studied in our schemes. Interestingly, many Cars Online research share some suggested a model where consumers characteristics such as significant could configure a vehicle using parts interest in online vehicle buying and from a variety of manufacturers, as heavy usage of online C2C tools, they though from a menu. “In the future, I also exhibit complex and diverse would like to be able to design my buying patterns. Consumers respond own car with different components of to different types of media, prefer my choice from different vendors, different communication channels,Cars Online 08/09 29
    • have different views on green vehicles a two-way dialogue, not a one-way and so on. Understanding and sales monologue. Monitoring these addressing the differences and not just types of sites and understanding how the similarities will be the key to they’re being used by consumers is success in these growing markets. essential to improving communication with car buyers. It’s still too early to Implement online vehicle buying tell how these new tools will capabilities. It’s easy to point to ultimately affect consumer buying obstacles to Internet selling of cars: decisions, but it’s clear that regulatory roadblocks, financing automotive companies must embrace challenges, technology hurdles. All of these developments and constantly re- which are legitimate concerns. But evaluate their marketing mix. consumers simply don’t care. Increasingly, they want to be able to Implement a holistic customer buy a car – from start to finish – over interaction strategy focused on the Internet. In fact, they envision a improving loyalty. Declining future in which most cars are sold this customer loyalty is particularly way. It is incumbent upon both apparent in mature markets. dealers and manufacturers to address Reversing this trend requires a the obstacles and challenges and take strategy that includes integrated lead real steps to implement online vehicle management, improved consumer buying capabilities. segmentation and targeted customer communication. Companies must Take green seriously. The Cars interact intelligently and consistently Online research provides plenty of with the vehicle buyer at all possible evidence of the growing consumer touchpoints – on the web, through focus on fuel efficiency and alternative- call centers, in the dealer showroom. fuel vehicles. Fuel economy is a leading The keys to success: customer factor in consumer vehicle choices and relevance, process excellence and a that’s not likely to change given the holistic view across the entire vehicle concerns about fuel prices and global lifecycle. warming. Consumers are searching for information about green vehicles and Focus on the future. Our Cars Online are finding it on the web – and research over the past decade makes it increasingly this knowledge is informing clear how much has changed in the their buying decisions. As they look automotive industry in 10 years. The ahead at the coming decade, consumers coming decade will see equally across all markets anticipate a growing significant changes to the vehicle role for alternative-fuel cars. buying process. Be conscious of the kinds of improvements consumers Be vigilant in allocating your expect and want in the future. Some marketing mix. Information sources may seem unrealistic, but they offer a used by vehicle buyers change rapidly glimpse inside the minds of vehicle and vary by market. And the buyers. Ignore them at your own increased reliance on C2C tools such peril. as blogs and discussion forums makes it clear that consumers are looking for30
    • Automotive the way we see it Capgemini’s Cars Online 08/09 study presents many of the findings of our extensive automotive consumer research. Yet there is much more that can be explored and applied to your own organization. For additional information about our Cars Online research or how we can help your company better understand the dynamics of consumer behavior in both mature and emerging markets, please contact: Global/United Kingdom Germany Nick Gill Christian Hummel +44 870 904 5699 +49 (0) 69 9515 1626 nick.gill@capgemini.com christian.hummel@capgemini.com Brazil/Latin America India Felix Massun Floyd D’Costa +54 911 4422 2442 +91 22 6755 7000 felix.massun@capgemini.com floyd.dcosta@capgemini.com China Russia Will Zhang Lyudmila Mashkova +8621 6182 2688 +7 495 980 97 96 will.zhang@capgemini.com L_Mashkova@tri-angle.ru France United States Eric D’Arche Mohit Takyar +33 01 49 67 98 91 +1 313 887 1474 eric.d-arche@capgemini.com mohit.takyar@capgemini.com About Capgemini’s Global Automotive Practice Capgemini’s Automotive practice serves 14 of the world’s 15 largest vehicle manufacturers and 12 of the 15 largest automotive suppliers. The sector generates value for companies through global delivery capabilities and automotive-specific service offerings such as Integrated Lead Management, B2C Web Strategy, Service and Parts Management, Supplier Transformation, Optimization of Dealer-Focused Operations and Global Emerging-Market Sourcing. For more information: www.capgemini.com/industries/automotive/Cars Online 08/09 31
    • www.capgemini.com/carsonline About Capgemini and the Collaborative Business Experience® Capgemini, one of the and through a global delivery model world’s foremost providers called Rightshore®, which aims to offer of consulting, technology and the right resources in the right location at outsourcing services, enables its clients competitive cost. Present in 36 countries, to transform and perform through Capgemini reported 2007 global technologies. revenues of EUR 8.7 billion and employs over 83,000 people worldwide. Capgemini provides its clients with insights and capabilities that boost their More information about our services, freedom to achieve superior results offices and research is available at through a unique way of working - the www.capgemini.com Collaborative Business Experience® -Argentina RussiaColectora Panamericana Este 1925 Triangle Consulting/CapgeminiB1609ECM - San Isidro, Buenos Aires 16 Bolshoy Ovchinnikovsky Per.+54 1147358000 Moscow 113184 +7 495 980 97 96BrazilRua Samuel Morse, 120 Conjunto 71 United Kingdom04576-060, Sao Paulo Forge End,+55 1135250100 Woking, Surrey GU21 6DBChina +44 (0) 1483 764 764No. 11, Boxia RoadZhang Jiang Hi-tech Park United StatesCapgemini Center 4000 Town CentreShanghai, PRC 201203 Suite 1050+8621 6182 2688 Southfield, MI 48075 +1 313 887 1400FranceCoeur Défense Tour A110, esplanade du Général de Gaulle92931 Paris La Défense Cedex+33 (0)1 49 67 30 00GermanyNeues Kranzler EckKurfürstendamm 21D-10719 Berlin+49 (0)30 88 703 0IndiaSEP2-B3, Godrej Industries ComplexEastern Express HighwayVikhroli (E)Mumbai 400079+91 22 6755 7000