Topic: industry insights
Before the COVID-19 pandemic hit, car dealers were already facing questions about what the future of the industry would look like. With consumers’ preferences changing and advancements in digital retailing strategies continuing to be made, many have been at least starting to think about tactics like online financing and home delivery. But the current health crisis has accelerated many of these trends, and today’s dealers must adapt to a new normal.
Like most businesses across the country, dealers have been taking more proactive steps to ensure consumers’ safety at the dealership, rearranging showroom layouts to support social distancing, increasing cleaning measures, and more. According to CarGurus COVID-19 Sentiment Study, among current prospective buyers, top expectations for dealer visits to purchase or service a vehicle include:
A recent CarGurus survey of 1,104 car buyers showed that consumer sentiment towards the dealership experience has shifted significantly as a result of COVID-19, with many buyers understandably hesitant to visit dealerships in person anytime soon. To adapt to this sudden shift in shopping behaviour, dealers are adopting new technologies, particularly in three key areas:
Whether it’s due to a vehicle breaking down, a new commute, a growing family, or any number of reasons, a vehicle purchase is essential for many. That’s held true even during the current health crisis: 64% of those planning to buy this year cited the purchase as necessary, according to the CarGurus COVID-19 Sentiment Study in April. However, months later and our follow-up study found that 43% of car buyers aren’t as confident in their ability to afford a vehicle as a result of the pandemic.
With consumers’ dwindling confidence, demand for financing is increasing. Before the pandemic, 40% of car buyers planned to finance their purchase. Now, 51% plan to or have already done so. Additionally, over one-third of those considering financing lost confidence in their ability to get approved (37%) and the financing rate they’d expect (37%).
As consumers emerge from lockdown, change travel plans, and reconsider what mobility will look like in the long-term, vehicles are becoming even more vital to everyday life, according to our latest COVID-19 Sentiment Study in the UK. In fact, more than a third (34%) of those surveyed said they expect to use their car more going forward than before the pandemic.
In the near-term, 38% of respondents say they see their car as an escape or for fun. Additionally, 42% say they expect to use their car for more road trips or longer drives, while 66% of those planning to travel this year say they intend to drive, rather than fly, for at least one trip.
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.
The spread of COVID-19 has wreaked havoc on the UK economy. It’s driven people indoors and pushed businesses to furlough large amounts of their workforce, resulting in a recession. Additionally, the pandemic forced the closure of car dealerships for much of March and all of April, which brought the automotive sector to a near halt.
New vehicle registrations in April alone fell 97%. According to the Society of Motor Manufacturers and Traders (SMMT), only 4,321 new cars were registered in April 2020. That’s the lowest monthly registration number since February 1946 when the UK was undergoing rationing and trying to rebuild after wartime destruction. But despite the steep decline in sales in recent months, it’s not all doom and gloom for dealers.
For those retailers digitally managing leads and tracking attribution, there’s a broad spread of options being employed. Believe it or not, more than a quarter of used car dealers are still using paper-based systems to manage leads. Built around a survey of more than 700 independent and franchised used car dealers and our annual Dealer Council meeting, the second-annual CarGurus One Voice Report examines the lead management challenge and how dealers are coping.
It was nearly impossible to have a conversation about the future of any industry in the UK in 2019 without mentioning Brexit. Despite that big, unknown headwind, UK car dealers are optimistic about 2020.
Built around a survey of more than 700 independent and franchised used car dealers and our annual Dealer Council meeting, the second-annual CarGurus One Voice Report examines the topics set to be key to car retailer performance in 2020.
A test drive is the one thing customers can’t do online, so it’s among the main draws to physical showrooms and potentially your best opportunity to interact with customers in the flesh. The industry-standard loop from and to the dealership is alive and well, but more and more manufacturers have begun offering extended test drives, such as Mercedes, SEAT, and Volvo – often for days at a time.
Longer test drives can be an extremely powerful sales tool if you have the capacity to offer them. We explain the perks and how you can make them work for you.
Electric vehicle residual values are tricky things to predict. Continual advances in the technology and the rapid escalation of new models means second-hand examples can become an unknown quantity and much harder to value than established petrol and diesel equivalents.
For lack of a time-honoured structure, dealers need to make sure they’re buying and selling used EVs for the right money. We explain how you can stay one step ahead of the plug-in pricing game.