cox automotive car buyer journey study pandemic … · 2/1/2021 · 3. dealer reached out with...

COX AUTOMOTIVE CAR BUYER JOURNEY STUDYPANDEMIC EDITIONRelease Date: February 1, 2021

Study Background & Methodology

Background• Cox Automotive has been researching the car buying journey for 11 years to

monitor key changes in consumer buying behaviors

Goal• Inform strategic decisions for Cox Automotive and OEM & Dealer clients

In-Field Dates• September 10 – September 22, 2020

Respondents• Buyers/Lessees that took ownership between March and September 2020

• Used the Internet during the shopping/buying process

• Results are weighted to be representative of the buyer population

2

3,016Recent Vehicle Buyers

2,010New Buyers

1,006Used Buyers

Pandemic Accelerated Positive Change

3

% of Buyers Satisfied

with Shopping Experience

Arrows indicate signif icant differences from 2020 or previous timeframe at the 95% confidence interval.

Letters indicate signif icant differences between New and Used at the 95% confidence interval.

Time Spent Researching & Shopping

NEW BUYER USED BUYER

11h 11m 2020

13h 49m2020

2019 11h 56m 2019 15h 53m

13h 13m 2020

14h 53m 2019

60% 61% 62%

60%

72%

66% 66%

69%

62%

74%

58% 58% 59%60%

71%

2016 2017 2018 2019 2020• Shifted Purchase Motivations

• Revolutionized Buying Process

Drivers of

Change

NewA

UsedB

Total

Source: Cox Automotive Car Buyer Journey - 2020

Pandemic Shifted Purchase Motivations

4

2) New Vehicle Market Recovery Triggered by Attractive Deals

3) Used Purchases Were Spurred by COVID-19 Impact

1) Online Research Accelerated by Decisive Buyers

Edit Master text styles


5

Online Research Accelerated

by Decisive Buyers

Purchases Motivated by ‘Want’ on the Rise During Pandemic

6

% of Buyers Purchasing

Because They ‘Want’ a Vehicle(vs. ‘Need’ a Vehicle)

41%

37% 38% 37%

44%

51%

48%

51%49%

57%

36%

32%34% 34%

39%

2016 2017 2018 2019 2020

New

Used

+Not Sure removed.



BC

BC

BCBC

BC

Total

A

B

C


Buyers Were More Certain About Their Vehicle Choices

Strategize a plan to maintain a comprehensive

online presence that includes third party sites

Intensify the urgency in offers and

strategically feature messages around

special deals and vehicle attributes

7

Total

New (A)

45%B

2018 Used (B)

32%

2018

(38%B)* (26%)*

35%2018

(29%)*

+Not Sure removed.

*Not asked in 2019 survey




% of Buyers Who Knew Exact Vehicle They

Wanted at Start of Shopping Process

8

Time Spent Shopping Online Dropped SignificantlyWith Less Cross-Shopping Between Makes & Models

Source: Cox Automotive Car Buyer Journey


Time Spent Researching & Shopping Online

Top Reasons

For Less Time Online

1. Already knew what they wanted“With our previous vehicle we weren't sure

which one to go with, but with this purchase, I knew exactly what I wanted in a

vehicle and the Make & Model.”

“There was less searching Internet for

makes, models, etc. We had decided ahead of time what we wanted, if available.”

2. Attractive offer

3. Dealer reached out with offers


NEW BUYER USED BUYER

5h 34m 2020

7h 44m2020

2019 6h 44m 2019 10h 25m

7h 14m 2020

9h 29m 2019


“Ready to Buy” Shoppers Visited Fewer Websites

99

Average Number of Automotive Websites Visited

NEW

BUYER

USED

BUYER

3.7 3.7

4.3

3.9

3.5

4.9

4.3 4.2 4.34.0

2016 2017 2018 2019 2020*

*In-f ield dates: September 10-22, 2020

Arrows indicate signif icant differences from 2020 or previous timeframe at the 95% confidence interval

Source: Cox Automotive Car Buyer Journey.

Average

Websites

Visited

4.5 4.1 4.2 4.2 3.9

Third Party Sites were the Most Popular First and Last Destinations for Buyers

10

Third Party excludes Carvana+Dealership includes CarMax

New Form Online Retailer is primarily Carvana.

*Data points exclude ‘Social Sites’, ‘Other Sites’, and ‘Not Sure’ from analysis

Arrows indicate signif icant differences from previous timeframe at the 95% confidence interval.


