CARS.com published research on how global conditions have transformed consumer car shopping experiences. The report surveyed in-market consumers from CARS.com's research panel, the Driver's Seat Community. Participants had to be in-market +/- six months and have acquired a vehicle within the last nine years. Host David Long and special guest Bradley Allred broke down the study's findings for the All Things Used Cars community.
What does the study show?
1. Close rates have dipped, flipping us to a seller's market.
As demand changes, consumer expectations of paying based on limited supply have shifted. Customers remember when the sticker price had some wiggle room, and they remember negotiation, but that is no longer part of the process. The rapid changes to the market have created ample opportunities for customer disappointment.
2. Consumers have adapted to the post-pandemic world and are content to wait out the high prices.
Data shows that between 39-48% of car shoppers are willing to wait out prices. There is also a significant reduction in brand loyalty, while category desire remains stable. Customers will more easily switch from Honda to Toyota than from pick-ups to minivans.
What do dealers do now?
1. Maintain a relationship.
Reaching out to customers even when you do not have what they want shows them you are there for them.
2. Offer solutions.
While making regular contact with customers reminds them you will let them know when you find what they are after, you can also use it as a time to let them know what similar options you have. With category playing a more significant role than the brand, connecting consumers with what they want even if it was not their initial first choice is possible.
3a. Communicate timing
Consumers are accustomed to making slow decisions and feel they are being targeted by a sales tactic when told a car may sell out from under them. However, customers also hate having cars sold out from under them. Being transparent with timing from the beginning eliminates some sales discomfort and missed opportunity disappointment, helping them make decisions quicker.
3b. Communicate pricing
Everybody has seen news stories about record automotive profits, supply shortages, and inflation. Customers do not always know why the sticker's price is the price. Helping them understand the contributing factors such as reconditioning, availability, and market movements (such as mortgage rates) that indicate the same car's price trajectory next week will help them see there is no trick.
4. Help them feel like they are winning.
It is important to remember that this is a long-term game. Customers will remember if they feel taken advantage of in these high-profit times. They will leave reviews and tell their friends.
Help them feel like they are winning in a time when they feel beaten down: free oil changes, car washes, anything to help them mentally and financially.
Some around the All Things Used Cars community repeat a powerful expression: Fix your roof while the sun is shining. As David Long said early in the Clubhouse meeting, "I see a cloud coming." The time is now to take the needed steps to be ready for the next shape of the market. With generations of connection and service, dealerships will surely again adjust to accommodate the needs of the communities they call home.