It’s no secret that the COVID-19 lockdown has hit the automotive industry hard. UK dealerships were closed for just over two months in an attempt to curb the spread of COVID-19. Typically, hundreds of thousands of used and new vehicles would have been sold during this time period.
Instead, what we’ve seen is the creation of pent-up demand from consumers who wanted to purchase a vehicle but could not do so in March and April. However, although UK leads submitted to dealers hit a low in March and fluctuate day to day, they’ve been on the rise overall ever since. This lift in leads tallies with the results of our COVID-19 Sentiment Study, which found that 87% of respondents expect to purchase a car later than they initially planned. Even more significant, only 4% of those planning to buy this year have delayed their plans indefinitely. In other words, sales will still happen this year—just a bit later than expected.
Lift in leads as dealers reopened
Looking in more detail at CarGurus UK lead volume, May is when we first started to see early indicators of market activity returning just ahead of dealers getting back to business. The data suggests that many consumers were simply waiting for dealerships to reopen so they could resume their buying journey. Even more important for dealers, UK lead submissions have continued to increase now that dealerships have reopened.
When comparing the total UK leads submitted via CarGurus UK for the week of May 25 to the week of June 1, there was a 12.7% increase. This shows that although leads were already trending upward, the reopening of dealerships provided a much-needed, additional spark in the market.
Not all price buckets are increasing at the same rate
Recessions have unique effects on consumers in different economic groups. For example, consumers who tend to be hit hardest by a recession are also the people who are more price sensitive. That’s almost certainly why the growth rate in the cheapest price bracket (vehicles costing £0 to £9,999) has been slower than the two price brackets above it.
While the sample size for the higher tier price buckets is smaller, there are significant increases particularly for vehicles costing more than £50,000. For these vehicles, leads have grown 44% between the week of May 25 and June 1.
While each price bucket is increasing at different paces, it’s important to remember that the largest share of consumers is searching for vehicles in the £0 to £9,999 price bucket—and the fewest number of consumers falls in the £50,000-vehicle price bucket. And so, even though the growth rate of leads for the lowest priced vehicles is only about 8%, this is actually quite substantial given the high number of people shopping in this segment.
Buyers will be back in June
With showrooms reopening, albeit, under new guidelines around social distancing, dealers should expect an influx of consumer traffic. Many will be the buyers who wanted to make a purchase but couldn’t because showrooms have been closed. Others will likely be consumers who come to market now looking for a good deal having read stories about how dealers need to move inventory. There will be a mix of both, but the point is that there will be lots of selling opportunities for dealers in June.
In the meantime, the best things to do are to make sure it’s clear to buyers that you’re back to business and ramp up your dealership’s marketing efforts again. Additionally, it’d be wise to focus on mastering digital retailing, which is likely here to stay and will lead to more sales in the long term.