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Car Buyer of the Future M A R C H 2 0 1 5

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About this Study

June 2014 October 2014

8 LEAD USER ETHNOGRAPHIES

FOCUS GROUPS WITH 40 NEW AND USED CAR BUYERS

4 EXPERT INTERVIEWS

QUANTITATIVE SURVEYS AMONG 4002 VEHICLE BUYERS AND INTENDERS

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Consumers want change in the car buying process

4

Only 17/4002

consumers like the

process as it is today

Base: Total (4,002)

B1. For each vehicle buying phase below, please pick your most preferred idea.

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BUT, there are myths about what car buying will look like in the future

6

Salespeople will have a LESS important role 1

7

84% want to buy the

vehicle in person

Consumers actually prefer to buy vehicles

IN PERSON

Base: Total (4,002)

AP3. For each of the following steps of the vehicle buying process, how strongly do you prefer to complete the step online versus in person?

8

Buying a car online would be a

little weird. I think losing that

personal touch would be a

bad thing. It’s kind of like a

little bit of reassurance. That

just seems really, really

impersonal.

– Car Buyer

“ “

Source: Lead User Ethnography

9

Despite misperceptions, FEMALES prefer to buy in person

Prefer to Buy Online Prefer to Buy In Person

15% 85% Base: Females (2398) AP3. For each of the following steps of the vehicle buying process, how strongly do you prefer to complete the step online versus in person?

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Dealerships are not

JUST for transactions

Base: Total (4,002)

AP1. Different people have different shopping preferences when it comes to buying a vehicle. Please read the following statements and tell us

which describes you better. If you’re not sure, use your best judgment. “A dealership is a place where I go to learn about vehicles.”

go to the dealership to LEARN about

vehicles

43%

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Young Millennials are more likely to rely on the dealership

Base: Total (4,002)

AP1. Different people have different shopping preferences when it comes to buying a vehicle. Please read the following statements and tell us which describes you better.

If you’re not sure, use your best judgment.

48% 40% Young Millennials: Older Millennials:

Go to the dealership …to learn:

Base: Young Millennials (359); Older Millennials (1163) AP1. Different people have different shopping preferences when it comes to buying a vehicle. Please read the following statements and tell us which describes you better.

If you’re not sure, use your best judgment. “A dealership is a place where I go to learn about vehicles.”

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Base: Total (4,002)

D1. When you visit a dealership, which of the following activities do you want to do most?

Ask the salesperson detailed questions

about vehicles

Learn about special deals and offers

Learn about warranty and service options

Hear my financing offers

Have a dealership employee explain the

process/paperwork to me

Consult with the salesperson about which

vehicle is best for me

58%

54%

44%

40%

31%

21%

At the dealership, consumers want to:

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Consumers DON’T want to negotiate 2

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56% prefer to negotiate

The majority of consumers

DO want to negotiate

Base: Total (4,002)

B1. For each vehicle buying phase below, please pick your most preferred idea.

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Flat rate pricing is a good place to start negotiating from.

WHY? Because consumers don’t trust Flat Rates

-Recent Car Buyer

Source: Consumer Focus Groups, Car Buyer of the Future

“ “

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Lowest price will ALWAYS win 3

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Consumers will pay more for a better experience

54% would buy from a dealership that offers their preferred experience, even if it didn’t have the lowest price.

Base: Total (4,002) B5. Thinking about the preferred process you built to shop for and buy a vehicle, please indicate which of the following statements you agree with more. “I would buy from a dealership that offers my preferred experience, even if it didn’t have the lowest price” “I would buy from a dealership with the lowest price no matter what”

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Great salespeople beat lowest price

Great Salespeople

Lowest Price

More consumers will drive for GREAT sales people vs. lowest price

73%

65% Base: Total (4,002) AP1. Different people have different shopping preferences when it comes to buying a vehicle. Please read the following statements and tell us which describes you better. “I’d be willing to go out of my way to find a dealership with great salespeople” “I would travel farther to a dealership to get the lowest price”

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What will the future of car buying look like?

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Changes are coming across the entire process

RESEARCH TEST DRIVE DEAL STRUCTURING PRICING FINANCING SERVICE

SHOPPING BUYING OWNERSHIP

Base : Total (4,002)

B1. What we’d like you to do now is create your most preferred process for shopping and purchasing a vehicle using the ideas that you liked.

