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  • The Evolution of the Online Car Buying Process www.maxtradein.com 1-855-NEEDMAX (633-3629)
  • 2www.maxtradein.com 1-855-NEEDMAX (633-3629) Table of Contents Introduction Introduction Consumer Car Buying Habits and Frustrations The Evolution of Car Shopping 1. Online Penetration 2. Demographic Data on Car Shopping 3. Percent of Customers Who Trade In or Sell Their Old Car to Purchase a New Car Top Consumer Frustrations in Car Selling/Trade In Process 1. Dealing with Salespeople 2. Spending Time on the Process 3. Determining the Value of Their Used Car Top Online Resources Used by Consumers to Determine the Value of Their Used Car 1. Kelley Blue Book 2. Consumer Reports 3. Edmunds 4. MaxTradeIn 2 3 3 5 7 9 10 10 12 12 14 14 14 14 14 The car buying process is making a huge shift to digital, meaning car dealers need to adapt and recreate the experience of the dealership online to cater to the digital customer. To better equip themselves, buyers are going online, at an astounding rate of 83%, spending an average of 18-19 hours researching before making a vehicle purchase. And as the industry shifts, consumers online activity, including consumer research, interactions with salespeople and actual purchases and sales of vehicles, is growing at an overwhelming rate. If dealers fail to create an online presence to effectively interact with todays customers, they lose the opportunity to put their dealership in front of over half of those individuals looking to purchase a vehicle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  • $370 billion Increase in number of family members, which leads to requiring a bigger vehicle. The old vehicle breaking down frequently and or requiring more maintenance than it is worth. Change over to a better looking or more powerful model as people become more affluent. The sale and purchase of used cars is almost as old as the automobile industry itself. As the largest retail segment of the U.S. economy, the used car industry is worth $370 billion a year and makes up almost half of the auto trade. While the used car market is lucrative, it can be a pain and a burden for car buyers and dealers alike. But with the emergence of software and technology, the car buying process can be a lot easier and beneficial for all parties involved. So, why do people decide to buy and sell used cars? 1 IInnccrreeaassee iinn nnuummbbeerr ooff ffaammiillyy mmeemmbbeerrss,, hi h l d t i i bi hi l 3www.maxtradein.com 1-855-NEEDMAX (633-3629) Consumer Car Buying Habits and Frustrations 2 People upgrade to newer cars for many reasons, including:
  • Many people cannot afford new cars. Since used cars cost less, people can purchase a higher-end model with their budget. People may want to reduce costs on insurance and registration, both of which are significantly lower for older cars compared to newer cars. Many people cannot afford new cars. Since used cars cost less, people can purchase a higher-end model with their b d t 3 4 5 Most people try to sell their cars to other buyers, including both independent and franchised dealers. That being said, many people are also waiting to buy new cars and purchasing used cars instead. There are buyers for used cars, regardless of the wear-and-tear and the increased maintenance these cars require, because: 4www.maxtradein.com 1-855-NEEDMAX (633-3629) The average cost of a new vehicle was $30,500 in 2012, while the cost of used cars has decreased for both franchised ($10,558) and independent dealers ($9,158) in 2013. 2013 10k 20k 30k 40k new car used car franchised dealer used car independent dealer
  • The 2013 Car Affordability Study undertaken by Interest.com reveals a typical household cannot afford a new vehicle. The study reveals that Washington is the only state in the U.S. where a typical household can afford the monthly payments that a new vehicle would demand, with a median income of $86,680 a year. As new vehicles become less affordable for buyers, the used car market will continue to grow. A survey by Maritz Research, which surveyed 80,219 buyers of 2012 model-year vehicles, revealed that 11.4% of buyers did not take a test drive and rather relied completely on online research. Even when scheduling a test drive, 9.5% of the buyers used the Internet to schedule a test drive. People are now moving away from paid and promotional content and increasingly seeking out genuine user experiences and credible third-party reviews. The rise of social media has aided this shift. Consumers interact among themselves, whether by computer, smartphone, tablet, etc., to discuss products and seek feedback, searching for product information from various sources. And finally, shoppers are shifting the paradigm by approaching the marketer, initiating their purchase from a position of knowledge and strength. Many people still think of the car buying process as very traditional, with fast-talking car salesmen and high-pressure negotiations. But with the rise of digital technology and software, the car buying process has completely changed. 5www.maxtradein.com 1-855-NEEDMAX (633-3629) Online Penetration 83% of the people undertake online research before buying a car. 6 7 8
