While the online car sales business has struggled like most non-essential retailers amid the coronavirus pandemic, there are signs of life, according to new research from automotive digital solutions provider Cars.com.
Cars.com commissioned research to determine the impact of COVID-19 on the overall U.S. automotive industry. While many dealerships are experiencing low foot traffic and many have closed showrooms completely, it says millions of people are still engaged in car purchasing online. Its data shows that nearly 80 percent of Cars.com’s visitors are searching and viewing inventory with “high intent to purchase.” However, they are looking for different ways to connect with local dealerships.
“Our data shows continued engagement online with the car-purchase process as more Americans stay-at-home,” said Alex Vetter, president and CEO of Cars, Inc. “Though showroom visits are declining nationwide, the auto industry has the technology and digital tools available to meet shoppers where they are. Digital retailing, home-delivery options, increased comfort and reliance on chat tools to connect with shoppers in real-time and enhanced engagement with social channels are very valuable mediums for dealers to generate sales during this challenging period. Our automotive industry has always proven to be an incredibly resilient and resourceful industry. We are committed to helping car shoppers and dealerships navigate these unprecedented times with an array of dealer tools that are well suited to connect with the at-home shopper.”
The research revealed three key trends impacting the automotive sector. First, shoppers are looking to connect digitally as the last two weeks have shown an uptick in consumer interest in completing more purchase tasks online. Shoppers are handling price negotiations (48 percent) and financing (42 percent) online.
Second, cleanliness concerns are swaying nearly one in five consumers toward car purchases and affecting ride-hailing. The pandemic has pushed 17 percent of people who don’t own a car to now consider purchasing a car. The main reasons: increased urgency to stop using public transportation (43 percent) and distrust in the cleanliness of others’ cars (28 percent). Among consumers who plan to buy a car, one in three have accelerated their timeline. The COVID-19 crisis is also driving a decrease in ride-hailing as 42 percent of survey respondents state they are now using them less.
Third, auto dealers are ramping up home-delivery capabilities. The survey found an increased desire for more digital services and home delivery options. Dealer Inspire, a Cars.com company, saw a spike of 250 percent for Online Shopper, its digital retailing tool and nearly 65 percent for its artificial intelligence (AI)-powered Conversation chat tool in March over February. Among dealer survey respondents, most are ramping up online financing (57 percent) and online estimates for trade-ins (40 percent), while others are focused on chat options (36 percent) and home delivery of vehicles (49 percent).
The company released the research on the heels of a millennial survey. It found that millennials are frustrated with the high prices of new cars and are far more likely than baby boomers to take out longer-term auto loans. When asked about financing $25,000 at a 4.5 percent interest rate, the largest share of millennial respondents (26 percent) selected $316 per month for 96 months (eight years) compared to just 16 percent of boomers. It also found that millennials are twice as likely as boomers (62 percent versus 36 percent ) to shop for a vehicle online.