Car Buyer Behavior Changes 5/10 - 5/16
Five automotive industry consumer behavior shifts were identified between May 10 and May 16, 2020. These include increased interest among car buying among millennials, growing interest and usage of "concierge" services, rising trips to dealer showrooms, more consumer engagement in digital industry events, and an increasing percentage of consumers trading in cars with negative equity. Current industry financing incentives, a growing comfort with online car shopping, and financial concerns, may be driving top queries related to car buying, which include researching and buying cars online and saving money on car insurance.
More Millennials Consider Car Purchases
- An April 2020 Capgemini survey found that younger (under 35) consumers were demonstrating greater intent to purchase a vehicle compared to older consumers.
- According to a Harris Poll weekly consumer tracker of over 2,000 US adults, millennials are showing a slight upward trend in car buying intent from April 20 to May 11. In the most recent survey (conducted between May 8-10), just under a quarter (23%) of younger millennials (18-34) and 24% of older millennials (35-49) intend to buy a car once "things return to normal and businesses reopen." In mid-April, 21% of those between 18-34 and 17% of those between 35-49 said they would likely buy a car when things return to normal.
- The Capgemini survey found that, despite a growing interest among younger consumers to purchase a car, financing could be a barrier for some.
- Millennials are considered a key group to engage as the auto industry works to recover from COVID-19. Key dealer recommendations including data mining to target this audience and offering a diverse array of inventory, with a focus on sustainability.
Increasing Usage of "Concierge" Services
- In a May 16, 2020, article focused on COVID-19 car buying behavior changes, Forbes noted services that virtually coordinate test-drives, home delivery ("concierge services"), and other aspects of the virtual car shopping experience are continuing to grow.
- Carvana reported a 16% increase in miles driven by their auto haulers from February to March.
- Steve Kalafer, chairman of Flemington Car and Truck dealership, said about the trend toward concierge services: "We're delivering cars to people's homes so they can test drive. Many times, they will let consumers try about 10 different cars before they purchase."
- Ernie Garcia, Carvana CEO, commented on the trend: "Consumers continue to shop for cars online and more are turning to home vehicle delivery versus pickup for their online car purchase."
- Car manufacturers are responding to this behavior shift by launching their own concierge services.
- On May 11, Gemini announced the launch of Gemini Concierge, positioned as a "complimentary personal shopping service" and the "easiest and newest way to shop for a vehicle"
Increasing Trips To Dealerships
- Car dealerships are starting to re-open their showrooms as states begin to lift their lockdown restrictions.
- According to Gravy Analytics, consumer foot traffic to dealerships declined 76% between February 2 and April 12, 2020, but increased over 35% from April 12 to May.
- Some reasons for preference for an in-person auto buying experience include viewing vehicles, test-driving a car, and signing final paperwork.
- Even with dealers adapting to virtual sales models, dealerships are modifying the in-store experience to entice consumers to showroom. Safety provisions, such as using Plexiglas barriers to separate customers and employees, providing sanitizer and masks, requiring social distancing, locking cars on display, and appointment-only showroom shopping, are increasingly being implemented to reassure consumers who want to shop for an automobile in-person.
Consumers Engaging In Digital Automotive Industry Events
- With the cancellation of in-person events, such as trade shows, consumers are engaging in digital industry events to view new car launches.
- Hyundai launched its 2021 Elantra with a series of live-stream events, which garnered 800,000 views.
- Other companies who have turned to online events to preview their automobile innovations include BMW and Audi.
- Lamborghini was planning a May virtual launch of a new model.
- Volkswagen considers interactive virtual show visits, in which consumers can experience their new models, as a way to reach consumers in the future. Jochen Sengpiehl, chief marketing officer of the Volkswagen Passenger Cars brand, said about the virtual visit experience, "Our first digital booth is only the opening chapter in our new sustainable concept for future innovative online experiences."
More Consumers Trading In Cars With Negative Equity
- According to recent research by Edmunds, consumers are increasingly trading in vehicles with negative equity when buying a car, representing 44% of new vehicles in April 2020, compared to 40% of new vehicles in March 2020 and 33% of new vehicles in April 2019.
- Automotive industry experts attribute this spike in negative-equity trade-ins to the aggressive financing incentives currently being offered by car manufacturers.
- In addition to the spike in negative equity trade-ins, the amount of negative equity also reached an all time high of $5,571, further reflecting consumers' interest in taking advantage of generous incentive offers.
- Ivan Drury, Edmunds senior manager of insights reflects on this trend as an opportunity for consumers: "If you play your cards right, this could be an opportunity to essentially reset your loan and acquire a new vehicle for a similar or smaller monthly payment."
Top Car Buying Topics and Queries: May 10-May 16
- Top car buying topics between May 10-May 16, 2020 include "Car-transportation mode", "Used car", "Car dealership", "Credit", and "Lease."
- Top car buying queries between May 10-May 15, 2020 related to the purchase of used cars ("buying used car", "used car", "buying a used car") and new cars ("buying new car" and "buying a new car"). Additional top queries include "cars", "car insurance", and "online car buying."
- Toward the end of the week of May 10-May 16, car buying searches trended up slightly. Top rising search topics related to Suburu, CarGurus, and Hyundai.
Used Car Purchase Queries ("buying used car")
- This query is related to purchasing automobiles as it results in news highlighting why it currently a good time to purchase a used car.
New Car Purchase Queries ("buying new car")
- This query is related to purchasing automobiles as it results in news that sheds light on some incentives that are drawing consumers to car buying, such as this May 13, NPR article, "7-year No-Interest Loans What It Takes To Sell Cars In A Pandemic."
- This general search query highlights car marketplaces and research sites, such as Edmunds, for consumers to conduct online research, shopping and buying.
- In addition to providing alternative auto insurance provider websites, this query provides recent news resources intended to help consumers save money on car insurance, such as this article, published by Yahoo Finance on May 16, "How to Compare Car Insurance Quotes and Get Cheaper Rates."
Online Car Buying
- This search focuses on browsing and buying new and used cars online, with a number of leading online automobile marketing places identified in the search.
To identify consumer behavior shifts related to the automotive industry for the week of May 10, 2020, to May 16, 2020, we leveraged consumer surveys, polls, industry resources and thought leadership, industry news, expert publications, and observed behavior changes (such as foot traffic metrics, provided by Gravy Analytics). We also leveraged recent communication by some car dealerships or manufacturers, when relevant, to illustrate the behavior shift. Resources used to identify the behavior shifts were published between May 10, 2020, and May 16, 2020, though supporting information could be from slightly outside this time frame, if still relevant. Consumer surveys may have been fielded prior to May 10, 2020, but were considered relevant if highlighted in a resource published between May 10, 2020, and May 16, 2020, and fielded no earlier than April 2020. Behavior shifts identified did not duplicate previous research. Top and rising topics and queries were sourced from past 7-day Google Trends in the US, related to "car buying."