  • A study by Think Insights and Google revealed that: of new car buyers use the Internet to gather information. of new car buyers used the Internet to compare vehicles. of them used it to make the final purchase decision. 6www.maxtradein.com 1-855-NEEDMAX (633-3629) 9 10 68%68% 69%69% 45%45% i A study by Arthur D. Little revealed that 32% of Americans may buy their new cars online by 2020, with little to no interaction with the dealership selling the vehicle. These statistics might be very disconcerting for independent and franchised dealers, as a dealers closing rate increases dramatically when they can get car buyers into their physical dealerships. If buyers continue to rely on online research instead of physical interaction with the car, it will be imperative for dealers to make the online customer experience more user-friendly, interactive and engaging, in order to maintain their close rates. In other words, dealers need to recreate the experience of putting the prospective buyer behind the wheel without actually having them come into the dealership.
  • 11 7www.maxtradein.com 1-855-NEEDMAX (633-3629) Demographic Data on Car Shopping Gender demographics have a profound impact on the buying process. When trying to sell a new or used car, it is imperative that dealers become familiar with their target markets and how they can appeal to their needs. In past years, men dominated the buying scene, but recently women caught up and now have the same, and at times, more influence in retail purchases. Women now comprise 47% of the U.S. labor force and are the sole or primary provider in 40.4% of U.S. households today. Families where Dad is the breadwinner and Mom is the homemaker have fallen from 70% in 1960 to 31% in 2011. A recent study, The Female Factor commissioned by [email protected], revealed a change in womens spending habits over the last decade. Women are now more involved in the familys finances and have a big say or controlling interest in big-ticket item purchases like cars. Actually, over half of the car-buying decisions are made by women. In 2011, 97% of women negotiated how much they would pay for a car, while the corresponding figure in 2000 was 86%. 70% 31%1960 2011 86% 97%2000 2011
  • 12 13 Women have a significant say in 85% of all consumer purchases. The product specific involvement is: 8www.maxtradein.com 1-855-NEEDMAX (633-3629) new cars 65% 92% 91% vacations 80% 93% healthcare food new homes 66% PCs According to consulting firm A.T. Kearney, women purchase 60% of all cars. However, 74% of women feel misunderstood by automotive marketers, while only 59% of women feel misunderstood by food marketers and 66% of them feel misunderstood by health care marketers. For example, male and female minds work differently and they shop for vehicles differently, making it that much more important for dealers to recognize these differences when interacting with prospective buyers. According to LeaseTrade.com, men tend to rely on assumptions and preconceived notions about products, while women tend to ask more questions, even ones which men consider as obvious. When making a purchasing decision, women factor in both emotional and rational sides, while paying
  • 2013 1m 500k new cars used cars On average, about 60% of a dealers used stock are trade-ins from buyers looking for new cars. 14 close attention to detail. Therefore, layering emotional decision-making opportunities (such as tying a vehicles use to their familys interests to stress practicality) while also including rational information (such as information about fuel efficiency, seating capacity, etc.) in the message has the highest impact on the female buyer. On average, women have an average of 171 contacts in their email or mobile lists, and 92% of women pass along information about deals or finds to others. But this also means they can use those contacts to tell others about negative experiences they've had with a brand. Making women feel more comfortable and in control in a dealership will be key to closing more sales within that target market. Furthermore, providing them with as much information as you can online will encourage them to consider your offe

The Evolution of the Online Car Buying Process - MaxTradeIn

Aug 11, 2014

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Automotive

maxtradein

