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Car Buying - US - January 2011

This report explores the automotive retail market in the U.S. It provides insight into the external market and internal/industry factors affecting new vehicle sales, consumption and dealership trends—and what they mean for future sales, promotional campaigns, and industry innovations within dealership groups. Specific questions that are answered in this report include, but are not limited to, the following:

  • Are consumers buying vehicles in a recession and if so, what kind of vehicles are they buying?
  • How are consumers researching their new vehicle purchase and which is more important: being on the showroom floor to test the vehicle or researching outside the showroom, either online or through traditional media?
  • If consumers are not buying now, when are they expected to buy? Who will be buying?
  • How are car purchasing decisions influenced by friends or family or co-workers?
  • Does ‘buying American’ matter to car buyers anymore and if so, to which consumers?
  • Where are consumers purchasing new vehicles—group dealerships or online or corner lots?
  • What matters to consumers most when purchasing new? Is the showroom environment more or less important than finance deals or promotions?
  • How many new vehicle dealerships exist currently and where are they?
  • What is the median spend consumers are making on a new vehicle?
  • How have new vehicle sales fared during the recession and how are those trends impacting future sales?
  • How much of a factor is online retailing for new vehicle sales? What online platforms are or are not working?
  • What recessionary factors are impacting car buying and how?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • U.S. unit car sales increased in 2010 for the first time since 2000
                        • Mintel forecasts that dealership sales will likely increase 21% in 2010
                          • Dealerships are shrinking, especially among those selling less inventory
                            • The average U.S. dealership sold 10% fewer vehicles in 2009
                              • New vehicle registrations dropped 33% in 2009 from previous year
                                • Consumers are holding onto cars longer, creating pent-up demand for new
                                  • Spouse or partners help influence car buying
                                    • Test drives are more important than ever in determining buying
                                      • A third of respondents purchased new since recession
                                        • Average spend on new vehicles: $27K
                                          • Midsize sedans, small cars purchased during recession
                                            • Consumers may still be hesitant to purchase new following recession
                                              • Two thirds of respondents connect domestic cars with U.S. economy
                                              • Insights and Opportunities

                                                • Dealerships should offer prepaid gift cards as a brand marketing tool
                                                  • Dealerships should take advantage of Cyber Monday promotions
                                                    • Integrate technology integration more seamlessly into sales platform
                                                      • Develop buyer relationships that are designed for the long, not short term
                                                      • Inspire Insights

                                                          • Trend: Simplicity and Convenience
                                                            • Dealerships will benefit by allowing convenience to start from home
                                                            • Market Size and Forecast

                                                              • Key points
                                                                • U.S. sales reach 11.6 million units, the first year-to-year increase since 2000
                                                                    • Figure 1: Total U.S. vehicle sales, by units, 2005-10
                                                                  • Dealership revenues plummeted 17% in 2008 but recovery started in 2010
                                                                    • Figure 2: Total sales at new car dealerships, at current prices, 2005-10
                                                                    • Figure 3: Total sales at new car dealerships, at inflation-adjusted prices, 2005-10
                                                                • Market Drivers

                                                                  • New vehicle registrations dropped 33% in 2009 from previous year
                                                                      • Figure 4: Total number of U.S. motor vehicles in use, new vehicle registrations, scrappage and licensed drivers, 1991-2009
                                                                    • Consumers are holding onto cars longer, creating pent-up demand for new
                                                                      • Figure 5: Median age of automobiles and light trucks in operation in the U.S., 1990-2008
                                                                    • Cut-rate financing, shorter loan terms trending to help generate sales
                                                                      • Persistent unemployment drives consumers to consider low financing
                                                                          • Figure 6: U.S. unemployment rate, by month, July 2008-October 2010
                                                                        • Disposable income remains limited in many households
                                                                          • Figure 7: Real disposable personal income, January 2007-January 2010
                                                                        • Consumer debt declining in 2010
                                                                            • Figure 8: Consumer debt, Q1 1999-Q1 2010
                                                                        • New Car Dealerships

