“How much will you afford to buy a used car today?” The cartoonish presentations of used cars of yesteryear have disappeared with the pandemic shortage of used cars and subsequent price spikes, making the online shopping experience the big differentiator in used sales today. today.
In a recent blog post, Cars.com noted that an analysis of its dealerships showed that median used vehicle prices began to rise in January 2021 as new car production slowed, reaching “a peak from around $25,500 in February 2022. Since then, prices have remained high compared to previous years, but have seen a slight decline in recent months: the median price of all used models was around 24,000 $ in July. »
Compare that to the July 2019 average of $17,500 and that puts median used car prices nearly 40% higher in 2022 than in 2019. With a price that isn’t leverage dealers can use to convert viewers into owners, the online shopping experience proves compelling. for more consumers.
We looked at this in “The Key to Satisfied Car Buyers is Digital Payments,” a collaboration between PYMNTS and Onbe, as part of our “Expanding Payments Choice” report series with Onbe. He notes that “digital transformation has taken automotive customers out of the showroom, forcing dealerships and automakers to develop better end-to-end digital solutions. These go beyond selling, and companies that can nurture relationships with their customers digitally have an advantage. »
According to the report, 72% of customer interactions regarding vehicles are now done through digital means, and 78% of used car shoppers surveyed say they are very satisfied with this process.
Perhaps most notably, price – traditionally the reason buyers turned to used vehicles in the first place – is now a motivating factor for just 21% of used car shoppers, according to the report. .
“Twenty-five percent of consumers said their main reason for shopping online was the ability to find the car they wanted, while 21% said it was price,” the report said, noting that “a positive online shopping experience seems to help bring in shoppers 62% of online shoppers said they have bought a car online before.”
Add to that loyalty programs that run the gamut from General Motors to Tesla, which in GM’s case is a points system that creates a balance that can be used on future car purchases. According to the report, “Julie Heisel, director of GM Rewards and GM Card, said the company recognizes the importance of a positive rewards experience to continue building customer loyalty.”
See also: New car sales up 9%; Used vehicle sales fall 17% year-on-year in August
Changing Demos Boost Auto Sales Strategies
The shift from roaming and kicking to browsing Amazon-style car-buying websites isn’t unwelcome by consumers, notoriously annoyed by dealing in person with skillful car salesmen.
As “The Key to Satisfying Car Buyers, Digital Payouts” has found, young demos are the rising force in car buying today, and the companies that cater to the preferences of these car-savvy consumers digital are reaping the benefits at a time when big purchases like cars are being postponed.
A study found that 68% of consumers under the age of 30 plan to buy or lease a vehicle in the next 18 months, adding that “these buyers increasingly want end-to-end digital experiences, selection, financing and vehicle maintenance. To win their market, automotive brands and companies providing assistance services must be prepared to offer smooth and flexible payments and meet expectations for instant gratification. »
Rewards and incentives have become a bigger part of what makes for a satisfying car buying experience, building loyalty to who they will buy their next car from.
Lily: New Vehicle Prices Rise for 5th Month, Kelley Blue Book Says
According to the Onbe report, “Millennials want instant gratification and smoother digital experiences when buying a car and receiving payments, whether associated with loyalty programs, visits to service centers or car loan repayments. By delivering better digital experiences that engage consumers online and through mobile devices, the automotive industry can increase brand loyalty and retain customers. »
While it’s estimated that only 2% of car sales happen online today, that number is set to grow as young digital demos become the primary customer base, overtaking baby boomers and Gen X buyers.
In an interview with PYMNTS, Tarek Kabrit, co-founder and CEO of Dubai-based online car marketplace Seez, said car buying will increasingly move into the digital realm and customers expect ease of payment and price transparency in a sector that is known for neither.
“Think Amazon, Airbnb, Uber – none of these [platforms] own the inventory. What they did was create the infrastructure [like] technology integrations, payment logistics, operations, customer support, then they connected supply and demand […]said Kabrit. “So in the automotive space, we think the winner will probably be a platform as well.”
Lily: Auto retail needs to think more like Uber and Open Table to sell cars online
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