Positive outlook for retail market as demand remains unaffected by latest announcements
Retailers urged to focus on the opportunities and on providing an exceptional online retailing experience over coming weeks
Despite the introduction of the Government’s Plan B measures last week, according to the latest data from Auto Trader, the automotive retail market remains in strong health. In fact, not only are levels of consumer demand continuing to increase, but the importance consumers are placing on car ownership has reached record levels.
The limited impact the new measures have had on demand is reflected in the ongoing surge in traffic to the Auto Trader marketplace, which last week (6th – 12th December) saw 11.6 million cross platform visits, marking a 20% increase on the same period in 2019. This is further supported by the fact that visits this week (up until 15th December) grew 1.1% on last week, and 23.1% on 2019.
Despite speculation of the impact further restrictions may have on the market, Auto Trader research indicates that high levels of demand will continue, fuelled in part by the growing importance people are placing on car ownership and the need for exclusive access. Out of circa 1,900[1] consumers, Auto Trader found car ownership was important to 95% of those surveyed, which is the highest ever recorded. Most significantly, it has grown over the course of the pandemic, increasing from 89% in March 2021, and 88% in August 2020.
This increased need for ownership is being driven by a number of key factors, not least the desire for freedom and independence which came out as the primary motive for 71% of consumers. This is up from 63% in February 2020. Another important influence is the ongoing anxiety surrounding the use of public transport. Indeed, the research found the desire to avoid using a bus or train has grown from 41% in February 2020 to 45%.
Commenting on the latest data, Auto Trader’s Commercial Director, Ian Plummer, said: “The regular news updates surrounding the growing number of Omicron cases and the possible measures to curb it are concerning, but it’s important to remember that we have been here before. Given the significant objections the Prime Minister faced from his own party, it currently seems unlikely the Government will impose restrictions on non-essential retail. However, even during the third lockdown in Q1 of this year, when forecourts were forced to close, retailers were still reporting robust sales, with average volumes down just 16% on 2019.
“Whilst it is not the end to the year any of us were hoping for, consumer demand for cars remains strong. Based on the record sentiment towards car ownership and the wider positive economic factors at play, we are confident this will continue, even in the face of potential new restrictions. It’s critical therefore, that retailers don’t lose sight of the opportunity to continue to provide a great online experience, and ensure it is as easy and as safe as possible to buy from you.”
To ensure retailers are best placed to benefit from the high levels of consumer demand in the market, Auto Trader recommends retailers focus on three key areas over the coming weeks:
Optimise your business and forecourt to trade online: Familiarise yourself with distance selling regulations, ensuring you’re able to meet the expectations of consumers who are willing to buy online. Make use of technology, whether the benefits of real-time retailing offered by Auto Trader Connect, or simply the added confidence customers have buying remotely by employing Home Delivery and Click & Collect flags, live chat, text, live video walk-arounds, and live vehicle delivery tracking.
Maximise your online opportunity through data: Use data to keep on top of the market, every day, via the tools that enable you to see how the market is performing around you, and specific to your forecourt, including changes in price, supply or demand. Remember it’s currently a seller’s market with strong margins available. With new car stock constraints expected to continue well into 2022, combined with continued high demand, price growth won’t fall any time soon. The average price of a used car is over £20,000 and with prices currently increasing c.28% year-on-year, we’ve seen five years’ worth of pricing growth inside just six months.
Maintain and protect your performance: If you’re not able to sell remotely, protect your local online market against those who are. Maximise your online coverage by having all your stock advertised online, to the best standard and the right price for the market and your business goals. Be aware of the changing car parc due to new car shortages and supply constraints. This is driving a change in buying behaviour amongst consumers and older stock. Don’t be afraid to reflect that change on your forecourt, supported by accurate market data.
[1] Auto Trader Market Tracker, September 2021
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