The automotive retail sector is quickly adapting itself to changing consumer preferences, with a growing focus on digitalisation and personalisation. According to recent research, there is still considerable work to be done. Jared Rowe, President of online automotive marketplace AutoTrader, believes that recognising the need to change will open the door to a “tremendous opportunity” to delight buyers.
AutoTrader’s latest Car Buyer of the Future study revealed that just 17 out of 4,002 people are happy with the current car buying process. However, that’s not to say they dislike all aspects of the process. “Two parts of the process that consumers want to retain – with a slight twist – are in doing online research and negotiating,” Rowe told Megatrends.
Touch point continuity
When it comes to performing research online, he notes that consumers are becoming more mobile and using multiple devices to shop for vehicles. According to AutoTrader’s figures, 42% of shoppers use multiple devices today. This should rise to an estimated 80% by 2020.
While many shoppers want to conduct their research online, they still want to come into the dealership at some point. “The shopping and buying experience is a personal one, so the best thing that dealers can do to maximise shoppers’ time at the dealership is to quickly assess where they are in the process – and meet them at that point,” observed Rose. 43% of study respondents said they see the dealership as a place to learn, and these consumers are looking to validate information they found online, learn about specials and offers, and learn about warranty and service. “For those shoppers, dealers should be prepared to offer accurate, in-depth information and perhaps connect the shopper with someone who is a specialist in the vehicle they’re interested in buying,” he advised.
From these findings, Rowe emphasised that “automotive marketers need to ensure that they have a multi-platform strategy and not be focused on mobile only.”
Contrary to what some may have assumed regarding price negotiations, AutoTrader’s study indicated that consumers actually do want to negotiate on vehicle price. “We expect that to continue being a part of the car buying process,” Rowe added. “It is important to note, however, that how and when they negotiate will evolve. The consumers we surveyed showed a desire to start the negotiating and deal-structuring process online, and they’d like to remain anonymous until they get comfortable with the dealer and the deal.”
Notably, there remain some misconceptions between buyers and dealers on pricing. “There are perception issues on both sides of the equation that we’ll need to overcome as an industry. Some dealers think that consumers want the lowest price, which isn’t always the case,” commented Rowe. “We know from some of our other research that consumers want a fair price. Additionally, this study showed that great in-dealership experiences and great salespeople trump lowest price for consumers. On the flip side, consumers still think that dealers are making much more profit than they actually are on each vehicle.”
On the whole, the gaps between the listing prices and transaction prices are shrinking, a development that Rowe hails as an indication that “more dealers are pricing their vehicles according to what the market demands and closer to consumers’ expectations for fair prices. As such, consumers aren’t negotiating as much off each vehicle on average. The more that dealers fairly price their vehicles and consistently advertise those prices across the various platforms and channels they use, the more consumers will come to trust the prices.”
Happy buyers are loyal buyers
Rowe sees considerable room for improvement across several other areas of the dealership experience, including test drives. While taking the car out for spin remains a key attraction to a dealer visit, he believes “test drives are ripe for change, as much hasn’t changed in this part of the process over the last few decades. The two key factors that we as an industry need to focus on in the test drive are addressing consumers’ desires for more convenience, and less pressure.”
Test drive convenience, price transparency and touch point continuity are just some of the areas within the sales process demanding attention. With such a long to-do list, what should be given top priority? “A key theme that we’ve seen time and again is that one of the greatest frustrations consumers have is the time that it takes to complete the purchase on the day they buy,” explained Rowe. “We recommend focusing on the in-store experience, particularly on the parts of the process that contribute to purchase-day delays. In this process, one of the biggest areas of opportunity is in the Finance and Insurance (F&I) office.” Tellingly, buyer satisfaction with the dealership begins declining after 90 minutes in store on the day of purchase. With the F&I process alone accounting for an average of 61 minutes, it’s clear that timing needs to be addressed.
In general, happy buyers make for loyal buyers. As personlisation gains in importance among car buyers, dealers will need to ensure they offer a customised sales approach. As Rowe commented: “Experience drives loyalty, and since buyers want a personalised experience, the dealers who do the best job at creating a compelling and customised experience in their stores will reap the best returns in terms of loyalty.”