With the close of 2022 fast approaching we found it fitting to reflect on some of the findings from various consumer research studies conducted this year, and unpack the key aspects to assist with fine-tuning your dealership’s strategy. While some of the challenges from 2021 shifted into 2022, most notably the supply and demand mismatch, we also saw several good news stories, especially surrounding purchase intentions. Price also remained a consistent factor in purchase decisions, along with the usage of automotive marketplaces to conduct vehicle research at every stage of the car buying journey. Let’s summarize the findings and insights from each of piece of Canadian car shopper research and detail what these findings mean heading into 2023.
Purchase intentions unscathed by economic uncertainty
Despite economic uncertainty, consumer purchase intentions increased. The majority of AutoTrader.ca car shoppers surveyed in November of this year rated their household finances as “Good” or “Very Good” (60%), while only 10% reported “Poor” or “Very Poor”. Nearly a quarter of shoppers intended to buy a vehicle within six months (24%), up from 18% in March of 2022.
Even if the market worsened, 60% of new car shoppers and 40% of those interested in used would still buy a car, and about half intended to spend what they had originally budgeted. The bottom-line is that no matter the state of the economy, cars remain a necessity for Canadians.
Online marketplaces a mainstay as the primary resource for car shoppers
According to our Vehicle Path to Purchase study, 45% of new car buyers and 78% of used car buyers use automotive marketplaces from the very onset right through to the close of their car buying journey. Marketplace visitation also ranks high across both cohorts, with an average of 9.4 visits for new shoppers, and 15 visits for used shoppers.
Most spend more than an hour each time they frequent an online automotive marketplace, comparing vehicle prices, examining features and reading online reviews. The majority of car shoppers spend 3 months in their journey, from initial research to finalizing the purchase.
Price is top of mind for used and new car buyers when considering a purchase, followed by brand reputation, fuel economy and vehicle availability.
Experience is also influential with car shoppers, as 40% of used buyers favour a fair price and amazing customer experience, over the best price with a lackluster experience. It appears crucial for dealer operators to prioritize these elements of the online and in-dealership experience to ensure shoppers are primed to put ink to paper when they do visit your store.
Transforming shopping behaviours
Although the microchip shortage continued to affect the industry, car buyers had become increasingly aware of it and were willing to adapt. They anticipated longer wait times for a new vehicle delivery, didn’t expect incentives or negotiation to play a part in the purchase process, and thought it would be tough to find pre-owned vehicles.
The research also found that new car buyers were more likely to purchase a car without a test drive. Almost a quarter of all shoppers were willing to exceed their initial budget by $2,000 to $4,000 if necessary and would travel farther – even out-of-province – to get the right car. More than half would spend an extra two to four hours a week perusing online automotive marketplaces. With 64% desiring a price comparison tool and 31% seeing value in vehicle reviews, offering these tactics within your dealership website represents a competitive advantage.
Car shopper interest in electric vehicles ramps up
Currently electric vehicles (EVs) only represent a small slice of the Canadian market, but an AutoTrader survey in March of this year uncovered that 55% of shoppers believe half the vehicles on the road will be electrified within 10 years. Most people don’t drive electric, however, 68% would consider buying one. The majority of those who demonstrate interest in an EV would choose a Battery Electric Vehicle (BEV), rather than a Hybrid Electric Vehicle (HEV) or a Plug-in Hybrid Electric Vehicle (PHEV).
Examining top brands, Tesla is most desired by Canadian shoppers, followed by Toyota, Hyundai and Ford. Among the top reasons buyers would choose an EV, 89% cite fuel efficiency, while 51% point to lower maintenance costs. Dealers offering new or used EVs could have an edge over their competition but, as we are in the early stages of the adoption curve, consumer knowledge gaps are evident, thus bridging the gap with educational content surrounding EVs is a must for car dealers.
Common car shopper challenges and preferences you need to know
Looking back to February of 2022 we checked in with consumers to better understand their preferences and any challenges they may face when car shopping. Our research found most respondents had bought more than four vehicles in their lifetime, but only 27% were very familiar with the car buying process. Only 12% of shoppers visit a dealership early in the buying journey, with most doing so midway or late in the process – primarily because they do most of their research through online automotive marketplaces.
Half of the car buyers surveyed had trouble negotiating price and financing, as well as assessing a used vehicle’s history and condition. They demand straightforward online information, including payment and finance options, and vehicle history and condition reports. Car shoppers also see tremendous value in testimonials from owners and reviews from automotive experts, delivered in a more engaging format, video. Unsurprisingly, buyers want to trust the brand and the dealer, to ensure they’re getting a good price.
- Vehicle purchase intentions remain steady regardless of economic shifts, continue to invest in your marketing efforts and inventory replenishment
- Automotive marketplaces are a mainstay as the top resource for car shoppers, so be sure your inventory is present where they are online
- Experience trumps price, providing your customers a quality experience across every touchpoint with your dealership is key
- Car shoppers are willing to transform conventional shopping behaviours, due to the supply and demand imbalance, offer them alternative options to get a deal closed
- Investigate the feasibility of growing your EV inventory to match the lift in consumer interest and demand
- Vehicle affordability is top of mind for Canadian car shoppers, along with vehicle information, keep your merchandising up to snuff to help your inventory listings convert