Covid changed everything – and continues to disrupt lives as it works its evil around the world but has left some alternatives that were barely considered before the pandemic, online shopping being one of those.
Findings from a recent Progressive survey of US online car buyers showed online car buyers reported higher satisfaction overall than in-person buyers.
South Africans generally are a tactile nation, and car buyers enjoy the ‘touchy feely’ part of the buying process, lovingly stroking their intended model as if it could impart some level of wisdom or simply inhaling the smell of a new car.
According to the Progressive survey, most American consumers who bought a car online in the past two years — 78% — found it a highly satisfying experience. Online car buyers also reported high satisfaction with trading in their old vehicles and financing their new ones, with 80% saying they were satisfied with the trade-in process and 70% with financing their online car purchase.
In contrast, only 58% of those who purchased from a dealership found their experience highly satisfying — 57% reported being highly satisfied with the trade-in process, and 53% were pleased with the financing experience.
“Our survey occurs at a time when car buying has changed dramatically. The pandemic brought unforeseen supply chain issues and microchip shortages that reduced vehicle inventory. Consumers flocked to sites that touted nationwide inventory and a contactless process, while major automakers like Ford and Nissan promoted custom online ordering,” says a survey spokesperson.
In South Africa, while online car shopping is very much in its infancy, the new Volvo XC40 P6 Recharge is available exclusively online through the My Volvo website – a first step in what may become a growing trend.
Buying a car once meant heading to the dealership to test drive cars, negotiate a final price and close the deal by signing reams of paperwork — a process that could gobble up countless hours of someone's time.
Not anymore. Dealerships have expanded their online sales efforts and new services have sprung up in the USA that sells directly via online marketplaces. While online sites such as Carshop.co.za have been around for some years connecting used car buyers and sellers, it is the progression to new cars under the spotlight.
Before the pandemic, most Americans expressed interest in purchasing cars online, but few did so. A 2017 Washington Post story reported, "53% of US consumers would be either extremely likely or very likely to buy a car entirely online."
Fast forward five years to 2022, and online car buying has become an increasingly viable option that more and more Americans are embracing. With online car buyers finding satisfaction with the experience, it seems likely that more consumers will look to the web when it's time to buy their next vehicle.
“Half of our respondents bought a car online, either through a vehicle delivery website or a car dealership's website,” says Progressive.
In the decade before the pandemic, millennials weren't buying as many cars as older generations. They seemed to be a less car-focused generation, more likely to walk, bike, or ride-share.
However, as millennials aged and moved out to the suburbs and, as the pandemic prompted people to avoid public transportation and ridesharing services out of safety concerns, this trend shifted. Millennials and Gen Z now account for the automotive industry's biggest growth sector.
“As they started buying more cars, millennials weren't as likely to take the traditional car-buying path. Our survey found buyers under 40 were more likely to buy a car online than those over age 57. Only 26% of those aged 25-40 reported purchasing a car from a dealership, and only 23% aged 18-24 went the traditional dealership route.
“For those over age 57, nearly 80% purchased their vehicle at a dealership, with middle-aged buyers split close to 50/50 between online and in-person buying.”
However, the shift to online car buying during the pandemic seems more about inventory shortages than pandemic-related concerns.
“Our survey found 25% of online car buyers ranked the ability to find the car they wanted online as their number one reason for shopping online. Price was considered the most important factor for 21% of buyers. Only 14% ranked COVID-19 restrictions and comfort levels as their most important reason for shopping online.
“For in-person buyers, the ability to test drive was ranked the number one reason for choosing to shop at a dealership by 34% of respondents. For 18%, having shopped at a dealership before — ‘it's what I'm used to’ — was the number one reason they chose shopping in person. Another top reason, ranked number one by 13%, was the ability to compare vehicle options easily.”
It makes sense for online shoppers to visit multiple websites to comparison shop.
“Our survey found that online buyers were twice as likely to compare across more than three websites. Of those who bought their car online, 51% looked at three or more sites.
“For those who bought in person, only 24% looked at three or more websites during their pre-purchase research.
“Those online car buyers who researched three or more websites were also 15% more likely to negotiate the price of their car than those who researched less than three sites (80% vs. 65%, respectively).”
Some other findings
The survey found that 81% of online car shoppers financed their vehicles, with 71% choosing to finance through the site where they purchased their car. A 70% reported being highly satisfied with financing, with only 4% somewhat unsatisfied. Nobody reported being not satisfied at all.
Of those who bought at a dealership, only 58% financed their vehicle purchase. Of those who financed, 38% used their bank or lender. Five per cent reported being somewhat unsatisfied, with some noting that interest rates were too high and paperwork took too long.
Most online shoppers (80%) were satisfied with the trade-in process. In contrast, 60% of in-person shoppers reported being highly satisfied.
Only 3% of online shoppers said they were somewhat unsatisfied or unsatisfied with their trade-in experience. About 6% of in-person shoppers were unsatisfied.
When asked what could be done to improve the online car shopping experience, online shoppers said they would like to see more digital enhancements. Examples included virtual 3D test-driving experiences and 310-degree videos of a vehicle's interior and exterior. Other suggestions included:
The automotive industry is also very aware of the shift to online shopping — industry executives expect a majority of sales will happen online by 2030, according to KPMG. As dealerships and manufacturers increase online options and car-buying websites improve their processes, consumers can expect a more seamless digital experience with more options — not less.
