Buying a car—3 reasons automakers and dealers need to rethink their consumer relationships

We are witnessing a generational sea change in car buying, both in terms of how and what consumers are purchasing. The COVID-19 pandemic changed how cars are sold, with dealers forced to embrace online sales and other modernizations. The Harris Poll asked consumers about their expectations when buying a car so brands can better navigate the new automotive landscape. On the surface many attitudes remain static: A sizable majority of Americans—61%—get their primary personal vehicle from a dealership. That’s more than five times the number giving the second-most popular answer, from a private seller, which garnered only 12% Americans remain deeply divided on the question of buying a car online, with equal numbers expressing comfort and discomfort with the idea (45% and 47%, respectively). And no wonder: Cars are both so functional and so personal that the notion of buying a car sight unseen gives many people pause. In fact, nearly 4 in 5 Americans (79%) said that they would not buy a vehicle without having first seen it in person. Cannes Lions 2022 Read all of Ad Age’s festival coverage here Check out our live blog here Those top-line numbers hide generational tumult, however. Older, traditionally minded car buyers dominate purchases, but younger consumers are bringing a fresh mindset to market. Here are three trends that manufacturers and dealerships will have to reckon with as millennials and Gen Zers take their place at the marketplace steering wheel. The future is online Younger car buyers are doing it differently. While 61% of Americans got their vehicle from a dealership, that figure drops sharply for Generation Z (35%) and millennials (45%). Indeed, Gen Xers report almost twice as often as Gen Zers that they bought from a dealership (66%) and baby boomers report more than twice as often having done so (79%). Conversely, majorities of Americans under 57 (54% of Gen Z, 57% of millennials and 55% of Gen X) are comfortable buying from an online-only dealer. With only 29% feeling comfortable, baby boomers account for the overall national split. Where are younger consumers buying their cars? While only 6% of Americans said that they had bought directly from the manufacturer (online, in other words), that figure stood at 14% for Gen Z and 11% for millennials (as opposed to 4% for Gen X and 1% for boomers). A less-pronounced but still notable trend emerged regarding online-only dealerships such as Carvana and Vroom (which recently landed in the top-20 performing brands among Gen Z): While the percentage of Gen Zers (5%), millennials (6%) and Gen Xers (6%) who have used such platforms is in line with the general population it’s markedly higher than among baby boomers (2%). It is little wonder that the global, online auto market is exploding. Estimated to be at $237 billion in 2020, it’s projected to reach $723 billion by decade’s end. Eliminate friction Design thinking, a business strategy that prioritizes the consumer experience, has seemingly penetrated every aspect of commerce—except car-buying. While every other sector has sought to eliminate friction and promote seamlessness between online and in-person shopping (think Amazon and the Apple store) car dealers have dragged their feet, often enjoying complex legal and regulatory protections that have insulated them from pressures to change. The aspects of car shopping that consumers like least maps closely with in-person experiences. We asked Americans about 10 different parts of the automotive-buying process and the ones that failed to achieve majority approval included: working with a salesperson (41% enjoyed it), negotiating with the seller (37%) and purchasing paperwork (33%). Overall, two-thirds of Americans said that they would prefer to pay a set “best available” price for a car rather than haggle to get a better deal. The point here is related to the first insight: The auto industry needs to adjust to a future in which people will expect a more user-friendly, transparent process. This moment ought to spur it to reexamine its business model and modernize before the market makes it obsolete. EVs have a long way to go Electric vehicles are making inroads into the market but manufacturers must still do a great deal of public education to allay consumer concerns. More than 4 in 5 Americans (82%) worry about how far electric vehicles can travel, the prevalence of charging stations (82%) and their cost (83%). While those figures are lower for Gen Zers and millennials, majorities in those groups share those fears. Nevertheless, 2 in 5 Americans (42%) indicated a likelihood that their next vehicle will be electric. The generational breakdown is again instructive: Majorities of Zers (56%) and millennials (63%) are open to electric, with the figures dropping among Gen Xers (40%) and boomer (21%). Manufacturers need to address consumers’ fears head-on. More than 2 in 5 Americans (46%) said that electric vehicles costing less than traditional automobiles would make them more likely to purchase one. Similar numbers said the same about the cost of electric vehicles dropping in general (44%), about more charging stations being installed (45%) and receiving financial incentives such as tax credits (43%). The good news is that the 2022 bipartisan infrastructure bill authorized $5 billion for building charging stations, which is a start. The auto industry needs to rethink its relationship with consumers. The pandemic gave the process a jump-start; now it just needs to get moving. Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here

Buying a car—3 reasons automakers and dealers need to rethink their consumer relationships

Featured Stories