In-field dates: September 10-22, 2020

First and Last Websites Visited – Total Buyers*

First And Last Website Visited(Among Buyers Visiting Multiple Websites)

78%of vehicle buyers visited at

least 2 websites

Total Vehicle Buyers

New Form Online Retailer

Google Search

OEM Sites

Third-Party Sites

Dealership Sites+

17%

33%

56%

53%

9%

6%13%5%5% 3%

First Last

Cox

Automotive

19%Cox

Automotive

23%



11

New Vehicle Market Recovery

Triggered by Attractive Deals

Purchase Delays Heightened Due to Pandemic

1212

17%

34% 33%29%

23% 21% 19%

EarlyOutbreak

Shelter inPlace

Reopening SummerSpike

Back toSchool

October January

March Late March

– April

May –

Mid June

Late June –

July

August –

September

Arrows indicate signif icant differences from previous timeframe at the 95% confidence interval.

Source: Cox Automotive COVID-19 Consumer Impact Study

% of Shoppers Delaying Purchase

Due to COVID-19

Edit Master text styles 13

OEM Incentive Spend Reached Record High at Onset of Pandemic

9.6%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Inc

en

tiv

e S

pe

nd

as

% o

f A

TP

2015 2016 2017 2018 2019 2020

• Source: Cox Automotive Analysis of Motor Intelligence, KBB

Trended Incentive Spend as of % of Average Transaction Price


Shoppers Said That the Right Deal Could Accelerate Purchase…

54%52%

47% 46%

40%38%

45%41%

47%

39%

26%29%

15%

April 4-6 April 25-27

COVID-19 cases start to

decline

Governments start to lift

quarantines

A deal or incentive I

cannot refuse

Personal/ family

employment

situation is secure

Schools and businesses

reopen

A promising treatment for COVID-19

emerges

Ability to purchase

completely

online

N/A

Source: 2020 Cox Automotive COVID-19 Digital Shopping Study 2.0

of New shoppers

believed they will get

some sort of favorable

deal

Triggers that Could Accelerate Vehicle Purchase(among those who have delayed purchase)

86%


…So Incentives, Special Offers, and Cash Rebates Drove Research…

Source: Cox Automotive Car Buyer Journey - 2020In-field dates: September 10-22, 2020

Looked for Incentives, Special Offers, Rebates(Includes those who did this online & in-person at the dealership, excludes those that did not do)

62% 56% 65%(-1) (+0) (-2)

Did at Dealership: 38% (+1) Did at Dealership: 44%B (+0) Did at Dealership: 35% (+2)

Total New (A) Used (B)

A

Did Online Only

…and New Buyers Were Enticed by Attractive Deals

16

NEW BUYERS

1. Previous vehicle had high mileage

2. Wanted a vehicle with certain features

3. Promotional Offer – Attractive Deals (17% Post-COVID vs. 11% Pre-COVID)

4. Wanted/Needed a different vehicle type

5. Lease expired

USED BUYERS1. Previous vehicle had high mileage 2. Previous vehicle was unreliable or expensive to repair

3. Wanted/Needed a different vehicle type4. Wanted a vehicle with certain features

5. Previous vehicle was damaged



Top 5 Purchase Triggers

Edit Master text stylesSource: Cox Automotive 17

Nearly 1 in 5 New Buyers Took Advantage of APR Deals at the Start of the Pandemic

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Jan-

17

Feb

-17

Mar

-17

Ap

r-17

May

-17

Jun

-17

Jul-

17

Au

g-17

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan-

18

Feb

-18

Mar

-18

Ap

r-18

May

-18

Jun

-18

Jul-

18

Au

g-18

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

Jan-

19

Feb

-19

Mar

-19

Ap

r-19

May

-19

Jun

-19

Jul-

19

Au

g-19

Sep

-19

Oct

-19

No

v-1

9

Dec

-19

Jan-

20

Feb

-20

Mar

-20

Ap

r-20

May

-20

Jun

-20

Jul-

20

Au

g-20

Sep

-20

Oct

-20

No

v-2

0

Dec

-20

0% APR Finance Share

New Buyers Who Received 0% APR


64%

18

Trust in “The Deal” Dramatically Improved Among New Buyers During the Pandemic

+Not Sure removed.