                                                                          • Key points
                                                                            • Total U.S. new car dealerships fall 11% between 2008 and 2010
                                                                                • Figure 9: Number of dealerships selling new cars, 1990-2010
                                                                              • Total number of new car franchises drop 9% between 2009 and 2010
                                                                                • Figure 10: Number of car and light truck franchises in the U.S., 2009 and 2010
                                                                              • California boasts the highest number of new car dealerships
                                                                                • Figure 11: Number of new car dealerships, by state, 2010
                                                                              • The average U.S. dealership sold 10% fewer vehicles in 2009
                                                                                • Figure 12: Number of new vehicles sold and average selling price, 1997-2009
                                                                            • Top U.S. Dealership Groups

                                                                              • Key points
                                                                                • AutoNation
                                                                                  • Penske Automotive Group
                                                                                    • Figure 13: Top 20 dealership groups in the U.S., by the total number of new vehicle units, 2009
                                                                                • Online Car Buying

                                                                                  • Key points
                                                                                    • The internet now an essential element of the car-buying process
                                                                                      • eBay Motors aiming to increase new vehicle inventory
                                                                                        • Industry still experimenting with selling new vehicles online
                                                                                          • GM tried but failed in partnership with eBay Motors
                                                                                            • Ford taking online sales to the UK
                                                                                              • AutoNation expanding online effort in three states
                                                                                                • Kia partners with eBay in the attempt to increase U.S. brand awareness
                                                                                                  • Figure 14: Kia Motors/eBay Motors ad, November 2010
                                                                                                • Volkswagen raising Jetta profile through luxury goods retailer promotion
                                                                                                • Dealership Qualities

                                                                                                  • Kentucky Toyota-Scion dealership creates community destination
                                                                                                    • Dealership uses naming rights of city park to bring vehicles to people
                                                                                                    • Innovation and Innovators

                                                                                                      • Phone app allows users to connect with automaker before, after purchase
                                                                                                        • Ford steers test drives of new F-150 pick-up to buyer homes
                                                                                                          • Corvette enthusiasts enticed by opportunity to participate in engine build
                                                                                                            • Nissan invites ‘Mommy Bloggers’ to test drive updated minivan
                                                                                                              • Partnership with truck company brings messaging to the streets
                                                                                                              • Marketing Strategies

                                                                                                                • Strategy: Test drives as a VIP exclusive event
                                                                                                                  • Figure 15: West Herr Ford direct mail ad, 2011
                                                                                                                • Strategy: Turning the test drive experience into a family event
                                                                                                                    • Figure 16: General Motors Mark of Excellence Test Drive Experience direct mail ad, 2011
                                                                                                                  • Strategy: Marketing trade-in process as upgrading your lifestyle
                                                                                                                    • Figure 17: General Motors Mark of Excellence Test Drive Experience direct mail ad, 2011
                                                                                                                  • Ford shows how swapping your ride can help you in the long run
                                                                                                                    • Figure 18: Ford ad, 2011
                                                                                                                  • Chevrolet suggests consumers “switch” to their vehicles
                                                                                                                    • Figure 19: Chevrolet ad, 2011
                                                                                                                  • Strategy: Providing all the information buyers need at their fingertips
                                                                                                                      • Figure 20: Bankston Ford ad, 2011
                                                                                                                  • Participation in New Vehicle Purchasing

                                                                                                                    • Key points
                                                                                                                      • A third of respondents purchased new over the last three years
                                                                                                                          • Figure 21: Participation in new vehicle purchasing, by gender, age, household income and race and Hispanic origin, September-October 2010
                                                                                                                      • When New Vehicle Purchasing Took Place