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Shoppers will continue to research online – across multiple devices

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42% of car shoppers use multiple devices

2013

2014

2015

42%

32%

23% Source: 2013 -2015 Autotrader Automotive Buyer Influence Study

Multi-device usage for car shopping has grown

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80% will use multiple devices by

2020 Source: Autotrader forecast

Multi-device usage will reach new

heights by 2020

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64% of their time is

spent on mobile

Multi-device users spend

most of their time on mobile

Among mobile shoppers,

Source: 2015 Autotrader Automotive Buyer Influence Study

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Test Drives will look very different in the future

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If I don’t lay eyes on it and hands on it, I am not buying it.

You can take a picture 100 different ways and get 100

different perspectives. I have to put my hands on it.

- Recent New Car Buyer

Test drives are NOT going away

88% of consumers would not purchase a car without test driving it first

Base: Total (4,002) AP1. Different people have different shopping preferences when it comes to buying a vehicle. Please read the following statements and tell us which describes you better. “I would never buy a vehicle without the test drive”

“ “

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Consumers prefer the Test Drive Center concept

68% Base: Total (4,002) E1. Now we will show you some different ideas about new ways to shop for and purchase vehicles. For each experience, please tell us how appealing the idea is to you.

find test drive centers appealing

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Convenience and low pressure are key for test drives

70% 67% Base: Those who selected test drive centers (994) E3. What in particular did you like about the [INSERT ELEMENT] experience?

like test driving multiple vehicles in one place

like not having pressure while test driving

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Deal structuring will begin online

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Consumers want to build deals before getting to the dealership

like to start the negotiation on their terms

like being anonymous to the dealer until they lock in a deal

56% 45% Base: Those who selected Online Deal Building (1,193) E3. What in particular did you like about the [INSERT ELEMENT] experience?

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Negotiating will be a part of the process—for the foreseeable future

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55% Base: Total (4,002) E1. Now we will show you some different ideas about new ways to shop for and purchase vehicles. For each experience, please tell us how appealing the idea is to you.

find negotiating appealing

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Millennials prefer negotiating over flat rate pricing 62% prefer negotiating vs. 38% who prefer flat rate

Females prefer negotiating over flat rate pricing 59% of females prefer negotiating vs. 41% who prefer flat rate

Two most influential groups prefer negotiating

Base: Females (2398); Millennials (1522) B1. For each vehicle buying phase below, please pick your most preferred idea.

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Financing paperwork will begin online

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F&I process needs to evolve

72% find online paperwork appealing

Base: Total (4,002) E1. Now we will show you some different ideas about new ways to shop for and purchase vehicles. For each experience, please tell us how appealing the idea is to you.

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WHY?

like to save time at the dealership

like having no pressure when filling out paperwork

72% 71% Base: Those who selected Online Paperwork (1,307)

E3. What in particular did you like about the [INSERT ELEMENT] experience?

Saving time and removing pressure are key for F&I

38 Source: Dealer Sourcing Studies (Sept. 4, 2013 – March 26, 2014)

6.5

7

7.5

8

8.5

9

9.5

10

< 30 min. 30 min. - 1 hr. 1 - 1.5 hrs. 1.5 - 2 hrs. 2 - 2.5 hrs. 2.5 - 3 hrs. 3 - 4 hrs. 4 - 5 hrs. 5 - 6 hrs. 6 hrs. +

Satisfaction declines after 90 minutes at the dealership

28%

Buyer’s Average Satisfaction vs. Time Spent @ Dealership

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Average time consumers spend in F&I is

minutes

F&I monopolizes critical time at the dealership

This accounts for 2/3 of the ideal time they want to spend at the dealership overall

61 Source: 2014 Time Study

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Consumers want Local Service Centers

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Consumers want more service location options

83% find local service networks appealing

Base: Total (4,002) E1. Now we will show you some different ideas about new ways to shop for and purchase vehicles. For each experience, please tell us how appealing the idea is to you.

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WHY?

76% 63% Base: Those who selected Local Service Networks (986) E3. What in particular did you like about the [INSERT ELEMENT] experience?

want to go to a service center close by

want to be able to service vehicle anywhere

Convenience is key in vehicle service

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Why should manufacturers & dealers care?

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Base : Total (4,002) B6. Please rate your level of agreement with the following statements. I would visit dealerships more often if the vehicle buying process were improved

72% would visit dealerships more often if the buying process was improved

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Base : Total (4,002) B3. Above is the preferred process that you built to shop for and buy a vehicle. If a dealership offered this shopping process, how likely would you be to buy from them? “Would make me much more likely to buy from that dealership.

66% would be much more likely to buy from a dealership with their preferred experience

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Base : Total (4,002) B6. Please rate your level of agreement with the following statements. I would buy a vehicle more often if the vehicle buying process were improved

53% would buy a vehicle more often if the buying process was improved

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Change now while times are good

Q&A

Car Buyer of the Future