The latest edition of the Auto Trader Market Report reveals what the increase in demand for digital car buying means for retailers
According to the latest edition of the Auto Trader Market Report, consumer sentiment towards digital retailing has been accelerated by COVID-19, offering retailers a huge opportunity to enhance the car buying experience, and in turn, accelerate sales.
In a nationally representative study of 1,500[i] car buyers, the number of consumers who’d consider buying a car completely online has increased to 41%, up from 37% in August 2019. But online car buying is still very much nascent for now in the UK, and this level of interest increased to 61% once car buyers had been given a tangible example of how digital retailing could help improve their buying experience.
It’s a small but meaningful change to attitudes towards digital car retailing, which is further illustrated by the trends observed on the Auto Trader marketplace. Despite the challenges in the UK car market, there’s been a significant increase in consumers using Auto Trader, with the average number of monthly visitors consistently reaching over 20%[ii] year-on-year (YoY) every month following the end of the first lockdown in June. And with over 50%[iii] of buyers recently stating they’re open to home delivery or click & collect services, it’s evident the traditional car buying model is evolving quickly.
The Report found that most consumers would prefer to complete many of the tasks necessary to buy a car away from the showroom, either with some or no human interaction. In addition to the more mundane jobs, such as sourcing insurance quotes (77%) and checking availability (69%), when asked what jobs they’d like to manage remotely, many identified more complex tasks, including exploring car finance (66%), arranging delivery / collection of a car (53%) and agreeing on the price (45%).
Many car buyers already engage with certain necessary tasks online, such as checking the various features available (46%), the running costs (45%), and the type of car they need (42%). However, the research highlighted that consumers would be willing to do more of the buying journey online if they knew jobs were available to complete digitally: over a third of those surveyed said they’d like to get a part exchange value (33%)[iv]; understand the total cost of ownership (36%); negotiate on price (35%); and to organise finance (32%) from the comfort and safety of their home.
Whilst many key tasks can be completed online, the Report’s findings show the opportunity in making some of these important jobs easier for consumers to manage digitally. For example, 41% of those surveyed said they found confirming the part exchange value online either difficult or very difficult to complete, whilst 43% said the same for checking finance.
Barriers to buying online are falling while drivers grow
Despite these perceived difficulties, consumer perception of the barriers to digital car buying have decreased. Indeed, the number of consumers needing to check the condition of the car prior to purchase (from 57% to 54%); concerns around how it will drive (from 54% to 50%); and nervousness on making a large purchase without seeing it in person (from 49% to 46%) have all declined since August last year.
Conversely, interest in the drivers to buy online have increased over the same period, particularly around ease, speed, trust and transparency. 46% of people surveyed want to buy online for convenience; whilst 35% of people want to buy online to get the car quicker; 33% because they think it’s easier to compare available deals; and 23% would want to buy online to avoid haggling.
Commenting on the opportunities for retailers, Nathan Coe, Auto Trader’s Chief Executive Officer, said:
“It’s clear there is a meaningful shift in sentiment towards digital retailing. We believe it represents an exciting opportunity for the industry to significantly improve the consumer experience, and in turn accelerate the buying process. If today’s buying cycle could be increased by just 10%, it would lead to circa one million more car sales a year, which would make a significant contribution to the industry’s post COVID recovery. We’re committed to providing the tools and intelligence every one of our retailer partners need to make a successful and profitable transition to digital retailing.”
People who have bought online recently identified clear benefits, including the ease of access to information, a broad choice of cars, and being able to complete jobs in their own time. However, they also identified numerous pain points, such as having to sift through irrelevant content, inconsistences across websites, and a general sense of mistrust in the process, with a concern around who’d be accountable if something went wrong.
Whilst the sentiment for digital retailing is increasing, the Report highlights the vital role retailers continue to play in the car buying journey, with many consumers still wanting and enjoying the dealership experience, especially the more emotional tasks, such as viewing the car in person (47%); browsing the showroom (41%); collecting the vehicle once purchased (36%); and discussing their individual needs with the retailer (23%).
Clearly, not all car buyers are looking for the same journey, but rather their own personalised experience which suits their needs; some will want to complete certain aspects of the process digitally, others will prefer to manage them in person, whilst some will want to complete the whole process in the dealership. To succeed in this fast-evolving landscape, retailers will need to integrate digital touch points across their processes so that the car buyer can dip in and out of online and offline seamlessly, whilst addressing the core needs of buyers, including trust in the car, the price, the process, and in the retailer themselves.
Supporting the transition to digital retail
To enable retailers to meet consumers’ growing digital expectations, Auto Trader has launched a series of products designed to make the car buying journey more efficient, hand helping retailers create a blended buying experience. The recently launched Buy Online hub enables car buyers to search for over 350,000 vehicles currently available to buy via Click & Collect, and / or Home Delivery on Auto Trader. In just over a week, circa 9,000 retailers have listed their stock available through these buy online channels.
And in January, Auto Trader is set to roll out its Guaranteed Part Exchange (GPX) tool, which will provide retailers with better qualified buyers and a more profitable route to sourcing stock, whilst offering consumers a guaranteed part-exchange price for their current vehicle, underwritten by Manheim Auction Services. GPX marks an important step in Auto Trader’s journey to digital retailing and ensuring all of its retailer partners are able to compete online.
The Market Report can be read in full, here.
[i] Auto Trader Digital Retailing research conducted by Join the Dots, August 2020
[ii] Auto Trader internal data
[iii] On site survey of 1,000 in market consumers, 4th November 2020
[iv] Auto Trader Car Buyers Tracker, August 2020