Customer Car Purchasing Journey
In 2016, the Americans auto loan market size was $564.6 billion. With no signs of slowing, the auto loan industry jumped to $568.6 billion by the end of 2017. Therefore, family income plays a major role in deciding to apply for car loans. About 44.6% of families with lower income (less than $40,000) don't apply for car loans to finance their vehicle purchase.
Customer Car Purchasing Journey: Overview
"In the United States, vehicle sales are slowing down. Consumers are holding onto their cars for longer and buying less often—an average of 6.5 years today compared to 4.3 years just a decade ago."
According to research from Google, the most important phases in the customer car purchasing journey are:
- “Which-car-is-best-for-me”: At the beginning, they ask family members and friends for advice and look into "trusted automotive industry portals for vehicle information."
- “Is-it-right-for-me”: Then, they "read information on car company websites, check out video clips that demo vehicle features and options, and watch online test drive videos."
- “Can-I-afford it”: They look for price comparison and financing options in order to find the trade-in value of their owned car.
- “Where-should-I buy it.” According to Google, shoppers prefer dealerships that are near their location trying to find the dealership which will deliver the best experience.
- “Am-I-getting-a-deal”: After deciding what to buy, they will visit one to two dealerships to complete the purchase. Also, "they’re using their smartphones to confirm if they’re getting the best price."
In 2016, the Americans auto loan market size was $564.6 billion. With no signs of slowing, the auto loan industry jumped to $568.6 billion by the end of 2017.
About 73% of consumers in the United States get car loans at the dealership while only 5% of them apply for car loans online in 2018. Therefore, it is estimated that 29% of consumers are planning to get their car loans online in the next years. In 2019, online car purchase financing increased by 8% to reach 13% of the car loans industry while 63% of the consumers get their car loans at the dealership.
Approximately two-thirds of the consumers in the United States took out a car loan to finance new or used cars' purchase. Half of these car loans were taken out from directly the dealership/purchase location while about 47% were taken from a credit union, a bank, or an internet lender.
Family income plays a major role in deciding to apply for car loans. About 44.6% of families with lower income (less than $40,000) don't apply for car loans to finance their vehicle purchase. On the other side, lower-income families who apply for car loans prefer taking it from a credit union, a bank, or an internet lender (28.5%).
Additionally, families with $40,000-$100,000 income are getting loans directly from the dealership:
- Don't apply for loans: 28.9%
- At the dealership: 36.2%
- A credit union, a bank, or an internet lender: 33%
Further, higher-income families (more than $100,000) are also getting loans directly at the dealership/seller:
"Mobile app is biggest driver of satisfaction when customers experience all five aspects of the auto loan process: Overall, 23% of auto loan customers indicate completing a loan application digitally (website or mobile app)." About 47% of car loans' customers shopped online prior to a dealership visit. Within these customers, 42% prefer choosing an indirect financing option (through their dealer) and 12% prefer direct financing offered by a financial institution.
Customers Mindset and Behaviors
"The automotive consumer journey is one of the most complex of all industries. Although customers still purchase their vehicles at dealerships, most of the decision-making and influential moments happen beforehand online." Customers are purchasing from dealerships "where they have previous experience" with fewer visits to multiple dealerships. In addition, 51% of customers looking for a new car in the United States are women.
When researching, video research is the most effective and popular type of research. Customers are looking for features, test drives, and car options on YouTube. Therefore, 70% of customers who used video search before their car purchase were influenced by video content.
Also, they don't focus only on auto brands websites, but they check comparison websites for reviews and price comparison. Thus, 56% of new purchases "start at a third-party site and end up at a dealer website."
More than 50% of car buyers use a mobile device in their car purchasing journey. According to research conducted by Weve Automotive, the mobile journey starts with:
- Awareness: 57% start with a mobile search for car inspiration.
- Consideration: 59% look for compared prices/specifications comparison on mobile device.
- Intent: 61% search for nearby dealerships on mobile.
- Purchase: 9% purchase a new car on a mobile device.
- Loyalty: "9% explored aftersales on their mobile."
Car Purchasing Barriers
The main barrier that most buyers are facing is price. In the second place, comes reliability as customers want their vehicle to serve them for several years without troubles.
Male customers worry more about performance while about only 40% of female customers worry about their new or used car's engine performance. Also, "fuel consumption is becoming increasingly important, and stands in third place when looking at the main concerns of buyers."
Car Purchase Triggers
Shoppers’ purchase triggers affect the car purchasing journey and process. The main triggers are life stage change (new job, move to suburbs, new baby, kids going to college), car milestone (upcoming maintenance, out of warranty, lease over), out one car (there is an accident, car breaks), routine upgrade (for example buy next car every 2-3 years), and pure desire (no reasons, they just want a new car).
Purchase trigger by income:
Current vehicle milestone will occur: About 31% of customers earning more than $75,000 purchase because of a routine upgrade, and about 28% purchase because of a vehicle milestone. Meanwhile, only 18% of customers earning less than $75,000 purchase because of a vehicle milestone. Customers earning less than $75,000 are "more likely to purchase due to a life change" (19%) or being “out” a vehicle (24%).
Purchase trigger by age group:
- 18-34: Purchase due to a life stage change (30%) or being out a vehicle (23%).
- 35-54: Purchase due to current vehicle milestone (25%) or routine upgrade (20%).
- 55 and more: Purchase due to current vehicle milestone (26%) or routine upgrade (27%).