Study Finds Luxury Buyers Take Their Time, Do Parts of the Deal Online, Are More Satisfied

Luxury vehicle sales in Q1 2019 rose 1% while total U.S. sales dipped 3%, in line with Cox Automotive’s expectations for the full year. Q1 sales and share of midsize and compact luxury utilities rose while luxury full-size utilities held steady. Average transaction prices were higher in all luxury utility categories. Meanwhile, sales and transaction prices for luxury cars in all categories dropped.

Affordability is ranked fifth for its importance to consumers buying luxury vehicles and third for non-luxury buyers, according to the latest Kelley Blue Book Brand Watch™. Despite a strong economy and stock market, like non-luxury buyers, luxury buyers increasingly seek value as buying conditions worsen, the threat of tariffs hang in the balance and consumer confidence weakens.

In the 2019 Car Buyer Journey Study, Cox Automotive surveyed over 3,000 consumers – of which 411 purchased a luxury new vehicle within the last 12 months and used the internet at some point during that process. When we analyzed significant differences in the shopping behaviors between luxury new-vehicle buyers and non-luxury new-vehicle buyers, a few trends emerged.

1. Luxury Buyers Driven by Emotion 

According to the 2019 Car Buyer Journey Study, luxury new-vehicle buyers are more driven by emotional triggers than needing a vehicle. While non-luxury buyers tend to be split between entering the market out of need or want, luxury buyers are less likely to wait until the need arises before deciding it is time to buy a new vehicle. Of luxury buyers, 62% say they are in market because they want a new vehicle, which is significantly higher than the 49% of non-luxury buyers saying they are driven by want.

In fact, when we look at purchase triggers for luxury buyers the No. 1 trigger is that they found a car they couldn’t resist, cited by 28% of luxury buyers as the reason they decided to purchase another vehicle. Other leading triggers are an expired lease (26% vs. 12% non-luxury) and a change in finances (21% vs. 12% non-luxury).

2. Buyers of Luxury Vehicles Spend More Time in Market but Not Shopping

Buyers who wait to purchase a vehicle when the need arises tend to fast track the process. Luxury buyers, on the other hand, are in market largely because they want to be, so they can take their time and not rush the process. While the average non-luxury new-vehicle buyer takes approximately three months from start to finish, the average luxury new-vehicle buyer takes about four months.

In addition, while nearly half of non-luxury buyers are purchasing within one month or less, only 33% of luxury buyers purchase within that timeframe.

However, do not expect that more time in market equals more time spent shopping. Luxury and non-luxury buyers spend exactly the same amount of time researching and shopping for their next vehicle – an average of 13 hours and 6 minutes. And while we do not have sufficient base size historically to trend this figure among luxury buyers, it is safe to assume that it has probably dropped over the last two years. When we look at new-vehicle buyers overall, this group has shaved nearly 45 minutes off their shopping time since 2017. 

3. Luxury Buyers More Likely to Complete Deal Steps Online, Leading to Higher Satisfaction

So, what are luxury buyers doing when they are shopping online? For both luxury and non-luxury buyers, we see that they visit close to four websites on average. The significant difference is that luxury buyers are more likely than non-luxury buyers to leverage digital tools for completing some steps of the purchase process online prior to their dealership visit. These steps include financing, negotiating, finalizing the price, selecting F&I, and signing paperwork – all things related to the deal. This enables luxury buyers to spend more time on what makes them satisfied. First, luxury buyers are spending significantly less time at the dealership – an average of 2 hours and 40 minutes compared to the 3 hours spent by non-luxury buyers. Second, we found that 60% of their time is spent focused on the vehicle – either browsing the lot, test driving or setting up the technology – with 40% spent on the deal – negotiating and signing paperwork.

In our 2019 Car Buyer Journey Study, we asked buyers to rate their satisfaction with various aspects of the dealership experience. The length of time buyers spend at the dealership continues to be rated the lowest in satisfaction. However, satisfaction with time spent is significantly higher among luxury buyers than non-luxury buyers – 61% satisfied versus just 49%.

For related information, read the luxury segment findings from the Q1 Kelley Blue Book Brand Watch, a consumer perception survey.