The car buying process is changing now, more than ever. Consumers are going online at greater rates and doing research before buying a vehicle. Will your dealership be online to greet them? Are your online efforts appealing to your potential customers? Download our white paper and learn more about how people are using the internet to make car buying decisions, who is making the decisions to purchase and the best ways to optimize your efforts online. - MaxTradeIn

  • The Evolution of the Online Car Buying Process www.maxtradein.com 1-855-NEEDMAX (633-3629)
  • 2www.maxtradein.com 1-855-NEEDMAX (633-3629) Table of Contents Introduction Introduction Consumer Car Buying Habits and Frustrations The Evolution of Car Shopping 1. Online Penetration 2. Demographic Data on Car Shopping 3. Percent of Customers Who Trade In or Sell Their Old Car to Purchase a New Car Top Consumer Frustrations in Car Selling/Trade In Process 1. Dealing with Salespeople 2. Spending Time on the Process 3. Determining the Value of Their Used Car Top Online Resources Used by Consumers to Determine the Value of Their Used Car 1. Kelley Blue Book 2. Consumer Reports 3. Edmunds 4. MaxTradeIn 2 3 3 5 7 9 10 10 12 12 14 14 14 14 14 The car buying process is making a huge shift to digital, meaning car dealers need to adapt and recreate the experience of the dealership online to cater to the digital customer. To better equip themselves, buyers are going online, at an astounding rate of 83%, spending an average of 18-19 hours researching before making a vehicle purchase. And as the industry shifts, consumers online activity, including consumer research, interactions with salespeople and actual purchases and sales of vehicles, is growing at an overwhelming rate. If dealers fail to create an online presence to effectively interact with todays customers, they lose the opportunity to put their dealership in front of over half of those individuals looking to purchase a vehicle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  • $370 billion Increase in number of family members, which leads to requiring a bigger vehicle. The old vehicle breaking down frequently and or requiring more maintenance than it is worth. Change over to a better looking or more powerful model as people become more affluent. The sale and purchase of used cars is almost as old as the automobile industry itself. As the largest retail segment of the U.S. economy, the used car industry is worth $370 billion a year and makes up almost half of the auto trade. While the used car market is lucrative, it can be a pain and a burden for car buyers and dealers alike. But with the emergence of software and technology, the car buying process can be a lot easier and beneficial for all parties involved. So, why do people decide to buy and sell used cars? 1 IInnccrreeaassee iinn nnuummbbeerr ooff ffaammiillyy mmeemmbbeerrss,, hi h l d t i i bi hi l 3www.maxtradein.com 1-855-NEEDMAX (633-3629) Consumer Car Buying Habits and Frustrations 2 People upgrade to newer cars for many reasons, including:
  • Many people cannot afford new cars. Since used cars cost less, people can purchase a higher-end model with their budget. People may want to reduce costs on insurance and registration, both of which are significantly lower for older cars compared to newer cars. Many people cannot afford new cars. Since used cars cost less, people can purchase a higher-end model with their b d t 3 4 5 Most people try to sell their cars to other buyers, including both independent and franchised dealers. That being said, many people are also waiting to buy new cars and purchasing used cars instead. There are buyers for used cars, regardless of the wear-and-tear and the increased maintenance these cars require, because: 4www.maxtradein.com 1-855-NEEDMAX (633-3629) The average cost of a new vehicle was $30,500 in 2012, while the cost of used cars has decreased for both franchised ($10,558) and independent dealers ($9,158) in 2013. 2013 10k 20k 30k 40k new car used car franchised dealer used car independent dealer
  • The 2013 Car Affordability Study undertaken by Interest.com reveals a typical household cannot afford a new vehicle. The study reveals that Washington is the only state in the U.S. where a typical household can afford the monthly payments that a new vehicle would demand, with a median income of $86,680 a year. As new vehicles become less affordable for buyers, the used car market will continue to grow. A survey by Maritz Research, which surveyed 80,219 buyers of 2012 model-year vehicles, revealed that 11.4% of buyers did not take a test drive and rather relied completely on online research. Even when scheduling a test drive, 9.5% of the buyers used the Internet to schedule a test drive. People are now moving away from paid and promotional content and increasingly seeking out genuine user experiences and credible third-party reviews. The rise of social media has aided this shift. Consumers interact among themselves, whether by computer, smartphone, tablet, etc., to discuss products and seek feedback, searching for product information from various sources. And finally, shoppers are shifting the paradigm by approaching the marketer, initiating their purchase from a position of knowledge and strength. Many people still think of the car buying process as very traditional, with fast-talking car salesmen and high-pressure negotiations. But with the rise of digital technology and software, the car buying process has completely changed. 5www.maxtradein.com 1-855-NEEDMAX (633-3629) Online Penetration 83% of the people undertake online research before buying a car. 6 7 8
