5 trends shaping the auto industry’s approach to a new normal

Kyle Keogh, Steven Rampersad / June 2020 / Consumer Insights, Automotive

The automotive industry was already impacted by an unprecedented disruption before the coronavirus. Working with auto brands over the past few years, we’ve seen shared mobility, driverless cars, and electric vehicles shake up the industry, so understanding how to adapt during difficult times is not a new challenge. Here’s what’s different: COVID-19 is accelerating trends in the automotive industry that were already underway but had not yet been widely adopted. These will likely become the new normal when operations reopen.

Automotive brands looking to position themselves for recovery will need to adapt to faster industry cycles and shorter planning horizons. They’ll also need to prioritise initiatives that are best aligned with where the industry is headed, such as operationalising home delivery or further digitising the automotive purchase process. To help auto marketers prepare for what’s ahead, we’ve identified five key trends to keep in mind.

1. People are finding comfort in car ownership

Amid a nearly full halt to everyday modes of transportation, from flying to ride sharing, we’re starting to see a rise in consumers’ desire for their own personal mode of transportation. The personal spaces where people find comfort include their homes and their own cars.

A study from Ipsos in early March shows that, in China, people’s attitudes toward vehicle ownership, public transportation, and mobility solutions like ride hailing have shifted in the wake of the pandemic. Usage of personal or private cars nearly doubled after the outbreak, while reliance on public transportation has fallen by more than half, with taxis and ride hailing each seeing significant declines in usage.1 Among people surveyed in China who do not own a car, most responded that they intend to purchase a vehicle for health and safety reasons.2

For the U.K., we see this shift playing out on a macro level. Among young adults, 2 out of 5 are now considering buying a car.3 Additionally, a recent survey conducted by Google reported that 12% of people who didn’t own a car were considering purchasing one.4

A green line encircles a blue car. 1 out of 8 of public transport users say they will purchase a car as an alternative to public transport.

While around 40% of the U.K. population uses public transport,5 of that group, 43% of respondents indicated they will change their public transport usage in a post COVID-19 world.6 As an alternative to public transport, 1 out of 8 people indicated they would consider purchasing a car. This alternative is ranked higher than car sharing (7% of public transport users) and ride hailing (4% of public transport users) options.7

2. Financial uncertainty is having an increasing impact on car buying.

The crisis is having a big impact on the financial situation of U.K. consumers, and this is also affecting their consideration of purchasing a car. A recent study run by Google shows that 1 out of 4 car shoppers indicated that economic and financial uncertainty impacted their car buying process.8

Price is always an influential factor for car shoppers, so it’s no surprise that current deals offered by automakers are heightening people’s interest in what’s out there. Search volume for best car and truck deals has grown 70% globally from March 22, 2020, to March 28, 2020, versus March 15 to March 21 of the same year.9

Deals could speed the path to purchase, as 3 out of 4 auto shoppers see 0% APR financing or cash discounts as the strongest influencers of expediting their car purchase.10 Automakers have responded with financing deals like no-interest financing for 72 to 84 months, but have also moved to assist customers who need help with their payments by offering no-penalty payment deferments.

3. People want the dealer experience from their home

As consumer research increasingly moves online, U.K. search interest for “dealership near me” dropped more than 70% in February 2020 to April 2020.12 However, car shoppers still want to engage with vehicles as they would at a dealership; they just want that experience to be closer to home.

Seven out of 10 car shoppers indicated that they would prefer to finish the purchase at a non-dealer hand-over area,13 while 1 out of 2 car shoppers would prefer to sign all necessary documents electronically.14

Car shoppers ranked the following activities by preference as good alternatives to a dealer visit:15

  1. At-home test drive
  2. Digital showroom
  3. Review videos
  4. Online configurator
  5. Videoconference
  6. VR test drive

Before the pandemic, car shoppers were turning to YouTube to experience digital test drives. The importance of that trend is even greater given current shelter-in-place policies. Brands that want potential buyers to engage with specific models should consider highlighting video content of interior overviews, walk arounds, test drives and review videos.

4. People want online car buying and at-home delivery

A recent study shows that 46 out of 100 U.K. car shoppers plan to visit a dealership within one month of lockdown restrictions being lifted, and half of these shoppers would visit within two weeks.16

Despite dealerships still playing a critical role in the car buying process, an emerging trend is that there is a clear appetite for online options with car delivery.