                                                                                                                        • Key points
                                                                                                                          • Recession incentives motivated car buying during troubled times
                                                                                                                            • Figure 22: When last new vehicle was bought, in past 3 years, by gender, September-October 2010
                                                                                                                          • Recession purchasing highest among middle-aged consumers
                                                                                                                            • Figure 23: When last new vehicle was bought, in past 3 years, by age, September-October 2010
                                                                                                                        • Future New Vehicle Purchasing

                                                                                                                          • Key points
                                                                                                                            • Consumers may still be hesitant to purchase new following recession
                                                                                                                              • Figure 24: When next vehicle purchase is planned, by gender, April-June 2010
                                                                                                                            • Those aged 18-24 are most likely to purchase within the year
                                                                                                                              • Figure 25: When next vehicle purchase is planned, by age, April-June 2010
                                                                                                                            • Higher-income households most likely to purchase within the year
                                                                                                                              • Figure 26: When next vehicle purchase is planned, by household income, April-June 2010
                                                                                                                          • Amount Spent On New Vehicle Purchase or Lease

                                                                                                                            • Key points
                                                                                                                              • Respondents spending an average of $27K on new vehicles
                                                                                                                                • Figure 27: Amount spent on most recent vehicle purchase/lease, by gender, April-June 2010
                                                                                                                            • Type of New Vehicle Purchased

                                                                                                                              • Key points
                                                                                                                                • Midsize sedans and small cars bought during recession
                                                                                                                                    • Figure 28: Type of new vehicle purchased, by gender, September-October 2010
                                                                                                                                  • Those aged 25-34 purchased SUVs more than older peers
                                                                                                                                      • Figure 29: Type of new vehicle purchased, by age, September-October 2010
                                                                                                                                    • Crossover SUVs allowing taste of luxury for middle-income households
                                                                                                                                      • Figure 30: Type of new vehicle purchased, by household income, September-October 2010
                                                                                                                                  • Where New Vehicles Are Purchased

                                                                                                                                    • Key points
                                                                                                                                      • Brand dealerships dominating outlet where respondents purchased new
                                                                                                                                        • Figure 31: Where new vehicles are purchased, by gender, September-October 2010
                                                                                                                                      • Dealership groups rated highest among those aged 25-34
                                                                                                                                        • Figure 32: Where new vehicles are purchased, by age, September-October 2010
                                                                                                                                      • Dealership groups rated highest by those from lowest-earning households
                                                                                                                                        • Figure 33: Where new vehicles are purchased, by household income, September-October 2010
                                                                                                                                    • How New Vehicles Are Researched

                                                                                                                                      • Key points
                                                                                                                                        • Automaker sites first stop for respondents in researching vehicles
                                                                                                                                          • Figure 34: Where new vehicles are researched, by gender, September-October 2010
                                                                                                                                        • Under-45s rate automaker websites higher than older peers
                                                                                                                                          • Figure 35: Where new vehicles are researched, by age, September-October 2010
                                                                                                                                        • Respondents from higher-income households researching more
                                                                                                                                          • Figure 36: Where new vehicles are researched, by household income, September-October 2010
                                                                                                                                      • Who Influences New Vehicle Purchase

                                                                                                                                        • Key points
                                                                                                                                          • Majority of purchase decisions made with help from spouse or partner
                                                                                                                                            • Figure 37: Who influences new vehicle purchases, by gender, September-October 2010
                                                                                                                                          • Respondents aged 25-34 more influenced by friends than older age groups
                                                                                                                                            • Figure 38: Who influences new vehicle purchases, by age, September-October 2010
                                                                                                                                          • Children most influential in $100K+ households
                                                                                                                                            • Figure 39: Who influences new vehicle purchases, by household income, September-October 2010
                                                                                                                                        • What Influences New Vehicle Purchase

