Auto Trader’s 'The Future of Car Retailing' market report has found that almost three quarters of car buyers still want direct contact with a retailer before making a purchase.
While the online automotive marketing specialist stated in the findings of its study of 2,000 consumers that car retailers’ continued success would rely on a “significant digital rewiring over the next decade” it also revealed that customers still require contact with a vehicle seller.
The study found that 45% would already be happy to complete the whole purchase online if buying a vehicle on finance, increasing to 64% among buyers aged 18 to 34.
Auto Trader said in its findings that the “retailer remains vital”, adding that 74% of consumers would not buy a car without speaking to a retailer.
Respondents to Auto Trader’s research found that the average car buyer believes it will be 19.5 years before a car is bought completely without human interaction.
Only one-in-five consumers want to avoid retailers when buying a used car, meanwhile, reasoning that there's more to go wrong and, as such, they value the added reassurance.
Despite the need for certain traditional elements to the transaction, however, Auto Trader said that the move to an omni-channel retail offering would be central to car retailers’ success in the coming decade.
Nathan Coe, Auto Trader’s chief executive-designate, said: “Dealerships will remain central to the world of automotive retailing, but they will have to evolve as the one size fits all approach is fast becoming redundant.
“Retailers will need to adapt to provide a blended experience for consumers so they can choose the right journey for them, be it online or offline, or any combination of the two.”
According to research published by Frost & Sullivan last month, online car sales will number over a million across the globe in 2020 as rapid growth drives a further six-fold growth by 2025.
The research and consultancy provider said more than 618,000 new vehicles were sold online globally in 2018, nearly double the unit sales in 2017, adding: “Online sales are expected to cross one million in 2020 and grow to more than six million by 2025."
In August AM reported on Mercedes-Benz projection that 25% of its new car sales transactions will be completed online by 2025 as it develops a “single log-in” digital strategy offering lifestyle, mobility and shopping solutions to owners and non-owners alike.
And just last week the Peter Vardy Group said that it expects to complete 50% of its car sales online by 2023 as it credited a focus on used car sales and aftersales for profit growth in its 2018 financial results.
Peter Vardy has invested heavily in online retail start-up Silver Bullet.
Coe added: “The future is about digitizing the ecosystem to enable retailers to move to a less labour and property intensive model that better serves car buyers.
“Successful retailers will embrace technology, invest equally in their online platform as they do their physical one, and re-evaluate the physical elements of their cost base to run more efficiently.”
Auto Trader said that all car retailers, regardless of size, will have to adapt to a new way of retailing which will include the introduction of online payments
Auto Trader said that there were three main areas where car retailers needed to channel their investment in order to succeed in a new omni-channel car retail environment. Here are Auto Trader's tips for focussed investment in omni channel car retail:
Buying and pricing: Retailers who utilise data to complement their own expertise to inform their forecourt strategy can ensure they’re stocking the most desirable cars and pricing them according to the market – key to creating a more transparent customer experience and increasing stock turn (40 days versus an industry average of 80 days). Digital disruption of the traditional auction process will also make buying new stock more efficient.
Sales: As well as transacting online, the offline/physical sales experience needs to be aligned to the online journey. Auto Trader research shows car buyers need to complete approx. 28 jobs to complete a car purchase; sales executives need to establish where a car buyer is on their journey and pick up the missing pieces rather than trying to start from the beginning when entering the dealership.
Finance: Enabling customers to be able to complete as much of the finance process as possible before visiting the dealership. With circa 90% of brand-new cars and circa 30% of used bought using finance, retailers need to make finance front and centre online and offline. What’s more, making the process digital and more transparent will help meet the regulatory requirements recently set out by the Financial Conduct Authority (FCA).
To access the full Auto Trader Future of Car Retailing Market Report visit https://plc.autotrader.co.uk/press-centre/?type=Publication