Online Shopping Making Inroads into Automotive Industry

Capgemini survey also finds interest in green vehicles continues to rise.

Capgemini’s annual Cars Online study is out and it shows continuing trends towards online shopping and greater interest in green vehicles. The study surveyed more than 3,100 consumers in eight countries: Brazil, China, France, Germany, India, Russia, the UK and the US.

Key findings:

• Almost 90 percent of consumers today use the internet to research vehicles.

Nearly 40 percent would like to buy a car over the internet, and half would purchase parts and accessories online, the main drivers being price discounts and dissatisfaction with the dealer/retailer process.

• Reinforcing the 08/09 findings, green vehicle ownership continues its upward trend: 41 percent own a fuel-efficient or alternative-fuel vehicle, up from 36 percent the year before, and 30 percent plan to buy one. Fuel economy and environmental impact are the primary reasons.
• Customer loyalty remains vital with 68 percent of respondents likely to purchase the same make/brand again as their current vehicle, up from 61 percent last year. In addition, 63 percent would purchase from the same dealer where they bought their current car.
• The vast amount of information available on the internet is resulting in a shrinking buying cycle. Over two-thirds of respondents begin the research process two to four months in advance. Over half of respondents expect a response to an enquiry made online within four hours, and nearly three-quarters said they would look for another company if the response was too slow.
• Less than half of consumers with cars still in-warranty have their vehicles serviced at the purchasing dealership, emphasizing the importance of delivering a strong aftersales and servicing experience. Spare parts and service typically offer a profit margin up to ten times greater than that of the initial sale.

Capgemini’s recommendations for the industry:

1. Eliminate the bureaucracy and inefficiency inherent in the current buying model. Consumers want a faster, easier way to buy vehicles. Improved lead management systems, dealer optimization and online buying capabilities are among the tools that can be implemented to help achieve this objective.
2. Get serious about online selling. Consumer interest in buying vehicles and parts and accessories over the Internet is real. Providing a viable online option will be a key to maintaining customer loyalty in the coming years. Models may vary – ranging from services operated by individual manufacturers or dealers, to sites run entirely by third-parties such as eBay, to joint ventures between the two – but online buying will become the preferred approach for a significant group of consumers.
3. Focus on the aftersales and servicing experience. Keeping in-warranty consumers coming back to the purchasing dealership for servicing is imperative, particularly at a time when vehicle sales are slow. Service and spare parts operations typically offer a profit margin up to 10 times greater than that of the initial sale. In addition, the service experience can be a factor in securing customer loyalty and driving future repurchase decisions.
4. Manage your marketing mix according to each market. A one-size-fits-all marketing approach won’t work in today’s diverse automotive marketplace. Understand where to spend on the web and where to continue to invest in traditional media. And be sure to incorporate new media channels such as blogs and discussion groups into the mix. Web-based discussion groups, in particular, are growing in popularity. Consider how you, as a manufacturer or dealer, can facilitate or participate in these kinds of discussion sites.
5. Communicate with consumers before they reach the showroom. By the time vehicle buyers enter a dealership they are likely to have done a considerable amount of research and reduced their list of choices to one or two vehicles. The opportunity to influence them is nearly lost. Using new types of such as a Virtual Adviser, can help automotive companies grab consumers’ attention before it is too late.
6. Go green now. Consumers, automotive companies, governments, utilities and other types of businesses will increasingly focus on alternative-fuel vehicles. In the near future, “CO2” will become as important as “mpg” in vehicle buying decisions. It is becoming clear that alternative-fuel vehicles have the potential to be a market-changing force. However, the continued development of this business will require collaboration both inside and, more importantly, beyond the automotive industry.