  • A study by Think Insights and Google revealed that: of new car buyers use the Internet to gather information. of new car buyers used the Internet to compare vehicles. of them used it to make the final purchase decision. 6www.maxtradein.com 1-855-NEEDMAX (633-3629) 9 10 68%68% 69%69% 45%45% i A study by Arthur D. Little revealed that 32% of Americans may buy their new cars online by 2020, with little to no interaction with the dealership selling the vehicle. These statistics might be very disconcerting for independent and franchised dealers, as a dealers closing rate increases dramatically when they can get car buyers into their physical dealerships. If buyers continue to rely on online research instead of physical interaction with the car, it will be imperative for dealers to make the online customer experience more user-friendly, interactive and engaging, in order to maintain their close rates. In other words, dealers need to recreate the experience of putting the prospective buyer behind the wheel without actually having them come into the dealership.
  • 11 7www.maxtradein.com 1-855-NEEDMAX (633-3629) Demographic Data on Car Shopping Gender demographics have a profound impact on the buying process. When trying to sell a new or used car, it is imperative that dealers become familiar with their target markets and how they can appeal to their needs. In past years, men dominated the buying scene, but recently women caught up and now have the same, and at times, more influence in retail purchases. Women now comprise 47% of the U.S. labor force and are the sole or primary provider in 40.4% of U.S. households today. Families where Dad is the breadwinner and Mom is the homemaker have fallen from 70% in 1960 to 31% in 2011. A recent study, The Female Factor commissioned by [email protected], revealed a change in womens spending habits over the last decade. Women are now more involved in the familys finances and have a big say or controlling interest in big-ticket item purchases like cars. Actually, over half of the car-buying decisions are made by women. In 2011, 97% of women negotiated how much they would pay for a car, while the corresponding figure in 2000 was 86%. 70% 31%1960 2011 86% 97%2000 2011
  • 12 13 Women have a significant say in 85% of all consumer purchases. The product specific involvement is: 8www.maxtradein.com 1-855-NEEDMAX (633-3629) new cars 65% 92% 91% vacations 80% 93% healthcare food new homes 66% PCs According to consulting firm A.T. Kearney, women purchase 60% of all cars. However, 74% of women feel misunderstood by automotive marketers, while only 59% of women feel misunderstood by food marketers and 66% of them feel misunderstood by health care marketers. For example, male and female minds work differently and they shop for vehicles differently, making it that much more important for dealers to recognize these differences when interacting with prospective buyers. According to LeaseTrade.com, men tend to rely on assumptions and preconceived notions about products, while women tend to ask more questions, even ones which men consider as obvious. When making a purchasing decision, women factor in both emotional and rational sides, while paying
  • 2013 1m 500k new cars used cars On average, about 60% of a dealers used stock are trade-ins from buyers looking for new cars. 14 close attention to detail. Therefore, layering emotional decision-making opportunities (such as tying a vehicles use to their familys interests to stress practicality) while also including rational information (such as information about fuel efficiency, seating capacity, etc.) in the message has the highest impact on the female buyer. On average, women have an average of 171 contacts in their email or mobile lists, and 92% of women pass along information about deals or finds to others. But this also means they can use those contacts to tell others about negative experiences they've had with a brand. Making women feel more comfortable and in control in a dealership will be key to closing more sales within that target market. Furthermore, providing them with as much information as you can online will encourage them to consider your offe