Buyers have taken to the online shopping experience for new vehicles in impressive numbers, meaning the retail experience is going to change.
Clearly the pandemic has changed the world as we know it and in the auto industry some executives have noted the changes are likely to have long-term ramifications, especially when it comes to sales — and now there’s hard evidence to support that notion.
A new report from Urban Science and The Harris Poll showing 61% of consumers agree that the entire vehicle purchase process will change forever due to COVID-19, especially the online experience.
More than three-quarters, 78%, see some benefit to shopping for a new vehicle entirely online versus in-person, with 38% citing less pressure from salespeople as a primary benefit. Additionally, respondents cited the convenience (37%) and safety (32%) of not having to leave the home.
(Thousands of auto dealership jobs likely to fall victim to pandemic.)
However, despite those factors, there are few wholesale converts to internet purchases, as 93% expressed some concern with an entirely online new vehicle purchase process.
Shopping for a new vehicle online offers plenty of convenience for buyers.
“It’s important to note that one-third of consumers (36%) agree that there is no reason to ever visit a car dealership again,” said Simon Bradley, Global Practice director, Network at Urban Science.
“While this sentiment could change as we return back to normal, this potentially indicates alternative retail formats may play a role in changing consumer sentiment. The provision of safe, trusted locations to interact with vehicles of interest and the opportunity to have questions answered from a neutral brand representative could help motivate consumers.”
However, the process may already be in motion for many car companies. Mark LaNeve, head of sales, service and marketing for Ford, who told TheDetroitBureau.com that the shift to online car buying is at least three years ahead of where he otherwise expected it to be.
(Toyota sees retail market bouncing back fast, but warns there could be “lumps” ahead.)
Many dealers have been forced to bolster their online sales processes during the pandemic. The increasing popularity of internet sales – which has been stuck in neutral for more than a decade due to a variety of reasons including the reticence of dealers to participate fully – could end up cutting down on the number of salespeople needed at dealerships.
The traditional car buying experience will still be available to those who are more comfortable with it, but the internet will reduce those numbers.
“Consumers really like the experience of shopping online,” Michelle Krebs, an analyst with Cox Automotive, said during a mid-year update on the U.S. auto industry. “We believe they will expect to stay with this way of doing business, and may even be willing to pay a little more.”
However, in the near term, the motivation to avoid dealerships is more pragmatic as 71% said they would limit the number of dealerships they visited if they were purchasing a new vehicle right now due to health and safety concerns.
In the long term, a quarter of adults think fewer people will do in-person test drives before buying/leasing (27%) and that more people will be willing to use virtual or augmented reality to experience a vehicle (25%) with nearly one-third (31%) believing sales departments will do more mobile visits to customers’ homes — processes already taking place.
(Automakers continue to delay product launches in wake of pandemic.)
“It’s very clear that trust will be earned in new ways, and that a number of the adaptations the public has made during the pandemic are here to stay,” said Wendy Salomon, managing director, Corporate Strategy at The Harris Poll. “In automotive and elsewhere, companies must seek new, unique sources of value that build on the recalibrations we’re seeing.”