What factors are fuelling the resurgent health in the new car market?
We’ve been through a period of economic uncertainty, during which businesses and consumers delayed purchases of new cars because they were less certain about the future.
Consumer and business sentiment have started to climb up, and have continued to climb. It feels like people have got to a point where they’re more comfortable making this significant purchase. Plus, the availability and attractiveness of finance offers on new cars have definitely improved, making new car purchases – often versus even a used car – attractive.
Finally, people are increasingly looking at the cost of their vehicle. People are taking a total cost of ownership approach rather than focusing only on the big upfront purchase.
One of the first questions dealers would be wise to ask a customer is about insurance cover, because the cost can be so high.
What part is Autotrader keen to play in the digital arena?
Big data is a primary influencing factor; the ability to collate and process enormous amounts of data in near-real-time and provide value from it. On Autotrader, we have something like 150-160 million searches and from the data this provides we can provide much better insight to dealers around how they run their businesses. Sourcing and pricing stock will become increasingly sophisticated.
We trialled online purchasing several years ago, but were too early to market. However, if our consumer and dealer customers say they want it we will work on reintroducing it.
What could lead to a return of a chill to the market that we need to be sensitive to?
The availability of finance is key. If the taps turn off, like they did in 2007, consumers respond dramatically. The economic sentiment across Europe is also key. Anything that causes problems there as a trading partner to the UK will have knock-on effects on confidence. The third issue to consider is how much of the new car market confidence is a release of the build-up of buying intention? Once that is spent, what will normality in the market look like?
How does a dealer promote the positive aspects of their forecourt experience online?
A dealer can make promises on their website about their business, and consumers will judge your credibility. But they will look for social proof that it’s true so feedback from customers from social interactions, be it on Twitter or the dealer’s site.
What’s been the impact of the resurgent new car registrations on the used market?
In the first half of 2013, we saw negative growth in used car volumes due to the attractive captive finance offers on new cars, the move to more efficient vehicles and the lack of used car stock on the back of lower car production levels two or three years ago. There was a period where the used car market was in decline year-on-year. Now, as part-exchanges on those new car sales come into the market, the sector is growing once more.
Are consumers coming back to the market with different concerns and/or priorities?
When we speak to consumers about what their key buying considerations are, the cost of ownership, insurance and tax banding, miles per gallon are factors playing a much bigger part in any transaction.
What are the key factors to consider regarding digital technology in the next 12 months?
If dealers don’t pay sufficient attention to how their online forecourt appears on mobile devices they will get caught out, because internet customers – particularly mobile internet customers – are enormously fickle. If the dealer’s website doesn’t work on their mobile, then they’ll go elsewhere.
The second issue is social media and reputation management. Increasingly, as people do more research online, they will look to find out as much as they can about the person with whom they are going do business.
Forecourt experience remains fundamentally important but each experience – positive and negative – is amplified by the web.