Lessees

69% (+7)

New Purchasers

69% (+8)

TRUST DEALER

GAVE BEST DEAL…

Sept 2018 to

Aug 2019

Timeframe

(57%)

Trust the Dealer Gave the Best Deal Across Time+

61% 61%

71% 68%

55%59% 61% 64%

New

Used

Sept 2018 toAug 2019

Sept. 2019 to Mid-March 2020

March to May 2020

June to Sept. 2020

Heavy Incentives

Timeframe

Total

New (A)

69%B

Used (B)

63%

% of Buyers Who Trust the Dealership/

Retailer Gave Me the Best Deal


…but Incentives Are Not a Long-Term Strategy…





Factor % of

Buyers

(A) The Brand 81%

(B) The Dealership 72%

(C) The Vehicle 71%

(D) The Deal 67%

Factors Driving

Purchase Decision in 2020(Among New Buyers Who Repurchased the Same Brand)




Total

New (A)

72%B

Used (B)

58%

62%

Brand Loyalty:% of Buyers Who Have Purchased

the Brand Before

Aug 2018 toSept 2019Timeframe

(56%)

A

A

A

Letters indicate signif icant differences between the vehicle selection factors

at the 95% confidence interval.

.


Proactive Dealer Outreach About Deals Also Resonated with Past Buyers,but the Relationship Was the Ultimate Deciding Factor

38%

Dealers initiated

contact with

of Dealer Loyal

buyers

+Not asked of all respondents, asked as a follow -up in recontact survey.

Contact Initiated by the Dealership+

Results similar for

New and Used


“The dealer called me with a great deal

and I came in and bought the vehicle.”

Factors Driving

Purchase Decision in 2020(Among New Buyers Who Repurchased the Same Dealer)

Factor % of

Buyers

(A) The Dealership 66%

(B) The Brand 61%

(C) The Vehicle 46%

(D) The Deal 46%

AB

AB

Letters indicate signif icant differences between the vehicle selection factors

at the 95% confidence interval.

.



21

Used Purchases were Spurred

by COVID-19 Impact


COVID-19 Safety Concerns Motivated Used Buyers to Grow Their Garage

Arrows indicates significant difference since last wave or compared to other measures

Purchase Trigger Was

“Needed Additional

Vehicles in Household”

13% vs. 8%

Source: 2020 Cox Automotive COVID-19 Consumer Impact Study; Cox Automotive Car Buyer Journey Study - 2020

Over 1 in 4 Vehicle Shoppers

Who Plan to Add Another Vehicle

to their Household Cited

They No Longer Want to Use

Other Transportation*

Usage of Transportation Mediums

88%

56%

48%

31%

20%

88%

29%24%

15% 12%

Personal Vehicle Ride-Sharing Public Transportation Taxi Car-Sharing

Pre-COVID During COVID

% WHO SAY “VERY RISKY FOR COVID”

2% 32% 56% 39% 34%

Used New

Used Buyers’ Likelihood to Deliberate Between Buying a New or Used Vehicle Increased During Pandemic

23Source: Cox Automotive Car Buyer Journey - 2020 In-f ield dates: Sept 10-22, 2020

+Not Sure removed.

Arrows indicate signif icant dif ferences from 2020 or previous timeframe at the 95% confidence interval.







Total

New (A)

30%

2019 Used (B)

66%A

2019

(32%) (60%)

57%2019

(53%)

% of Buyers Who Considered Both

New and Used Vehicles


With New Inventory Scarce Due to Plant Closures, Especially Mid-Year…

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

3,600,000

3,800,000

20

19

-12-1

6

20

20

-01-1

3

20

20

-02-1

0

20

20

-03-0

9

20

20

-04-0

6

20

20

-05-0

4

20

20

-06-0

1

20

20

-06-2

9

20

20

-07-2

7

20

20

-08-2

4

20

20

-09-2

1

20

20

-10-1

9

20

20

-11-1

6

20

20

-12-1

4

Available Supply weekly, last 12 months

40

60

80

100

120

140

160

180

200

20

19

-12-1

6

20

20

-01-1

3

20

20

-02-1

0

20

20

-03-0

9

20

20

-04-0

6

20

20

-05-0

4

20

20

-06-0

1

20

20

-06-2

9

20

20

-07-2

7

20

20

-08-2

4

20

20

-09-2

1

20

20

-10-1

9

20

20

-11-1

6

20

20

-12-1

4

Days of Supply weekly, last 12 months

The supply situation is now stabilizing but remains well below 2019’s levels.

