As the U.S. economy and auto industry begin to take the first cautious steps toward a recovery from the global pandemic, the team of analysts at Cox Automotive set out to measure how COVID-19 reshaped auto retail in the U.S. Certainly, the immediate impact on auto sales was obvious and severe, with new-vehicle sales off near 70% in highly impacted markets. As the inevitable sales rebound begins, though, Cox Automotive was interested in assessing the medium- and long-term changes the industry will feel in the months and years to come.
Specifically, the “COVID-19 Digital Shopping Study 2.0” was undertaken to gain an understanding of how the global pandemic has impacted vehicle shopping habits, how vehicle consideration has changed, and how luxury shoppers’ purchase decisions differ from non-luxury shoppers.
A total of 1,125 consumers were questioned in late April as part of the study, with roughly half of those questioned (575) in market for a vehicle, most leaning toward new. Key findings include:
- Shoppers are expecting to begin transacting again soon. Once consumers feel safety measures are in place and businesses are open, nearly half would be comfortable buying within 30 days or less. These results are similar to consumer willingness to return to restaurants, and an indication that consumers are willing to return to old ways of doing business. Worth noting: Consumers in the survey indicated they would be far more comfortable with visiting an auto dealership than boarding an airplane once restrictions are lifted.
- With the economy in recession and unemployment elevated, consumers are interested in the “right deal”. Price incentives and low-to-no APR are still the leading offers that can trigger a shopper to move forward who may have been delaying their purchase. The study finds nearly half of consumers have reconsidered their price point for a new vehicle, and consumers are also looking to lower their down payments on a new vehicle purchase.
- While heavy incentives may lead shoppers to consider a different automotive brand and some buyers are showing flexibility on vehicle type, nearly 70% of those in market are not changing their mindset when it comes to vehicle segments. One exception: The onset of COVID-19 and resulting stay-at-home orders have increased interest in electric vehicles. Consumers interested in EVs before COVID-19 are now even more interested. This is particularly true with luxury buyers.
- A vast majority of consumers now expect OEMs and dealers to provide additional services and information through virtual shopping tools. Consumers now want to do more online, with 2-in-3 more likely to purchase a vehicle completely online. Worth noting though: About 1/3 of consumers still prefer to negotiate the deal in person. This group, which is predominately Baby Boomers and truck buyers, enjoys the face-to-face purchase process or believes a better deal will be struck across a table, with a handshake.
Vanessa Ton, senior Industry Intelligence manager at Cox Automotive notes, “What this study shows is that, coming out of the economic shutdown caused by COVID-19, vehicle buyers in general will likely be more focused on price, monthly payments and cost of ownership. And while we will not see a major shift in WHAT consumers are buying, we will see a shift in HOW consumers buy vehicles.”
Since COVID-19 hit the market, Cox Automotive’s online shopping sites, Autotrader.com and KBB.com, have seen strong upticks in shopping traffic. The team has experienced record-breaking traffic on weekends, likely as shoppers spend time online instead of on dealership lots. Vehicle description page (VDP) views are up relative to overall traffic, and the volume of online chats and text messages sent to dealerships via the shopping websites has increased 150%. Importantly, on Autotrader.com, the volume of digital retailing “deal sends” – when a customer makes an online offer – is up more than three-fold year over year. In all, these data points show how online shopping activity has accelerated during the global pandemic.
If you have questions about the study or would like to speak to one of the Cox Automotive experts behind the work, contact the Cox Automotive Public Relations team.