U.S. Auto Sales on the Rise with Online Buying

Auto sales in the United States have risen recently. 54 million new and used cars, trucks, and crossovers were sold in 2014, accounting for $1.1 trillion in sales. Total sales are expected to jump to $3 trillion by the end of the decade, but where are sales coming from? Enter a new car buying venue: the internet! Car buyers are abandoning trips to various dealerships and choosing instead to research and even buy cars online, causing dealerships to change sales tactics to accommodate new demands of car shoppers.

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U.S. Auto Sales on the Rise with Online Buying

United States car sales have recently risen, accounting for $1.1 trillion in sales during 2014. Car sales are expected to reach $3 trillion by the end of the decade, but where are customers buying cars from? What if we told you consumers are now choosing to forego the traditional car buying process and buying cars online instead. Negotiating with car dealers and calculating how much car they can afford has caused car buyers to change the way they purchase their car. In turn, car dealerships are making changes as well, building more responsive websites, devoting online sales staff to 24/7 customer support, and keeping inventory that consumers want.

Consumers Unhappy With Traditional Car Buying Process

Consumers are moving away from the traditional car buying process to avoid pains of the process:

• 38% don’t like negotiating with a dealer Click to Tweet
• 13% don’t like signing loan paperwork Click to Tweet
• 11% don’t like calculating what they can afford Click to Tweet

Some car buyers claim they’d give up their favorite luxuries for a week to avoid haggling over price:

• 42% would give up social media
• 42% would give up dessert
• 38% would give up coffee
• 18% would give up their smartphone

To avoid the less pleasant aspects of car buying, customers are going online and taking control of the car buying process.

• 72% want to complete the credit application and financing paperwork online Click to Tweet
• 56% want to start the negotiation on their own terms online Click to Tweet
• 45% want to remain anonymous until they are locked into the deal structure Click to Tweet

Online Car Buying Streamlines Process

Turning to the internet is helping car buyers streamline the process.

• 97% of buyers research their car purchase online Click to Tweet
• Consumers spend an average of 19 hours online to research before buying

When car buyers finish their research, they visit car retailers an average of 1.4 times before completing a purchase, a drop from the average of four visits in 1998.

Mobile is a Key Piece for Auto Sales

Instead of driving from lot to lot to gather information about vehicles, potential car buyers are taking advantage of the wealth of information at their fingertips. 41% of all online automotive sales activity takes place on mobile devices, eight times higher than 3 years ago. Car buyers are utilizing mobile devices for timely answers to pertinent questions such as price and vehicle specifications to ensure they can trust the retailer. Two different mobile platforms are utilized during initial car buying research:

• 34% of mobile ads initiate car buying research
• 34% of tablet ads initiate car buying research

5 Areas Online Car Buyers Research Most

Online car buyers are focusing research on five main areas:

1. Price — Consumers compare prices from dealerships to make sure they’re getting the best price and are ensured top resale value.
2. Specs — Consumers look at miles per gallon, acceleration, 0–60 rate, turn radius, handling, and performance in crash and safety tests.
3. Finance — 72% want to complete the credit application and financing paperwork online.
4. Value — Consumers read about customer satisfaction, other customer’s reviews, and if a vehicle was nominated for any awards. Consumers will also analyze how one vehicle compares to similar models.
5. Sales — Brand, model, and dealership reputation is taken into consideration as well as the sales process, financing, and warranty involved.

The wealth of research being done online is causing car buyers to become less attached to the dealer and more attached to the best deal.

Where Are Buyers Getting Information?

80% of prospective car buyers compare prices and cars from an average of 10 online dealerships. They may also check car manufacturers’ websites. Car buyers visit third party sites like:

• TrueCar
• AutoTrader
• Edmunds
• eBay Motors
• Dealer
• ConsumerReports.org
• KBB.com (Kelley Blue Book)
• CarAndDriver.com
• CarSoup.com
• Craigslist.org

Online car buyers also rely on specific content from dealers and manufacturers.

• 38% of consumers look at automotive blogs/publications
• 36% of consumers visit the manufacturer’s website
• 32% of consumers visit dealer websites
• 32% of consumers rely on social media

More Consumers are Completing the Entire Car Buying Process Online

Some car consumers are skipping the trip to the car dealership altogether and completing the entire purchase online. 16% of consumers have bought a car online and 75% of buyers would consider going through the entire car purchase online. This includes:

• Financing
• Price negotiation
• Paperwork
• Home delivery

While 56% of customers say they would miss test driving a car before they buy, the pros of completing a car purchase online outweigh the cons of buying a car in person for some.

Who are the Buyers?

The average car buyer who completes the entire car buying process online:

• Has an average income of $96,000
• Has an age range of 18–34

Price isn’t the deciding factor for individuals buying cars online. 63% of online car buyers say the car must be the right fit for them rather than the most financially sound.

Car Buyers Arrive Ready to Buy

If a car buyer chooses to buy from a dealership in person, 66% of buyers arrive knowing the exact car or truck they want, changing how car dealerships handle customers. To meet customer demands, dealerships have committed to:

• Responsive websites
• Dedicated 24/7 online sales staff
• Online sales prices
• Inventory consumers want

Online sellers are even offering guaranteed condition, warranties, and no-haggle return policies that meet or exceed auto industry standards.

Dealerships are also finding they must have the right inventory. If dealers don’t have the exact model with the right options, the customer may buy elsewhere due to convenience.

Customers also expect to be able to test drive a car when they want. 67% of all respondents expect a confirmation within eight hours of sending a request for a test drive.

Major Brands are Catching On

BMW recognized the change in the car buying industry and became the first major brand to modernize their process. BMW Sales and Marketing Chief, Ian Robertson said “We are the first car manufacturer to offer a digital sales solution for the entire product range and the full end-to-end buying or leasing process online. Now, the customer can do it all from the comfort of their home.”

Volvo followed suit and decided to make the first edition of its XC90 model available only online. 1927 cars were sold within the first 48 hours of the release, an average of over 40 cars an hour.

Offline Still Matters

Many car buyers still prefer face-to-face interaction and are apprehensive to complete a car purchase online. Security is the main reason customers are hesitant. Others feel they would miss aspects of the traditional car buying experience.

• 88% say they would not buy a car without test driving it first
• 47% prefer to review a model in person
• 42% say they would miss negotiating with a salesman

While a strong online presence is important, the in-store experience is crucial as well. Hyundai CEO John Krafcik believes that staying on the cutting edge and embracing trends is the key to making the overall car buying experience better.

Originally published at www.rawhide.org