Source: Cox Automotive VMA Database


c

Consumer Sentiment Decline Triggered Shoppers to Consider Affordable Options…

1 in 2Consumers Believe Their

Financial Situation Will Be

Negatively Impacted if

COVID-19 Continues for

Another Year

Over…

PERSONAL IMPACT FROM

ANOTHER YEAR OF COVID-19

#1 Use most/all of savings

#2 Lose job

#3 Move to cheaper place

#4 Defer student loan payments

#5 Tap into retirement accounts

Decline Since

Pre-COVID*

23%

Source:; 2020 Cox Automotive COVID-19 Consumer Impact Study; Morning Consult 25

Consumer

Sentiment

*Consumer Sentiment Decline from 1/29/20 to 12/1/20


…and With Rising New Vehicle Retail Prices, Used Buyers Stayed Committed to Used Choices

8%

19%

18%

22%

10%

36% 44%

46%

5%

35%

52%

57%

Reopening(May-Mid June)

Summer Spike(Late June-July)

Back to School(August-September)

October

% of Dealers Reporting Higher Retail Prices vs. February 2020

New Vehicles (Franchise)

Used Vehicles (Franchise)

Used Vehicles (Independents)

2020 Purchases(Among with Less than $75K HHI)

45% Used vs. 30% New

Arrows indicate significant difference to prior wave or year at the 95% confidence interval

Source: 2020 Cox Automotive COVID-19 Dealer Impact Study; Cox Automotive Car Buyer Journey Study - 2020

Pandemic Revolutionized Buying Process

27

2) Streamlined Process Delivered Higher Buyer Satisfaction

3) Higher Digital Retailing (DR) Engagement Proved to Build Trust, Save Time and Impact Loyalty

1) Online Retailers Became More Mainstream

28

Online Retailers Became

More Mainstream

Global Pandemic Changed Shopping Behavior

Utilize valuation tools to optimally price vehicles for faster turn

29

70%Impact on Likelihood to Visit Dealer

(Much/Somewhat less likely)

Source: 2020 Cox Automotive Covid-19 Consumer Impact Study,

Wave 3 (March 20-22 fielding)

Consumer Level of Concern About Pandemic(Extremely/Very)

55%“Shop online first and spend as

little time in the dealership as possible. Or buy a car completely online”

30

Dealership Visitation Dipped to an All-Time Low

Number of Dealerships Visited



New

Used

Total2.7

2.4 2.3 2.32.0

2.62.4 2.5

2.22.0

2.8

2.42.2

2.42.1

2016 2017 2018 2019 2020


Online Retailers Grabbed Share, While Dealership Website Traffic Fell

31Source: Cox Automotive Car Buyer Journey - 2020


Automotive Website Category Usage

60%56%

61% 61%

52%

29%25% 27% 26% 24%

76%79% 79% 78% 79%

3%7%

11%17%

2016 2017 2018 2019 2020

Dealership

OEM

Third Party*

New Form

Online Retailer

*Third Party excludes Carvana

New Form Online Retailer is primarily Carvana.


N/A


Competition Between Online Retailers and Brick-and-Mortar Dealerships Will Start to Heat Up in 2021

Source: Cox Automotive 2021 Predictions Study

believe New Form Online

Retailers (like Carvana or

Vroom) will become more of a

competitor

in 2021

20%Independent

Dealers

30%Franchise

Dealers

32

Streamlined Process Delivered Higher Buyer Satisfaction

33

Satisfaction With Dealership ExperiencesRose to New Heights…

34

+Not Sure removed.




% of Buyers Satisfied

with Dealership Experience

67%

61%

67%

70%

77%

69%

64%

72%73%

79%

66%

60%

65%

69%

76%

2016 2017 2018 2019 2020

NewA

UsedB

Total

35

…as the Dealership Experience Became a More Streamlined Process

57%

(+10%)

69%

(+9)

64%

(+7)

74%

(+7)

76%

(+6)

69%

(+6)

81%

(+3)


How Long the

Process Took

Interactions

with Finance

Trust Dealer

Gave the Best Deal

The Price

Paid

Interactions

with Sales

Selection of

Vehicles

The Test Drive

Process



% of Buyers Satisfied in 2020*

( ) = year-over-year change

Total

New (A) 62%B (+14) 71% (+9) 69%B (+8) 74% (+6) 78% (+5) 70% (+1) 83% (+5)

Used (B) 56% (+10) 68% (+8) 63% (+8) 74% (+8) 75% (+6) 68% (+7) 81% (+3)


With Efficiencies Across the Entire Dealership Experience…

Total 0:44 (-0:04) 0:25 (-0:03) 0:29 (-0:03) 0:44 (-0:05) 0:15 (+0:02)

New (A) 0:43 (-0:05) 0:24 (-0:01) 0:32B (-0:04) 0:39 (-0:02) 0:17B (-0:01)

Used (B) 0:44 (-0:04) 0:26 (-0:03) 0:28 (-0:02) 0:45A (-0:07) 0:14 (+0:02)

Lookingat Vehicles,

Talking with SalesTest Drive

Negotiating a Price or

Trade-in Offer

Discussingand

Signing PaperworkSetting up the Vehicle

2:35 (-0:13)New

2:37 (-0:13)Used

2:37 (-0:13)Total

Time Spent with the Dealership/Seller

+Outliers Removed





…Time Spent at Dealership Reached a Record Low


Time Spent with the Dealership/Retailer

2:55

2:42

2:53

2:50

2:37

2:532:47

2:58

2:48

2:35

2:55

2:40

2:512:50

2:37

2016 2017 2018 2019 2020

+Outliers Removed



“I interacted by phone with my salesman and told

him the type of vehicle I was looking to buy. I was

able to test drive immediately without having to look

at their whole inventory on the lot.”

