Industry News & Trends

Capgemini’s Annual Cars Online Study – Tracking Consumer Buying Behavior

Jeff Kershner
Posted onNov 13, 2008 at 11:57 PM
Updated onUpdated on Nov 17, 2008 at 10:36 AM

Capgemini’s released their 10th annual Cars Online study last week.

The first Cars Online report (10 years ago) noted that 11% of respondents used the Internet to research vehicles. That number has climbed over the decade, reaching 88% this year.

Some key factors from the report include:

  • 44% of consumers said they were likely or very likely to purchase a car entirely over the Internet if that capability were available, up from 20% last year.  By contrast, only 4% of US consumers in this study indicated they were “very likely” to purchase a vehicle online and 13% were “likely”.
  • Consumers are increasingly demanding about the speed of response they expect from dealers and manufacturers. Half of consumers said they expect a response to a web or e-mail inquiry within four hours, up from 39% last year. That number jumps to 60% for respondents who are within three months of buying a car.
  • 75% of respondents said they would switch manufacturer, dealer or both if they don’t get the response they expect.
  • Only 40% of consumer in the US said they were satisfied with the vehicle buying process. – That’s not good at all.
  • 22% of consumers that use New Online Tools (web 2.0) are searching for reviews on dealerships

Will consumers be making the FULL PURCHASE of a vehicle online in 5 years? 8 years? 10 years?

Barriers to Online Vehicle Buying

How will the dealers role in the consumer purchase evolve?

NOTE: It’s a great report other than the fact you have to wade through all the information from emerging marketa like India, Russia and Brazil (though still important). Be sure to sign up for your full copy of the report!

Jeff Kershner
Founder of DealerRefresh - 20+ Years of dealership Sales, Management, Training, Marketing and Leadership.
B
Jeff, since Ai-Dealer is the only company currently offering the complete "Buy-Direct" online, transactional capability considered by CapGemini, I'll say up front that I am posting here at your request, lest I otherwise step outside of the blog rules.

Since we have actual experience with what consumers say vs. what they do, I'll focus on that for this post along with some misconceptions about Buy Direct.

Perhaps the thinking behind the CapGemini report is behind this month's write up / vendor profile in Digital Dealer magazine?

http://www.digitaldealer-magazine.com/index.asp?article=2171

Anyway, here is the experience on the ground with Buy Direct. Stop thinking about Buy. Buy is just a natural extension of Shop.

That is why we call our product a Shopping Cart, not a Buying Cart.

Our definition of "shopping" for a car online includes 100% self-serve Desking and F+I - price, credit, interest rates, incentives, trade equity, extended warranties, protections, accessories, tax, title, fees, and most importantly, accurate monthly payments.

So you provide all of that by hooking the function up to your website, but in order to maximize your # of selling opportunities, the shopping cart is structured to allow consumers to "browse" the cars anonymously, but in order to "shop" they have to give you their name, phone number and email address.

The great majority of sales that arise via the shopping cart occur from your follow up of the people who start out in the cart, but who come in. Some buy online, but not many. Certainly not 44%... but that is okay.

Our dealers achieving the best results with this attribute ~5% of their sales to the shopping cart. With good process, here is what they get:

1) A boost in the # of leads that their website produces... usually 1-2 times, but it depends on site design and competition from other "lead" calls to action
2) 60-70% response rates (i.e. the shopping cart consumers respond very, very well to your follow up activities). Partly because they are lower in the funnel, partly because they are engaged with your process even though it was all online.
3) 20-30% close ratios... between Buy Directs and follow up of the unsold shopping carts of all those who created an account, this many close.

Then the more interesting question becomes (and this is an area we are just beginning to work with Ad Agencies on), how do you use this as part of a broader marketing and digital marketing strategy?

How do you spread the word that you have "shop and buy online" as a competitive differentiator?

Anyway, thanks for the invitation to post. Hopefully follow up posts don't center on how car dealers want people to buy (i.e. in the showroom)... but how to both give consumers what they want (shop) while still giving the dealers what they need (buy - whether online or in the showroom with highly engaged consumers).
M
These figures are pretty well inline with everything else we have seen. The only real surprising number was the 44% that would purchase a vehicle completely over the internet. I would have thought that number to be closer to 25%
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    Billy
  • November 16, 2008
Brian,

Great observations in your post but I do have to differ on your first paragraph. My own company offers a very user friendly ecommerce package that is having great success for our dealers.

I would have to say the most surprising number to me in the report was that just 43% of consumers saw inability to test drive vehicle as a barrier to purchasing online.

Only 43%!

That leaves a lot of consumers out there that don't seem to have that need.

Max RPM - We've found a surprising number of consumers willing to buy online. If you'd asked me less than a year ago I'd have said 10%.

