There may be fewer cars and trucks on the sales grounds, but advertising is still an important part of the future of local dealerships. That’s the message from Cox Automotive’s 12th Annual Car Buyer Journey Study.
“Dealers must always stay engaged and top of mind with customers,” said Vanessa Ton, senior manager of research and market intelligence at Cox Automotive. âWe see that if they don’t advertise, they’re going to lose sales. There is also going to be a loosening of consumer loyalty. Cox’s research found that dealerships that cut their ad spend between 50% and 89% saw a 28% drop in sales.
The latest study finds that two-thirds of consumers were very satisfied with their shopping experience, down from the record set in 2020 at 72%, when inventory was more plentiful and favorable incentive programs were offered. . Yet three-quarters of vehicle buyers in 2021 said they were very satisfied with the dealership experience.
“We’re also seeing some frustrations in the sense that this shortage of chips has caused a shortage of inventory, so consumers are having a harder time finding the right vehicle – and we’re seeing there are inflated prices,” he said. said Ton. “Despite these challenges, consumers are still highly motivated to buy.” She attributes this to a strong economy, falling unemployment and a resurgence in vehicle ownership, with people choosing to avoid public transport and ride-sharing services. This opens up new advertising opportunities.
âThe survey indicates there will be 50% growth as more consumers say they will drive more in 2022. With more miles and more vehicle usage, we believe that visits from service will increase significantly,” Tonne said. âSo definitely consider some type of advertising around the service to stay ahead and generate more revenue overall,â she advised dealers in a webinar this week. Ton noted that half of service visits were promoted by the service provider, making it even more critical for dealers to market themselves. “It also helps them protect loyalty,” she said. “Among those who had their car serviced at a dealership, 43% are loyal to the brand.”
The report also suggests that there are limits to the role that digital sales â and potentially marketing â will play in vehicle sales in the future. Despite the pandemic, Cox Automotive says the percentage of primarily digital shoppers has fallen from 20% in 2020 to 18% in 2021. And the time people spent buying a new car or truck has gone down the year. last, in part because there were fewer options to consider. Buyers said they spent just under 12.5 hours researching and buying a vehicle in 2021, down 46 minutes from 2020, according to the CBJ study. But among people who navigated their cars virtually, the survey found that those consumers were less likely to be shocked by high sticker prices and disappointed with their options.
âOne of the ways to stay engaged would be to promote more pre-orders, Ton recommended. get the right vehicle.” She said Cox’s survey showed 37% of buyers said they were willing to wait up to six months for the right vehicle.
New car prices may have peaked
There could be some relief in store for shoppers in the coming months. Not only are we hoping chip shortages will ease, Kelly Blue Book reports that the average new vehicle transaction price is up 12.5% ââfrom a year ago â but down 1, 8% month-over-month in January to $46,404. This is the third consecutive monthly decline.
“The new car price spike appears to have peaked,” said Michelle Krebs, an analyst at Cox Automotive. âYet, while we expect vehicle supply to improve, it will continue to be tight, particularly in the first half of the year. For this reason, we expect prices to remain high. for the foreseeable future, but car buyers can rest assured that we won’t. I don’t expect any more records.”
Analysts say new vehicle supplies have been flat since Thanksgiving. But because customer demand remains strong, it allows dealers to continue to maintain prices at or above the manufacturer’s suggested retail price. Consumers have paid for more than one sticker for each of the last eight months, while a year ago non-luxury vehicles were selling for more than $1,600 less.