“No price negotiation. We had already paid

and taken care of most things online - just

needed to pick up the car!”

Total

Used

New

Buyers Especially New Also were More Likely to Work with Only One Point of Contact at the Dealership…

3838


*Not asked in 2019

Arrows indicate signif icant differences from 2020 or previous timeframe at the 95% confidence interval

Source: Cox Automotive Car Buyer Journey.



Total

New (A)

47%B

2018 Used (B)

46%

2018

(39%B)* (44%)*

% of Buyers Who Interacted with One Point of

Contact at the Dealership They Purchased At

47%2018

(43%)*

Proactively Managing Online Reputation Can Result in More Vehicle Sales

3939

Source: 2020 Automotive Reputation Report by Reputation.com

10%

Dealers that Improve their

Reputation Score See Up to

Increase in Sales

Higher Digital Retailing (DR) Engagement Proved to Build Trust, Save Time and Impact Loyalty

40


As Dealers Adapted Their Business Because of COVID-19,Consumers Took Advantage of a New Digital Experience…

69%

74%

• Test drive home delivery

• Purchased vehicle home delivery

• Online credit application

TOP STEPS ADDED DUE TO COVID-19

of franchise dealers say

their customers have

used digital retailing tools

more since COVID-19

of franchise dealers added

at least one digital step due

to COVID-19

41

Source: 2020 Digitization of End-to-End Retail Study

Encouraging Higher Consumer Engagement With DRImproves Satisfaction With the Shopping Process

42

.

Letters indicate signif icant dif ferences between DR categories at the 95% confidence interval.



Total

72%

Light Digital (0% - 20% of steps

entirely online)

(A)

Heavy Digital(51%+ of steps

entirely online)

(B)

70% 77%A

Trends are similar across New and Used Buyers.

Overall Satisfaction with Shopping Experience (%8-10)


Expectations were That Digital Retailing Will “Save Them Time”…

Source: 2020 Digitization of End-to-End Retail Study

Saving time in person

at the dealership

86%

#1 SHOPPER BENEFIT:

Edit Master text stylesSource: Cox Automotive Car Buyer Journey - 2020 44

…and Actual Experiences Delivered on Those Expectations…

Light Digital (0% - 20% of steps entirely

online)

(A)

Heavy Digital(51%+ of steps entirely

online)

(B)

Satisfaction Level

(Among Digital Retailing Users - Completed Online Away From the Dealership)

Satisfaction with How

Long the Process Took

(at Dealership)

(%8-10)

Time Spent at the

Dealership

Shopping Experience

was Better than

Previously

2:49 2:07


B


A

38% 58%

53% 68%

A


Ultimately, Digital Retailing Drives Higher Loyalty and Trust


+Not Sure excluded.

Letters indicate signif icant differences between DR categories at the 95% confidence interval.

ATTRIBUTE New Used

Light (A) Heavy (B) Light (A) Heavy (B)

BRAND LOYALTY 70% 77% 58% 58%

DEALER LOYALTY 48% 63% 30% 28%

TRUST IN THE DEAL 65% 76% 63% 70%

A

A

A


Key Takeaways

• Ensure high satisfaction in the customer experience is the new norm and continue to streamline the purchase process.

Encourage dealer staff and consumers to partake in more DR steps to optimize time efficiency and elevate brand/dealership

loyalty.

• Consumers were less likely to finalize the deal online as they need guidance especially during the contract execution part of the transaction. Consider offering a single point of contact for customers through out the purchase process and clearly

communicate all the touchpoints when the assigned contact person is accessible for questions and guidance.

• Redirect reliance on incentives by consistently advertising, improving the customer experience and strengthening the brand to

maximize resilience in a slowdown in the economy.

• Continue to strengthen and invest in CRM programs, which have proven to be effective and essential.

• Reputation management is crucial and impactful to the bottom line. Capitalize on the fact that customer satisfaction is at a ll-

time high. Encourage customers to provide reviews of their dealership experience and keep them engaged. Utilize less than favorable reviews to strategize on ways to improve the retail experience.

cox automotive car buyer journey study pandemic … · 2/1/2021 · 3. dealer reached out with...

Documents