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2018 car buyer journey study brochure


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The 2018 Car Buyer Journey Study by Cox Automotive tells us that the consumer-dealer relationship is more important than ever. With interest rates growing and credit standards tightening this year, the F&I part of the experience will become more frustrating for both consumers and dealers. Pricing transparency and digital retailing are two ways to offset some of the economic challenges we can’t control.

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2018 car buyer journey study brochure

  1. 1. CAR BUYER JOURNEY 2018
  2. 2. SHOPPERS ARE SPENDING LESS TIME IN-MARKET TOTAL DAYS SPENT IN MARKET 2018 2018 2018 2017 2017 2017 2016 2016 SHOPPING DRIVEN BY NEED VS. WANT WANT A NEW VEHICLE NEED A NEW VEHICLE Shoppers are spending a total of four fewer days in market for a car than last year. The biggest decrease is among Used buyers, as 2 in 3 state they need, rather than want, a new vehicle. Total Buyers New Buyers Used Buyers 39% 108 61% 45% 112 55% 44% 56% 46% 109 54% 53% 104 47% 51% 49% 36% 108 64% 42% 115 58% 41% 59% Total Buyers New Buyers Used Buyers Total Buyers Total Buyers New Buyers New Buyers Used Buyers Used Buyers Total Buyers Total Buyers New Buyers New Buyers Used Buyers Used Buyers Total Buyers Total Buyers New Buyers New Buyers Used Buyers Used Buyers
  3. 3. REPEAT PURCHASE OR LEASE BRAND LOYALTY* MOST CAR BUYERS ARE UNDECIDED AT THE START OF THE SHOPPING PROCESS, BUT MANY REPEAT PREVIOUS DECISIONS. INITIAL MAKE/MODEL PURCHASE INTENT 32% 39% 29% Total Buyers New Buyers Used Buyers KNEW EXACT VEHICLE 55% of Used car buyers considered both New & Used vehicles 40% of New car buyers considered both New & Used vehicles 70% of those leasing have previously leased a vehicle 92% of those purchasing have previously purchased a vehicle 56% have previously owned the same make Only 1 in 3 car buyers know the exact vehicle they want to purchase when they start shopping. Many buyers are open to both New and Used vehicles. It’s also helpful for dealers to understand the role previous decisions can play. Among those who make a purchase, few are first-time buyers, and more than half have previously owned the same make. While car shoppers can be influenced about what to buy and who to buy from, the time to influence and convert them is online, where they spend the majority of their shopping time making decisions. *Among those who have previously purchased a vehicle
  4. 4. VEHICLE PRICING PREFERENCE (among those who shopped online) TIME SPENT SHOPPING/BUYING A VEHICLE Researching & Shopping Online Researching & Shopping with Print Talking with Others Visiting Other Dealerships/Sellers With the Dealerships/ Seller where Purchased TOTAL TIME SPENT ALL BUYERS 14:29HOURS 61% 13% 3% 2% 21% USED BUYERS 15:20HOURS 63% NEW BUYERS 12:31HOURS 55% 13% 13% 26% 20% 3% 3% 3% 1% BUYERS WANT TO KNOW THE TOTAL PRICE OF THE VEHICLE CAR BUYERS SPEND 60% OF THEIR TIME ONLINE While 53% of car buyers look for monthly payment information while researching a vehicle, 47% of buyers said that the total price of the vehicle is more important than the monthly payment. In general, lessees, females, younger age groups (particularly younger females), consumers with lower-incomes and those with children are among those more interested in a monthly price. That said, more than one-third of buyers feel the total and monthly price are equally important, highlighting the need for dealers to provide both options in their online merchandising. 47% Total price of vehicle 18% Monthly payment 35% Total price and monthly payment important
