Since April 19th, Deloitte has conducted the State of the Consumer Survey bi-weekly to analyze how the public perceives the effect of the global health crisis on their lives. Initially, the April survey identified that most areas of the world had increasing anxiety, save for Netherlands, South Korea, and Germany. China was virtually neutral.
Over the past weeks, the tide has turned. As of the June 13th survey, most nations have seen confidence grow in leaps and bounds. Aside from India, Chile, and Mexico, anxiety scores are either abundantly positive, cautiously optimistic, or neutral. Germany, Netherlands, and Japan lead the way in confidence.
Drilling down to local information, the respondents in the United States tended to disagree with the question, “I’m more anxious than I was last week”. As an ‘anxiety score’, as Deloitte calls it, the US is reported at a -6 percent. It shows that consumers are feeling less unsure of the economic impacts from COVID-19 than they have over the past two months.
Key Concerns Trend Positively
Health concerns have been waning among Americans, according to the latest June survey. Survey responses show a 46 percent decrease in concerns about an individual’s physical well-being, and familial health concerns have dropped by 55 percent.
Financial concerns are also trending well. For the question, “I’m concerned about making upcoming payments”, 21 percent fewer responses agreed.
For dealerships, one question that bodes very well is how people responded when asked if they agree or disagree with the statement, “I’m delaying large purchases”. 37 percent fewer people agreed with that statement.
Momentum Still Needed
Consumer confidence is growing, according to the Deloitte data in their bi-weekly survey, but there’s still plenty of ground to make up. Buying intent for automotive is still suppressed by 6 percent. Other notable responses in the survey show that online purchasing has become less important for 21 percent of those surveyed, fewer people opine that owning a vehicle is valuable to them.
On strong recovery efforts from OEMs that included steep cuts to cash pricing and 84-month no-interest terms, plus as much as 6 months no payments, the auto retail industry saw a surprising bounce back from devastating March and April numbers. Those incentives have been retracted somewhat, and it’s quite possible that reported sales on new vehicles will plateau.
Ideally, OEMs would continue with aggressive incentives until new car sales recover to pre-pandemic levels. Used car sales have already recovered to nearly the same level as pre-pandemic.
How Does This Apply to Dealerships?
There are two main points that dealers can glean from the Deloitte State of the Consumer Survey currently.
- Customers are ready to purchase. The anxiety customers felt previously about the economy that spurred them to withdraw from major purchases like homes and vehicles is dissipating. Credit is readily accessible, and shoppers are trending toward engaging in those large purchases once again. Actively advertise in your community to draw attention to your dealership.
- Disappearing incentives will dampen spirits slightly. Compared with the ultra-aggressive incentives through April and May, dealers will be tested in their selling abilities as manufacturers pull back on steep discounts. Dealers may need to cut into the front-end profits heavily to move metal.
The Deloitte survey will be released again in two weeks’ time and we will compare data with these findings.
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