According to the Wall Street Journal, most automakers reported declines in sales during this year’s second quarter. The numbers may look bleak, and these sales decreases may be the norm for the rest of 2020. Nevertheless, these numbers don’t tell the whole story about what is happening with potential car buyers. While some may not be in the position to purchase vehicles—especially new ones— that doesn’t mean consumer sentiment has waned.
In April, CarGurus surveyed a little under 800 potential car buyers about how they felt about purchasing cars this year amid COVID-19. Unlike 2008 and 2009, when much of the decline in sales had as much to do with distrust toward automakers as financial limitations, things are different this time around.
What are consumer sentiments toward buying cars? Are sales lagging for reasons beside COVID-19? Keep reading for our takeaways from the CarGurus survey.
The Delays Aren’t Permanent
It may be tempting to think that the purchasing delays will last throughout 2020 and into 2021. However, data from CarGurus shows that the lag in sales is likely only temporary. According to the survey, only two percent said they planned to hold off on purchases indefinitely. Additionally, between April and June, there was a 10 percent difference in the number of potential car buyers who said they were still delaying their car purchases.
Much of the delay is a result of an unsteady economy and if dealers can ensure a safe buying process. However, one of the critical factors was how brands responded to managing the COVID-19 crisis. The data showed a strong link between a car shopper’s perception of the brand’s response and whether they would consider buying from the automaker. Therefore, if you are waiting for consumers to return, be sure to acknowledge their safety concerns, and discuss how you are handling the pandemic in your marketing messaging.
The Focus Will Likely Switch From New to Used Vehicles
With new vehicle prices consistently rising, and the impact of COVID-19 on the economy, many are not sure they can afford a vehicle—much less a new one. The study revealed that 48 percent of car buyers are less confident in purchasing a car due to COVID-19.
As a result, 60 percent planned to pursue financing options. However, some may not be able to finance higher-priced new vehicles. Since used cars are expected to see price decreases between five to eight percent within the next two quarters, car buyers may drift away from newer vehicle models.
Dealers Have to Be Transparent About Keeping Customers Safe
Car buyers are expecting a change in how dealers operate regarding safety protocols, and they also want to know about it. Sixty percent of respondents wanted transparency about the steps that dealers are making to address cleanliness. However, their concerns aren’t just about face masks and wiping down surfaces; car shoppers want to see a complete change in how the purchasing process happens.
Sixty-one percent want contactless shopping options: at-home test drives, virtual appointments, and home delivery. On the other hand, there is a growing number of buyers who wish to conduct the entire purchasing process online (60 percent). Again, much like the delay in purchasing, these numbers could diminish, especially if a vaccine is produced within the next six months. However, it would help dealers to be flexible and offer contactless purchasing options while being clear about how they are following safety and cleanliness protocols.
For Dealers, Geography Plays a Pivotal Part in Consumer Sentiment
One of the more interesting—but expected—insights was a look into the buying behavior of rural, suburban, and urban car shoppers. Rural shoppers are less likely to delay car purchases, and half are open to still visiting the showroom. Alternatively, the majority of suburban and urban customers are willing to conduct the purchasing process online.
However, there is another crucial note regarding urban customers. These individuals are much more likely to turn to another form of transportation to get to their destination. It all comes down to the options that urban and even some suburban car shoppers have regarding transportation. These groups can turn to ridesharing or even public transport, whereas rural customers don’t have the same options.
The goal for your dealership is to develop brand messaging that speaks to what is important to each of your target audiences. This step includes taking their geographic location into account. Different motivations are driving urban, suburban, and rural customers. Determining what these motivations are and developing messaging to address them will help you reach them.
COVID-19 is Altering the Way Americans are Viewing Their Cars
Even amid the fears and financial limitations associated with COVID-19, people still want to purchase cars. In fact, data from the study revealed that 33 percent of respondents expect to use their vehicle more going forward than before the pandemic. Much of this is due to fears associated with ridesharing, and the desire to use cars for vacation and travel.
It can be disheartening to see the lag in sales, but it helps to know the narrative behind the numbers. As vaccines are developed and states gradually reopen, it looks as if consumers will be ready to pick up where they left off.
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This has been a JBF Business Media production.