How Dealers Can Meet Changing Consumer Behavior – Cox Automotive
Are you looking for a clear understanding of what today’s auto shoppers want, need, and prefer? The Cox Automotive Car Buyer Journey Study helps dealers, OEMs and the auto industry overall match current buyer sentiments and behaviors.
The study is based on a survey of more than 10,000 vehicle shoppers and buyers in 2022. It offers a comprehensive look at the overall vehicle buying process – the journey through researching, shopping and the steps required to complete the deal – for both new and used vehicle buyers.
We talked to Vanessa Ton, Senior Manager of Industry Intelligence at Cox Automotive, who helped lead the research project. She shares four top insights dealers should know to meet consumer needs and drive profits.
The biggest takeaway from this study was that satisfaction with the car buying process declined in 2022 for the second straight year. What top factors impacted this?
Vanessa Ton: First and foremost, let me jog your memory on what kind of economic factors were impacting car buying decisions in 2022. Inflation spiked to a new 40-year high. The Feds raised rates seven times. Interest rates reached a 20+ year high and the average car loan interest rate rose by more than 3%.
So, it’s no surprise that the first factor to bring down customer satisfaction was high prices. New vehicle prices spiked roughly $7,000, while used vehicle prices increased more than $8,000. Consumers tell us they paid more than they budgeted which caused them to be more dissatisfied with their deal and lose trust in their dealer/retailer.
Second factor, limited availability. Customers were already faced with hardships finding a car within budget and now they had even less choices. The shopping experience became less about finding THE perfect vehicle, and more about finding ANY vehicle.
Third factor, time spent. Today, buyers are spending two hours more than last year researching and shopping for their next vehicle purchase. In addition to more time online, they are spending more time at the dealership because limited inventory forced people to browse dealer lots and engage with salespeople more.
Speaking of spending time online, 68% of shoppers in the Car Buyer Journey Study say they will do most or all their purchases online in the future. That’s higher than ever before. How can dealers make sure they are winning digitally?
Vanessa Ton: Today, just under half of consumers are already doing at least one step of the purchase experience online, with 39% using an omnichannel experience of shopping both in-person and online, and 8% completing their entire transaction online. That 8% is expected to grow to 28% in the future, as shoppers indicate they want to do more online in the future.
Dealers can prepare and stay ahead of the change by having a more robust online purchase experience on their website. Make sure you know your customer, know your business, and know the experience you offer. It’s also important that your team is trained to handle more of the sales process online. The most successful dealer groups have specific teams or specialists trained to handle and convert this kind of business.
The Car Buyer Journey Study found vehicle pre-ordering to be a growing trend. Nearly 1 in 5 new vehicles were pre-ordered in 2022, an 89% increase year-over-year. Tell us why consumers prefer it?
Vanessa Ton: While pre-ordering isn’t a new concept, it’s only within the last two years that OEMs have made it more widely available to help alleviate buyer frustration with low new inventory. We found that customers turned to pre-ordering first and foremost to customize their vehicle to fit their needs.
Secondly, about half of the customers decided to pre-order versus buy from the dealership because they didn’t need a vehicle immediately and were willing to wait.
And finally, 45% of customers said the limited selection of vehicles available pushed them to pre-order so they were guaranteed the vehicle they wanted.
This is key though: an overwhelming 79% were more satisfied with their pre-order experience in comparison to a past purchase where they bought off the dealership lot. They also indicated they would likely pre-order again when returning to the market.
To foster trust and transparency with that growing buyer segment, how can dealers evolve to better fit their needs?
Vanessa Ton: Focus on shorter waiting periods, giving customers the ability to track the vehicle and more touchpoints. Overall satisfaction among buyers who pre-ordered from OEM’s was higher because they had these things.
In our research, more than half of customers wished for a shorter wait. Americans have that “right here, right now” mindset. Strive for waiting periods that are no longer than three months. And make sure to always keep in touch with customers during the wait period.
One way to keep in touch is to give them a vehicle tracker. The more you share on status, the more informed and satisfied the consumer will be. Think of it much like Domino’s “pizza tracker”. It details every step of your pizza being made, from who’s making it to what time it leaves the store. And, even if your delivery is behind schedule, you can still see it’s being worked on and there’s progress happening. That’s where OEM’s and dealerships should be heading when it comes to consumer satisfaction and new car pre-order.
Customers also want the choice to have their vehicle delivered to their home or a preferred location. Ensure this capability is in place at the dealership. And lastly, buyers want financing finalized sooner so work to get pre-approval and paperwork ready when the vehicle is built.
This is only a fraction of the insights that we gleaned out of the 2022 Cox Automotive Car Buyer Journey Study. If you would like to read the study in full, visit the Cox Automotive Newsroom here.
