New research reveals key trends in online motor retail

By automotive-mag.com 11 Min Read

Motor Trader spoke to James Tew, CEO at iVendi about the company’s new white paper, which highlights some surprising new directions in vehicle buyer preferences

James, tell us about your new research?

Over the last year or more, we’ve seen some indications of new trends in online motor retail and wanted to carry out high-quality research to back up our impressions. So, we worked with a partner to survey 1,000 used car buyers at the end of 2023 and also talked to a number of those respondents in more detail. All of the key findings have been put into our new white paper, Driving future success: Five key trends in online vehicle retail, which you can download for free at ivendi.com/driving-future-success-mt.

What have you found?

Most people in motor retail now tend to view it as a market where the showroom and online channels exist side-by-side as a hybrid, with the vast majority of consumers moving between the two at will as part of quite complex buying journeys.

What our research shows is that this may not be the case, and there could be a relatively rapid swing underway towards increasingly digital sales. In our view, these journeys will still have a strong hybrid element but the situation we have seen in recent years where online and showroom split roughly equally could change quickly.

If realised, this trend would be of direct relevance to future business decisions made by anyone involved in motor retail or motor finance – and should serve to start essential new discussions across these sectors.

Q What evidence have you seen for this swing?

If we are going to point to just one finding, it’s that 74% of those surveyed expect to use some sort of online process to buy their next car – either buying online and collecting the car in person from a dealership (45%) or buying online with home delivery (29%). Only a quarter said they would prefer to buy their next car at a physical dealership.

The age of our respondents – and their respective preferences – is worth noting because it points to the direction of travel for motor retail’s future. Predictably, older consumers are more likely to favour buying physically at a dealership, with 34% of over 45s naming it as their preferred method, compared to 23% of 31-44 year-olds, and 21% of those under 30.  However, perhaps surprisingly, preferences for fully digital purchases with home delivery and no interaction with a physical dealership whatsoever were very consistent across all age groups at either 27% or 28%.

The ‘click and collect’ method – transacting online, then picking up the car at a physical dealership – was not only the single most popular method but also the one with the most progressive trend among the age groups. It was favoured by more than half of respondents under 30 (51%), by 47% of 31-44-year-olds, and by 37% of over 45s. There was also a strong preference for click and collect among female respondents, 47% of whom expect to buy their next car this way.

 

Q Is online motor retail helping to drive this trend to online?

Many retailers understandably want to maintain the showroom’s status as the key physical touchpoint for consumers, and there is sometimes a perception that offering motor finance online discourages in-person visits. However, our experience is the belief that withholding information from the website encourages consumers to call or visit a dealership is almost always false – if buyers can’t find what they want from you online, they often leave your website and look elsewhere.

The new research backs this up. It asked respondents which funding options they considered ahead of their next vehicle purchase, and easily the largest group – 47% – said they looked at motor finance from a dealership online. We also asked how they interacted with online motor finance tools, and the results were very supportive of the technology. The majority – 88% – felt communication with the dealer was made easier by such services, 66% said they used online motor finance tools to generate quotes, and 64% used online information and tools to research different motor finance products.

 

Q Do online tools generally drive engagement?

Most consumers in our research had made extensive use of online tools as part of their car buying journey. When asked how useful these were in helping their decision making on a scale of 1 to 10 – with one being ‘not at all useful’ and 10 being ‘very useful’ – 85% of respondents scored seven or more and the remaining 15% in the six to four categories.

More than two thirds (68%) said vehicle search was the most useful online tool, being well established as the entry point for most car buyers. Finance options (35%), part exchange (19%), and reservations (17%) were also mentioned by respondents as the online tools that impressed them the most. Crucially, these functions align with car buyers’ real-world needs. When they are made available to consumers in a clear and simple format on a strong retailer website, these tools can form a critical part of a modern, effective, consumer journey, and help to drive sales.

Part exchanges are an interesting part of the consumer journey at present. Fifty-one per cent of respondents to our survey said this had been an element in their purchase but only 44% were able to carry out an online valuation. It’s a potential roadblock to some purchases.

 

Q Did you ask any why car buyers were switching to online?

Yes, the survey found that car buyers are simply happier with the digital sales process. When we asked if online transactions met consumers’ expectations compared with other purchases, 75% said yes, compared with 61% for showroom sales, and just 47% for transactions conducted over the phone.

Online buying appears to fit more neatly into consumers’ lives and increases the frequency with which they interact with the sales process. Consumers were asked how often they went online to progress their car buying journey compared with calling or visiting the dealership. Online was easily the most frequent, with 34% of respondents saying they moved their purchase forward through this route at least daily. Only half as many, 17%, called the dealership as often, and just 13% physically visited a showroom the equivalent number of times.

When asked what motivated them to enquire online, 60% of respondents said convenience, 51% ease of enquiry, and 42% to find information. Buyers just find digital easier.

 

Q Did you ask any questions about the impact of increased compliance?

Our survey was conducted a few months after Consumer Duty’s enactment, and respondents were asked if they felt the motor finance process

  1. was fair and transparent 2. if they felt in control of it, and 3. if they saw sufficient information which explained the available motor finance products. Responses to all three were resoundingly positive, with 87%, 82%, and 85% respectively replying yes.

The results were similar when we examined consumer interactions with motor finance products in more detail. When asked if they felt confident in choosing the right funding option for them, 88% of respondents said yes, 91% said they felt the online motor finance process was well-structured and easy to understand, 83% felt the motor finance choices they were offered represented fair value, and 87% agreed that the way in which their personal details would be handled was fully explained.

To us, this is further evidence of consumers’ ease and confidence in online motor finance applications and illustrates that Consumer Duty’s four key outcomes are largely being met.

 

Q What key lessons should dealers take away from your research?

Simply, that there are huge opportunities for those who work to meet the trend we have identified towards increased online motor retail. Car retailers providing a sophisticated consumer journey – one that allows the buyer to identify the right vehicle, finance it in a way that suits them, creates a digital route to part exchange, and strongly commits to compliance – will be ideally placed to maximise sales now and in the future.

For further information, contact the iVendi team on 0330 229 0028, email [email protected] or visit www.ivendi.com

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