  5. 5. THIRD-PARTY SITES ARE THE MOST-USED SITES FOR ONLINE CAR SHOPPING While car buyers use a variety of sites to shop, third-party sites are the most-used site of any online resource. 78% 67% 82% 29% 44% 23% 53% 56% 52% 3rd Party Sites Dealership OEM Sites Total New Used SOURCES USED TO SHOP* *Respondents were asked, “Please select the names of the specific website(s)/apps that you used.” Some selected more than one answer. While car buyers are using fewer websites (4.7 in 2018 down from 5.5 in 2017) during the shopping process than in prior years, the perceived helpfulness of each website category has not changed. Buyers continue to spend most of their time shopping on third-party sites. Dealer sites and search engines complement each other during the shopping process, and automotive marketers need to have a broad yet integrated marketing strategy, including a strong presence in the online inventory marketplace, to effectively reach and influence shoppers wherever they are shopping online. OtherSearch3rd Party Sites Dealership Sites OEM Sites TIME SPENT ON VARIOUS SITES USED 12% 3% 5% 5% 15% 69% 11% ALL BUYERS 8% 62% 12% NEW 18% 42% 20% 5% 13%
  6. 6. BUYERS MOST OFTEN START AT THIRD-PARTY WEBSITES When researching online, New buyers most often start at a third-party site and end at a dealer website, while Used buyers often start and end at third-party sites. Dealers should focus on unique ways to deliver a consistent overall message across all sites. It is also critical that dealership websites are user-friendly, compelling, easy to search, consistent across devices and accurately reflect the pricing, incentives, services and amenities that are offered when the consumer visits the brick- and-mortar dealership. 56% 41% 61% 46% 33% 51% 18% 19% 18% 6% 6% 6% 12% 27% 6% 8% 16% 5% 14% 13% 15% 40% 45% 38% TOTAL // FIRST NEW // FIRST USED // FIRST TOTAL // LAST NEW // LAST USED // LAST 3rd Party Sites 3rd Party Sites 3rd Party Sites 3rd Party Sites 3rd Party Sites 3rd Party Sites Search Search Search Search Search Search OEM Sites OEM Sites OEM Sites OEM Sites OEM Sites OEM Sites Dealership Sites Dealership Sites Dealership Sites Dealership Sites Dealership Sites Dealership Sites FIRST AND LAST WEBSITE VISITED
  7. 7. “WALKING IN” REMAINS MOST-COMMON INITIAL POINT OF CONTACT WITH DEALERS Half of car buyers do not contact the dealership prior to their first visit. While we anticipate a future shift in this behavior as dealers begin to adopt digital retailing tools, it will remain crucial for dealers to have effective sourcing and CRM processes in place to help understand initial contacts and walk-in traffic. Knowing what influenced a shopper to contact the dealership, regardless of method, can help dealers determine the value of their advertising and understand where to most successfully invest marketing dollars. 49% 26% 17% 4% 2% 1% Walk-In Phone Email Online Chat (a live chat service) Text On Social Media 57% 46% 20% 16% 18% 4% 4% 1% 3% 2% 1% 28% INITIAL CONTACT WITH DEALERSHIP Total New Used MORE BUYERS ARE GOING TO DEALERSHIPS WHERE THEY HAVE PREVIOUS EXPERIENCE The percentage of consumers who purchased/leased from a dealership where they had previously purchased/leased has increased. 2018 2017 2016 Total Total Total New New New Used Used Used 31% 27% 27% 40% 34% 31% 27% 24% 26% PREVIOUSLY PURCHASED/LEASED FROM DEALERSHIP
  8. 8. 37% 23% 33% 17% 22% 60% 17% 16% 18% Didn’t have the vehicle I wanted First Visited Like to shop around Middle Visited Not ready to make a decision Last Visited After test drive didn’t like the vehicle Poor sales experience Not able to come to a deal DEALERSHIP PURCHASED/LEASED FROM* REASONS FOR NOT PURCHASING FROM FIRST DEALERSHIP VISITED** WHY BUYERS DID NOT PURCHASE FROM THE FIRST DEALERSHIP VISITED Most buyers visiting multiple dealerships buy from the last dealer they visit. Didn’t have the vehicle I wanted and Like to shop around are the main reasons for not purchasing from the first dealership visited. Additionally, 1 in 6 New buyers did not buy from the first dealership they visited because they had a Poor Sales Experience. Dealers should focus on creating a positive in-store experience for shoppers and use stocking and acquisition tools to get the right inventory for their store. * Among those who visited and purchased or leased from a dealership ** Among those who visited multiple dealerships and purchased or leased, but didn’t purchase or lease from the first dealership