Our recent presidential election shows us the power of the internet as Jeff discussed in a recent post.
B
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    Bill Playford
  • November 16, 2008
Just went to a recent presentation where one of the speakers (a CEO, no less) said that the number of customers seeking to purchase a car totally over the Internet has flat-lined. Clearly, he did not see this report. "Click to buy" is alive and well!

If you want to completely wow a customer, complete the entire transaction over the phone, and deliver the vehicle (paperwork and all) to their house. Try it some time. You will be blown away by the results!
Alex Snyder
With 60% of consumers looking for any way to get a better car purchasing experience, it is no wonder they'd be more open to finding better methods. It makes total sense as to why a consumer is more willing to do the entire purchase online. As long as the car business is as "bent" (not to be read as corrupt) as it is, non-traditional purchase methods will be sought.

The number to watch over the next two years will be the online review researching - I expect that to grow substantially.
A
I looked through the original report and most of this data can be misleading, since the survey is not U.S.-centric. In fact, it covers 15 countries, including the U.S., Western Europe, and emerging markets. The "click to buy" interest was particularly strong in the latter group, e.g. Brazil (87%) and India (68%). By contrast, only 17% of US consumers in this study indicated a strong interest in click to buy.

Also, the emerging markets were added to the study in 2008 and are largely responsible for that massive jump from 20% in 2007 to 44% in 2008.

The study has some great data, but I wouldn't jump to any conclusions based on these overall numbers.
T
Amit..I have to totally disagree with (The study has some great data, but I wouldn’t jump to any conclusions based on these overall numbers.) Here’s an excise for all dealers/managers etc. Go to your local bar/restaurant/etc. and survey folks. I have conducted several over the past year all over the country and about 90% say if an online process where available they would go down that road in a minute. With that said, there is another company out here with the industry first online negotiation system. If you would like to know more about our early adopters program, drop me an email.
O
Alex,

I understand that you use myliveoffer on checkeredflag.com. I know this is not a complete negotiating tool and rather an abbreviated version, but how does this perform for you? Percentage of leads from myliveoffer vs the other leads of your website? Closing ratio of myliveoffer vs other leads from your website?

I have looked at both AIDealer's solutions and mydealerbroadcast and I think these would take too much time to complete for a customer and then they still have to come in to make sure that their trade is worth as much as the shopping tool said and whether they are approved for the financing. Don't get me wrong, I think it is a great concept, but wonder whether the consumer is really ready for this. Although it gets us closer to completing the sale online, it really is an estimate on trade and financing and thus is not a true turn-key shopping cart. I do think it helps getting the customer further along the process at your dealership and thus they are more likely to purchase from you.

That brings me back to the questions I had for Alex and anybody that is using any of these tools. What is the percentage of your leads from your website that use this tool? And as important, is there a significant increase in the closing ratio of these leads?

Any comments would be appreciated.

Thanks,
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    Billy
  • November 19, 2008
Oscar,

In order to take this off site, please send me an email to [email protected] and I’ll let you go through a demo.

The number of steps for a consumer are from 5 - 10 depending on financing and accessories and can actually be done in approx 1 minute
B
Oscar,

I'll have one of my dealers quote back stats of results and engagement that way it is not me (the vendor) doing it.

If I could make a suggestion... don't think in terms of all or none (i.e. all consumers won't buy online and more than none will also).

The shopping cart is an attraction ("We have shop online") and engagement tool (Consumer has to give name, phone # + email in order to do more than look at cars).

That way you get the selling opportunity regardless... and where you will sell most of your extra cars by having this.

Buy online is just a natural extension of shop. A few will buy online, but that is not where you build your business case. Yes it is almost purely incremental to what you are getting today, but I'll let my dealers speak to that.

I thought you may find this interesting too... Here is a link to a TV news show piece where they interviewed a consumer who used the service.

http://wbztv.com/consumer/Online.car.sales.2.762885.html

Not all. Not none. Just more.

Use it to attract and get yourself more good engaged consumers.
Alex Snyder
Oscar,

I don't typically post our business statistics, but I can tell you the most common thing I hear from the customers who use myLIVEoffer:

"It made me buy a car sooner than I was expecting to"

So, customers are playing on Checkered Flag.com, they find "Make My Deal" (myLIVEoffer) and play with it. Sometimes it gets them to pull the trigger sooner, but most of the time it keeps people coming back to us over and over again....and talking to their friends about it ;)
O
Alex,

Do you see a better closing ratio on the myliveoffer leads than the other leads from your website? You do not have to tell me percentages if you do not feel comfortable posting that I understand. Just want to know whether closing ratio is higher, because that is what I see as the biggest benefit.

Thanks in advance.
O