More than 90% of U.K. car shoppers research online, and we’re now seeing the full vehicle buying journey — through purchase and delivery — follow a similar trajectory.17

A pair of hands shops for a car on a mobile phone. 19% of car shoppers would buy a vehicle sooner if there was an online option.

While dealers before COVID-19 have been able to offer vehicle delivery, only a very small number have the online capabilities to execute a full vehicle sale online. Additionally, while the purchase journey itself is happening online, the purchase still happens offline. At-home test drives and vehicle delivery were tied as the number one alternative to visiting a car dealership for car shoppers.18

Prior to COVID-19, 7 out of 10 car shoppers would consider buying online if the option was provided.19 A recent survey shows that this number has increased to 8 out of 1020, with many customers indicating an online purchase option would mean they buy their car sooner.21 At a time when social restrictions related to the pandemic are impacting consumer behaviour, developing strategies for how to meet consumer demand for online buying and at-home delivery can make a large impact.

5. People are tuning in to digital events

As circumstances have required postponing or canceling auto shows and large conferences, some original equipment manufacturers are delaying vehicle launches, while others are shifting to fully online launches for new vehicles. This is a radical shift for an industry used to glossy, in-person rollout events.

Hyundai U.S., for instance, unveiled its 2021 Elantra in early March through a live stream. Leveraging video content that helped bring its features to life, Hyundai captured the interest of viewers watching from the safety of their homes. The initial tease video, live stream, and walk-around clip garnered nearly 800,000 combined views.

For auto brands rethinking live events in the near term, consider this guide for help.

The pandemic has changed business as we knew it. And while we can’t predict the future, these shifts in consumer behaviour are likely to persist. As automakers shift to moving metal again, understanding customer expectations, as well as the new ways people shop and buy, will be critical to success.

Kyle Keogh

Kyle Keogh

Industry Director, Automotive at Google
steven_rampersad_headshot.jpg

Steven Rampersad

Analytical Consultant, Automotive Google U.K.

Sources (21)

1. Ipsos, Impact of Coronavirus to new car purchase in China, March 12, 2020. Accessed May 2020.

2. Ipsos, Impact of Coronavirus to new car purchase in China, March 12, 2020. Accessed May 2020.

3. Financial Times May 19th, 2020, ‘Time to buy a car? Industry hopes for coronavirus silver lining | Free to read

4. Google Survey, U.K. English, May 18th, 2020, n = 311 of respondents who don’t own a car

5. Google Survey, U.K. English, May 18th, 2020, n = 2,577

6. Google Survey, U.K. English, May 18th, 2020, n = 1001 of respondents who used public transport pre COVID-19

7. Google Survey, U.K. English, May 18th, 2020, n = 480 of respondents who will changes their use of public transportation post COVID-19

8. Google Surveys, U.K. English, ‘Global Auto Pulse’, May 19th, 2020, n = 918 of of respondents who plan to purchase a vehicle in the next 12 months

9. Google Data, Global English, March 22, 2020–March 28, 2020 vs. March 15, 2020–March 21, 2020.

10. Google Surveys, U.K. English, ‘Global Auto Pulse’, May 19th, 2020, n = 833 of respondents who plan to purchase a vehicle in the next 12 months

11. iSpot.tv

12. Google Data, U.K. English, February 2020 vs April 2020

13. Google Surveys, U.K. English, May 19th, 2020, n = 561 of respondents who plan to purchase a vehicle in the next 12 months

14. Google Surveys, U.K. English, May 19th, 2020, n = 444 of respondents who plan to purchase a vehicle in the next 12 months

15. Google Surveys, U.K., ‘Global Auto Pulse’, May 19th, 2020, n = 845 of respondents who plan to purchase a vehicle in the next 12 months

16. Google Survey, U.K. English, May 18th, 2020, n = 535 of respondents who plan to purchase a vehicle in the next 12. months

17. Google/Kantar TNS, U.K., The Drive to Decide Survey, n=504 recent car buyers, 2018.

18. Google Surveys, U.K., ‘Global Auto Pulse’, May 19th, 2020, n = 845 of respondents who plan to purchase a vehicle in the next 12 months

19. Google/Kantar TNS, U.K., The Drive to Decide Survey, n=504 recent car buyers, 2018.

20. Google Survey, U.K. English, May 18th, 2020, n = 418 of respondents who plan to purchase a vehicle in the next 12 months

21. Google Surveys, U.K. English, ‘Global Auto Pulse’, May 19th, 2020, n = 886 of respondents who plan to purchase a vehicle in the next 12 months

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