The increasing number of sources and amount of information available to consumers is putting many off from buying a car.
Extensive choice and price transparency in the car market means consumers can gain an unparalleled level of insight into their shortlist of cars.
But new research by Auto Trader reveals consumers can be “overwhelmed with choice”.
Its survey of 5,000 consumers on their car buying experience revealed that 26% had planned to purchase in the last six months, but hadn’t – with almost half (46%) citing the research process taking longer than expected as the reason.
“More choice has led to more in-depth research,” the Auto Trader February 2016 Market Report says. “And compared with consumers who identified not having the money as the reason for not completing the purchase within the six month period (24%), almost twice as many consumers identified that it’s time spent on research that delayed their purchase.”
As a result 80% of consumers find the process of buying and selling cars stressful, with more than half claiming to have been put off altogether.
“One factor behind this could be confusion when it comes to the methods of selling and subsequent financial outcomes.”
So, 37% of respondents expect a part-exchange value to be the same or more than a private value, highlighting a “lack of awareness” on selling options and financial returns.
The dealer forecourt remains the most popular place to compared cars, with 50% of consumers saying this is the favoured place for making comparisons.
This if often combined with use of online marketplaces, used by 44%.
But 29% of consumers claim to have walked away from a part-exchange deal due to a disagreement on the price with a car dealer. “It suggests for nearly a third of consumers, a lack of awareness of what a dealer is likely to offer in a part-exchange could be making the selling process more difficult.”
Provide this and they will come
Online valuation tools are proving more popular, however, along with a part-exchange guide price, with 81% of consumers claiming they would be more inclined to visit a dealership if they were offered a part-exchange price on their car in advance.
“This is giving car dealers more sales opportunities at an earlier stage in the consumer’s buying journey – whilst saving consumers time and money from face-to-face part-exchange negotiations.”
The end of haggling?
However, the degree to which buyers are prepared to research their next purchase has led to a new phenomenon – haggling is becoming less popular, particularly with younger buyers.
Of those who had purchased new or used cars, 56% said they had paid the asking price or more (including add-ons).
It appears price transparency and mobile technology has increased car buying research to the point of eliminating negotiation in a large number of cases.
But the percentage of consumers claiming to have paid the asking price for their vehicle drops with their age – with more younger drivers paying nearer the asking price or more, than older buyers.
And this is not just down to older drivers being more comfortable with haggling.
“Younger car buyers are using mobile technologies more than ever to research during the car buying journey.
“In fact, 24% of 18 – 34 year olds claim to have used a mobile device to validate car prices while on a dealership forecourt, compared with 9% of those aged over 35.
“Including all ages, 14% of those surveyed had used a mobile device on the forecourt to fact check – suggesting that with mobiles playing a more integral role in the buying journey, consumers are more likely to benefit from online price transparency by knowing what price to pay for their next car.”
Auto Trader quotes CarShop marketing director. Leo Nelson said: “The key success of this strategy has come in the form of communication and transparency; and as a result, we have seen a reduction in the number of people expecting to be able to haggle over price, or ask for a discount.
“We are aware that customers have access to information, and are not afraid to use it. But because we believe in our product and pricing, we have implemented customer WiFi in our stores to help customers reaffirm that haggling is not necessary, and alleviate any concerns.”
Dealers as digital retailers
Nathan Coe, Auto Trader operations’ director, said: “There’s a clear need for dealers to operate as digital retailers to adapt to these changes, and some already have by adopting digital strategies to run their business, being fanatical about consumer experience and using data to help aid with decisions that help them stay relevant in terms of both the cars they stock and prices they charge.
“Today’s car buyer will not be forced to do more work if they’re not offered the tools to make life easier.
“Our research revealed that 81% of car sellers are more inclined to visit a dealership if they are offered an online part-exchange guide price on their car in advance. It’s another example of consumers demanding more online services, which take the stress out of the negotiation.
“The pace of digital change is speeding up and there’s more to come, driven by the demands of the next generation of car buyers; the Millennials.
“They will expect digitally-driven services in every aspect of their lives, so it’s more important than ever that the industry evolves at a pace that meets these demands.”
Notes on the survey: In January 2016, Auto Trader surveyed 5,000 consumers with a UK driving licence about their car buying behaviours, as well as their experiences and perceptions about the car buying and selling processes.
Statistics for consumer mobile usage are highlighted from the Auto Trader mobile usage research study, conducted in October 2015.