  9. 9. BUYERS ARE SHOPPING AROUND LESS ARE LESS SATISFIED WITH PRICE The percentage of car buyers visiting multiple dealerships has been declining in recent years. At the same time, buyers report being less satisfied with the price they paid for their vehicle and less often trust that the dealership gave them the best deal. A simple, pressure-free shopping experience, transparent pricing (reinforced by online and in-store pricing tools that can help provide market context, such as Kelley Blue Book® Price Advisor), and a set price or non-negotiable price model can help build customer satisfaction in this area. These features should be stressed in advertising and as part of the sales process. 2018 2018 2018 2017 2017 2017 2016 2016 2016 BUYERS VISITING TWO OR MORE DEALERSHIPS TRUST DEALERSHIP GAVE THE BEST DEAL SATISFACTION WITH PRICE PAID FOR VEHICLE Total Total Total Total Total Total Total Total Total New New New New New New New New New Used Used Used Used Used Used Used Used Used 59% 61% 62% 62% 65% 67% 66% 63% 70% 58% 67% 66% 63% 68% 68% 62% 68% 74% 59% 58% 60% 61% 64% 67% 68% 61% 69%
  10. 10. BUYERS ARE LEAST SATISFIED WITH LONG PURCHASE PROCESS When asked to rate their satisfaction on a scale of 1-10, 77% of car buyers gave the test-driving process an 8-10 rating. Satisfaction declined to 59% when interactions with the FI department were factored in. Of the 3-hours average time spent at the dealership during the purchase process, half is spent negotiating or doing paperwork, resulting in a 46% satisfaction rate for how long the process takes. Among buyers who were dissatisfied with how long the process took, Negotiations and Financing/Paperwork were the top 2 areas that took longer than they expected. Dealers should strive to shorten the deal-making purchase process – particularly through streamlining FI paperwork and negotiations – in order to enhance customer satisfaction and improve loyalty and retention rates. Digital retailing can help accomplish this goal by allowing consumers to complete purchase steps online before completing purchase activities in-store — thereby reducing the time spent on the deal at the dealership. SATISFACTION WITH DEALERSHIP PROCESS SATISFACTION WITH OVERALL DEALERSHIP EXPERIENCE ALL BUYERS ALL BUYERS NEW NEW USED USED 63% 57% 59%Interactions with the financing department 79% 76% 77%The test-driving process 76% 72% 73%Interactions with dealership sales people 75% 69% 71%Your overall experience with the dealership 50% 45% 46%How long the process took00:00 68% 60% 62%The selection of inventory available
  11. 11. WHAT PART OF THE PROCESS TOOK LONGER THAN YOU EXPECTED?* Total New Used64% 64% 64% Total New Used31% 40% 28% Financing/Paperwork Negotiation *Among buyers who were dissatisfied with how long the process took Buyers spend nearly 40 minutes idle at the dealership. Leaving customers idle has the potential to lead to headaches in finalizing the sale, as some start to rethink the deal during that time.
  12. 12. PRIOR AWARENESS IS CRITICAL TO FI SALES Although awareness is increasing, nearly 1 in 4 buyers are not already aware of FI products prior to going to the dealership. Since purchase of FI products is much higher among consumers who are already aware of the products before going to the dealership, dealers should offer FI educational resources on the dealership website (which buyers say they prefer) and provide opportunities for consumers to learn more about FI on their own during the sales process (e.g., on an iPad while waiting for preparation of paperwork). AWARENESS OF FI PRODUCTS GAP INSURANCE EXTENDED WARRANTY Not AwareAware SERVICE CONTRACT THEFT PROTECTION MAINTENANCE PLAN TIRE AND WHEEL PROTECTION LOST OR STOLEN KEY REPLACEMENT 62% 40% 36% 35% 24% 19% 16% 38% 60% 64% 65% 76% 81% 84%
  13. 13. ABOUT THIS STUDY For the past five years, Cox Automotive has conducted studies designed to gain an understanding of consumer car-shopping behavior and perceptions of the dealer experience. The 2018 Car Buyer Journey, commissioned by Cox Automotive through IHS Automotive, is based on a survey of 2,050 consumers who purchased or leased a vehicle within 12 months of September 13, 2017.
  14. 14. ©2018CoxAutomotive.AllRightsReserved.“Autotrader”isaregisteredtrademarkofTPIHoldingsInc.usedunderexclusivelicense.KelleyBlueBook,KBB.comandtheKelleyBlueBooklogoaretrademarksofKelleyBlueBookCo.,Inc.