The pandemic is pushing young buyers into showrooms earlier than they had planned, and dealerships should be ready to respond with affordable products and new ways of doing business, says a new survey conducted by Deloitte.
Of the 1,022 Ontarians aged 18 and older surveyed during the week of Aug. 17, 18 per cent said their plans for purchasing their next vehicles have been accelerated by COVID-19, according to Ryan Robinson, who leads Deloitte’s automotive research practice in Toronto. This figure rises to 31 per cent among respondents 18 to 34 years old, Robinson said, with 56 per cent of that group citing a car’s ability to assist with social distancing.
Among all age groups, 27 per cent of respondents said they are reconsidering which type of vehicle to acquire next, and 48 per cent among that group said this rethink involves purchasing a less expensive vehicle than they had originally planned. For those aged 18 to 34, this percentage drops slightly to 46 per cent, while 51 per cent of buyers aged 34 to 54 say they expect to spend less on their next visit to showrooms.
“Consumers may be confronting a new reality, or a different reality, in terms of their financial capacity,” said Robinson, who presented the findings at the Trillium Automobile Dealers Association’s virtual Auto Dealers Innovation Series & Expo on Sept. 24. “That is definitely going to have an impact, we think, on their ability to engage in the retail sector, particularly for large durable goods and long-term financial decisions like buying a car.”
One of the survey’s more surprising results shows that a clear majority of those surveyed are not interested in a fully virtual sales process, regardless of age. Only six per cent of respondents expressed a desire to complete a purchase entirely online, while 16 per cent said they would prefer a partially virtual process, leaving a full 78 per cent who favour completing a sale at a dealership in person. Interest in buying a car without setting foot in a dealership goes up among the 18 to 34 age group, but still tops out at 12 per cent.
When asked what entity they would expect to deal with in an entirely virtual purchase, 68 per cent of those surveyed said they would prefer to buy from an authorized dealer, while 27 per cent said they would favour buying directly from the manufacturer. Interest in buying from a third-party platform such as Amazon is very low at just four per cent.
However, younger buyers have a higher tolerance for completing a purchase without test driving the vehicle. Only 26 per cent of those 18 to 34 said the inability to test drive would be a deal-breaker in a sale, as opposed to the overall result of 44 per cent.
“Again, the 18 to 34 camp is a special kind of consumer set that deserves a little bit of different attention,” Robinson said. “It’s easy [for] analysts that look at this industry to think in black and white terms, it’s either a physical process or it’s a virtual process. In fact, this is going to get really complicated and messy for the foreseeable future.”