Trends in Automotive Purchasing Behaviors

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Trends in Automotive Purchasing Behaviors

Sales of luxury vehicles in Canada have been on the rise for the last decade, as the net sales volume of such has approximately doubled in that time span (compared to the paltry 20% growth of all vehicle sales in Canada in that same time period) and luxury vehicles attained a 12.1% share of the Canadian automotive market in 2018. Four major trends in luxury automotive purchasing behaviors in Canada are (1) a strong preference for luxury SUVs instead of cars, (2) the popularity of leasing luxury vehicles, (3) the dominance of Mercedes, BMW, and Lexus with regard to top luxury vehicle sales, and (4) Gen X's keen interest in large luxury vehicles. One major trend in general automotive purchasing behaviors in Canada is the widespread use of online vehicle research before buying a vehicle.

Findings

A. Four Major Trends in Luxury Automotive Purchasing Behaviors in Canada

1. Luxury SUVs, Not Cars

  • The first major trend in luxury vehicle purchasing behaviors in Canada is the strong preference for luxury SUVs instead of cars.
  • Of the ten luxury vehicles with the most sales in Canada in 2018, eight were some type of SUV while only two were cars.
  • This trend is affecting the consumer journey by fueling the production of more luxury SUVs, as the manufacturers can clearly see that those are the luxury vehicles that Canadian consumers want.
  • Examples of companies that have successfully implemented/capitalized on this trend include Audi (top-selling luxury vehicle thus far in 2019), Mercedes-Benz, Acura, Lexus, and BMW.

2. Gen Xers Like Large, Luxury Vehicles

  • The second major trend in luxury vehicle purchasing behaviors in Canada involves Gen X's purchases of large, luxury vehicles.
  • Research studies have found "that when Gen-Xers get their first steady job, they’re actually leasing luxury cars."
  • In fact, Gen-Xers are choosing "larger luxury cars, trucks and SUVs" despite the fact that many "say they're green" with respect to the environment.
  • This trend is affecting the consumer journey by resulting in more leased luxury vehicles, as doing so is common among Gen X consumers in Canada, and resulting in fewer "green" vehicle choices among this generation.
  • Examples of companies that have successfully implemented/capitalized on this trend include BMW, Mercedes-Benz, and Lexus.

3: Leasing luxury

  • The third major trend in luxury vehicle purchasing behaviors in Canada is the rising popularity of leasing luxury vehicles.
  • Leasing luxury vehicles used to be quite popular in Canada, as such accounted for about 50% of all vehicle purchases back in 2007. However, that percentage collapses in 2009 to below 10%. As of 2018, leases have rebounded nicely to about 30% of vehicle purchases and luxury vehicles "account[] for a good portion of that" (exact value not provided by the source).
  • This trend is affecting the consumer journey by leading Canadian consumers to focus on how much money the vehicle will cost them each month instead of the total vehicle price. Accordingly, the price of an otherwise expensive luxury vehicle can be made far more affordable and thus appeal to a wider cross-segment of the market. Leasing luxury vehicles is also a popular decision among Canadian Gen-Xers, as many of them choose to do so when getting a vehicle.
  • Examples of companies that have successfully implemented/capitalized on this trend include BMW, Lexus, Infiniti, Audi, Mercedes-Benz, and Acura.

4. Mercedes-Benz, BMW, and Lexus Dominate The Luxury Segment

  • The fourth major trend in luxury vehicle purchasing behaviors in Canada is the dominance of Mercedes-Benz, BMW, and Lexus with regard to the most-popular luxury vehicles.
  • Of the ten luxury vehicles with the most 2019 sales (thus far) in Canada, three are made by Mercedes-Benz, three are made by BMW, and two are made by Lexus. Accordingly, those three brands hold an 80% share of the top-ten luxury vehicle sales in Canada thus far in 2019 (3 + 3 + 2 = 8; 8/10 = 80%).
  • One way that this trend is affecting the consumer journey is through the production of more affordable luxury vehicles. For example, both the Mercedes B-Class and the BMW 2 Series have sticker prices below $40,000. As a result of those lower prices, more consumers are able to buy or lease those vehicles.
  • With regard to luxury-vehicle-market domination, Mercedes-Benz, BMW, and Lexus are companies that have successfully implemented/capitalized on this trend. Of those, Mercedes-Benz and BMW have received attention for their production of lower-cost luxury vehicles.

B. One Major Trend in Overall Automotive Purchasing Behaviors in Canada

1. The Online Effect

  • One major trend in overall automotive purchasing behaviors in Canada is the widespread use of online vehicle research before vehicles are bought or even seen at the dealership (when applicable).
  • A comprehensive research study found that 27% "of Canadians would consider fully purchasing a vehicle online" without ever visiting a dealership. That same study also found that the first tool that consumers utilize for conducting vehicle research is a dealership's website, as 23% begin their research journey there.
  • Age also factors into the willingness to purchase a vehicle online. Thirty-six percent of Canadians between the ages of 18 and 34 said they would "consider fully purchasing a car online," while 33% of Canadians between the ages of 34 and 54 reported the same, and trailed significantly by the 11% of Canadians ages 55 and over who were willing to consider doing so.
  • This trend is affecting the consumer journey by resulting in fewer visits to dealerships among consumers. However, for those consumers that do visit a dealership, the consumer journey is also being impacted by car sales representatives having conversations with consumers about those vehicles "at a very educated level" because those representatives assume that consumers have done plenty of research before arriving at the dealership.
  • Examples of companies that have successfully implemented/capitalized on this trend include Car Nation Canada, Car Canada, and Ford, among many others.

Your Research Team Applied the Following Strategy:

We began our research by looking exclusively for information about major luxury vehicle purchasing behavior trends in Canada. We reviewed a vast quantity of articles published by a wide array of media and industry sources ranging from Ipsos market research to Auto News. Ultimately, we were able to find four major purchasing behavior trends specific to luxury vehicles in Canada. To find one additional trend, we expanded the scope of our research to encompass purchasing behavior trends pertaining to overall vehicle purchases in Canada (not just luxury vehicles), which we were able to find through the same research approach we used for luxury vehicles. We categorized the above as "major trends" in automotive purchasing behaviors in Canada based upon the supporting data/information provided about them in the articles we consulted (that information is summarized above), which demonstrates the significant reach of those trends in Canada. Lastly, all of our research findings pertain solely to Canada, which we ensured by using Canadian sources and/or sources referencing information specific to Canada.
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