                                                                                                                                          • Key points
                                                                                                                                            • Test drives dominating influence for respondents when purchasing car
                                                                                                                                              • Figure 40: What influences new vehicle purchases, by gender, September-October 2010
                                                                                                                                            • Test drives rated highest by those aged 25-44
                                                                                                                                              • Figure 41: What influences new vehicle purchases, by age, September-October 2010
                                                                                                                                            • Higher-income households interested in test drives
                                                                                                                                              • Figure 42: What influences new vehicle purchases, by household income, September-October 2010
                                                                                                                                          • Attitudes Toward Trade-In Process

                                                                                                                                            • Key points
                                                                                                                                              • Female respondents feel less satisfied regarding trade-in price than men
                                                                                                                                                • Figure 43: Attitudes towards trade-in process, by gender, September-October 2010
                                                                                                                                              • 25-34 year olds most likely to feel ‘ripped off’
                                                                                                                                                • Figure 44: Attitudes towards trade-in process, by age, September-October 2010
                                                                                                                                            • Attitudes Toward New Car Purchasing

                                                                                                                                              • Key points
                                                                                                                                                • Two thirds of respondents connect domestic cars with U.S. economy
                                                                                                                                                  • Figure 45: Consumer attitudes towards new car purchasing, by gender, September-October 2010
                                                                                                                                                • 25-34 year olds most likely to purchase to ditch clunker costs
                                                                                                                                                  • Figure 46: Consumer attitudes towards new car purchasing, by age, September-October 2010
                                                                                                                                              • Impact of Race and Hispanic Origin

                                                                                                                                                • Key points
                                                                                                                                                  • White respondents purchasing SUVs more than Hispanics
                                                                                                                                                    • Figure 47: Type of new vehicle purchased—white vs. Hispanic, September-October 2010
                                                                                                                                                  • Asian respondents most likely to purchase new within the single year
                                                                                                                                                    • Figure 48: When consumers plan to make their next vehicle purchase, by race and Hispanic origin, April-June 2010
                                                                                                                                                  • Neighborhood lots used more by Hispanic respondents than by whites
                                                                                                                                                    • Figure 49: Where new vehicles are purchased—white vs. Hispanic, September-October 2010
                                                                                                                                                  • Hispanics less inclined to use automaker sites than whites
                                                                                                                                                    • Figure 50: Where new vehicles are researched—white vs. Hispanic, September-October 2010
                                                                                                                                                  • White respondents more likely to seek advice from spouse or partner
                                                                                                                                                    • Figure 51: Who influences new vehicle purchases—white vs. Hispanic, September-October 2010
                                                                                                                                                  • White respondents more likely than Hispanics to be influenced by test drives
                                                                                                                                                    • Figure 52: What influences new vehicle purchases—white vs. Hispanic, September-October 2010
                                                                                                                                                  • Hybrid technology more essential for Hispanic respondents than whites
                                                                                                                                                    • Figure 53: Consumer attitudes towards new car purchasing—white vs. Hispanic, September-October 2010
                                                                                                                                                • Cluster Analysis

                                                                                                                                                    • Brandies
                                                                                                                                                      • Demographics
                                                                                                                                                        • Characteristics
                                                                                                                                                          • Opportunity
                                                                                                                                                            • Improvisers
                                                                                                                                                              • Demographics
                                                                                                                                                                • Characteristics
                                                                                                                                                                  • Opportunity
                                                                                                                                                                    • Indies
                                                                                                                                                                      • Demographics
                                                                                                                                                                        • Characteristics
                                                                                                                                                                          • Opportunity
                                                                                                                                                                            • Cluster characteristics
                                                                                                                                                                              • Figure 54: Car buying clusters, September-October 2010
                                                                                                                                                                              • Figure 55: Type of vehicle consumers purchase, by car buying clusters, September-October 2010
                                                                                                                                                                              • Figure 56: How consumers research car buying, by car buying clusters, September-October 2010
                                                                                                                                                                              • Figure 57: Factors that influence vehicle purchasing, by car buying clusters, September-October 2010
                                                                                                                                                                              • Figure 58: Attitudes towards car buying, by car buying clusters, September-October 2010
                                                                                                                                                                            • Cluster demographics
                                                                                                                                                                              • Figure 59: Car buying clusters, by gender, September-October 2010
                                                                                                                                                                              • Figure 60: Car buying clusters, by age, September-October 2010
                                                                                                                                                                              • Figure 61: Car buying clusters, by household income, September-October 2010
                                                                                                                                                                              • Figure 62: Car buying clusters, by race, September-October 2010
                                                                                                                                                                              • Figure 63: Car buying clusters, by Hispanic origin, September-October 2010
                                                                                                                                                                            • Cluster methodology
                                                                                                                                                                            • Appendix: Other Useful Consumer Tables

