The future of car buying - part 1

14 February 2019

Industry Insights

We all know the news on the high street and that shopping convenience, changing consumer buying habits and technology are reported as being the cause for the current situation.

Car parking, weather, poor customer service and being unable to find what you want all add to the problem.

But what other retail ‘type’ outlets could be subject to change in the near future?

So, you are thinking of a new car?

Car buying traditionally meant visiting dealerships, it was an afternoon or day out, going around with the ’family in tow’ looking at models, collecting brochures and occasionally having a test drive.

Ask yourself, when was the last time you went into a dealership and how many did you visit?

According to PWC’s Automotive Industry Trends report 2017 car buyers are now visiting between 1 and 1.5 dealers before purchasing a car compared to 4-5 a generation ago.

Today the majority of car research by customers is done on the Internet using YouTube videos, comparison websites, online magazine articles and customer reviews before contemplating going to a dealership.

However, Delloite in their ‘Navigating the customer journey – UK perspectives’ report note 70% spend less than 3 months researching choices and that this suggests there is only a limited time span to engage with them. When the respondent had made a choice then interaction with a real person is the most important buying aspect as part of the buying process.

As they conclude ‘customer experience is clearly not dead.’

Financing the car

And it used to be that buying a car was the second largest financial commitment to buying your house.

Not anymore.

The finance alternatives on offer have changed over the years from simple cash purchase and hire purchase to various lease/rental alternatives. Of these PCP for cars is one of the more popular methods for car purchasing and around 86% of new cars in the UK are sold on finance with PCP being prominent.

Car subscription schemes are the emerging model to ‘having’ not owning a car. Many brands now offer servicing packages for the duration of the finance period, Volvo has taken it one stage further with the Care by Volvo scheme.

‘For a fixed monthly amount Care by Volvo not only gives you a brand-new Volvo for a fixed time period of two or three years, it also covers all regular service and maintenance costs and provides you with comprehensive insurance and breakdown cover.’ Volvo website.

The benefit of a subscription service is that it doesn’t tie you into a long-term lease.

JLR offer Carpe, a 12-month subscription model that includes everything but fuel. Then there’s the Porsche Passport, similar thing but you get to drive any Porsche you want within your subscription.

Mercedes is called Collection, again very similar, but for the wealthy who like to switch up cars every few months without having to be tied into long term contracts.

Whilst these examples are in the premium car sector, this subscription based service is a growing segment within automotive.

Technology and its impact on the sales cycle

For several years now it has been possible to configure your choice of car online, select your options, arrange finance and order your vehicle without visiting a show room or having a test-drive.

According to the WEVE 2017 UK survey of 1,979 respondents, TV, Out Of Home and mobile are the strongest channels in driving action, with 84% using their mobile in the car buying process with the average research time being 6 weeks.

The same survey showed 9% bought the car on their mobile whilst 23% said they would buy their next car entirely online.

Meanwhile advances in virtual technology mean that you can walk around a vehicle that you have configured and look inside. No, you can’t touch it, you can’t smell the new car smell but eventually you will be able to achieve the VR experience in your own home.

The launch of the Jaguar i-Pace in 2018 was accompanied by a VR experience that demonstrated what could be the start of things to come in the customer journey.

Read part 2 here

References:

2015 Future of automotive retail, EY

2017 Automotive Industry Trends, PWC

2017 How Hyundai changed the course to improve the customer journey, Dean Evans, Think with Google

2017 Cars on demand, Car buying trends

2017 Weve Primary Automotive Research

2017 The Guardian Car finance: the fast lane to debt?

2018 BP press release BP to acquire the UK’s largest electric vehicle charging company

SMMT Motor Industry Facts 2018

Volvo website

MaaS website