                                                                                                                                                                              • Participation in new vehicle purchasing and household income
                                                                                                                                                                                • Figure 64: Participation in new vehicle purchasing, by household income, September-October 2010
                                                                                                                                                                              • Attitudes towards new car purchasing and household income
                                                                                                                                                                                • Figure 65: Consumer attitudes towards new car purchasing, by household income, September-October 2010
                                                                                                                                                                              • Participation in new vehicle purchasing by race and Hispanic origin
                                                                                                                                                                                • Figure 66: Participation in new vehicle purchasing, by race and Hispanic origin, September-October 2010
                                                                                                                                                                              • Attitudes towards trade-in process by race and Hispanic origin
                                                                                                                                                                                • Figure 67: Attitudes towards trade-in process, by race and Hispanic origin, September-October 2010
                                                                                                                                                                            • Appendix: Trade Associations

                                                                                                                                                                              Companies Covered

                                                                                                                                                                              • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                                              • Asbury Automotive Group, Inc.
                                                                                                                                                                              • Audi of America Inc
                                                                                                                                                                              • Automotive Aftermarket Industry Association
                                                                                                                                                                              • Automotive Industry Action Group (AIAG)
                                                                                                                                                                              • Automotive Oil Change Association (AOCA)
                                                                                                                                                                              • Automotive Trade Association Executives (ATAE)
                                                                                                                                                                              • BMW of North America, LLC
                                                                                                                                                                              • Bureau of Economic Analysis
                                                                                                                                                                              • Chrysler LLC
                                                                                                                                                                              • Connected Vehicle Trade Association (CVA)
                                                                                                                                                                              • Daimler AG
                                                                                                                                                                              • Ferrari S.p.A.
                                                                                                                                                                              • Ford Motor Company (USA)
                                                                                                                                                                              • General Motors Corporation
                                                                                                                                                                              • Hendrick Automotive Group
                                                                                                                                                                              • Hyundai Motor America
                                                                                                                                                                              • Kia Motors America, Inc.
                                                                                                                                                                              • Lithia Motors, Inc.
                                                                                                                                                                              • Mazda North American Operations
                                                                                                                                                                              • Mercedes-Benz USA
                                                                                                                                                                              • Mitsubishi Motors North America, Inc.
                                                                                                                                                                              • National Automobile Dealers Association (NADA)
                                                                                                                                                                              • National Independent Automobile Dealership Association (NIADA)
                                                                                                                                                                              • National Retail Federation (NRF)
                                                                                                                                                                              • Nissan North America, Inc.
                                                                                                                                                                              • Penske Automotive Group, Inc.
                                                                                                                                                                              • Porsche Cars North America, Inc.
                                                                                                                                                                              • Research In Motion (USA)
                                                                                                                                                                              • Rubber Manufacturers Association (RMA)
                                                                                                                                                                              • Staluppi Auto Group
                                                                                                                                                                              • Subaru of America, Inc.
                                                                                                                                                                              • Tire Industry Association
                                                                                                                                                                              • Toyota Motor Corporation USA
                                                                                                                                                                              • U.S. Bureau of Labor Statistics
                                                                                                                                                                              • Volkswagen of America, Inc.

                                                                                                                                                                              Car Buying - US - January 2011

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