US Dealerships and Third-Party Car Buying Market Report 2020
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“Consumers are not impressed with the level of service automotive retailers provide. Dealerships have a strong hold on the market, but that’s mainly out of habit. The money and time…

US Dealerships and Third-Party Car Buying Market Report 2020

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Report Summary

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Dealerships and Third-Party Car Buying: Incl Impact of COVID-19 – US market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

Consumers have ample options to choose from in terms of where
to purchase their next vehicle. Whether it’s shopping at a local
dealership, buying from a retailer rooted in online purchases or
simply buying a car off Craigslist, the automotive retail landscape
has changed drastically and will continue to do so. With that being
said, ample options don’t necessarily equate to a better car buying
experience. Across the board, automotive retailers are failing to
meet consumer expectations.

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Expert analysis from a specialist in the field

Written by Hannah Keshishian, a leading analyst in the Automotive sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Consumers are not impressed with the level of service automotive retailers provide. Dealerships have a strong hold on the market, but that’s mainly out of habit. The money and time required to attract new customers is significant, especially during a pandemic. In the long run, providing a better customer experience can increase profits by providing guaranteed repeat purchases, and cut down on customer acquisition costs – something that would be a win-win for all parties involved
Hannah Keshishian
Automotive Analyst

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Definition
          • COVID-19: Market context
          • Executive Summary

              • Top takeaways
                • Market overview
                  • Impact of COVID-19 on the used vehicle market
                    • Figure 1: Short-, medium- and long-term impact of COVID-19 on used vehicle sales, September 2020
                  • Opportunities and Challenges
                    • Lack of used vehicle inventory will lead to an increase in value
                      • Dealerships need to further digitize their car buying experience
                        • Third party retailers should push service center offerings
                        • The Market – Key Takeaways

                          • Much like new, used vehicle sales have decreased in the short term due to COVID-19
                            • As unemployment numbers decrease, more consumers may buy cars
                              • Consumer confidence makes small gains after severe losses
                              • Market Size and Forecast

                                • COVID-19 to have less of an impact on used vehicle sales
                                  • Figure 2: Total US retail sales and forecast of used vehicle sales, at current prices, 2015-25
                                • Impact of COVID-19 on the used vehicle market
                                  • Figure 3: Short-, medium- and long-term impact of COVID-19 on the used vehicle market, September 2020
                                • Lockdown
                                  • Reemergence
                                    • Recovery
                                      • COVID-19: US context
                                        • Learnings from the last recession
                                          • Declining vehicle sales could once again lead to shuttered dealerships and more
                                          • Market Breakdown

                                            • More US households could become two-car homes
                                              • Figure 4: Vehicle ownership, April 2020
                                          • Market Factors

                                            • Decreasing unemployment numbers could spur vehicle purchases
                                              • Figure 5: Unemployment and underemployment, January 2007- August 2020
                                            • Declining traffic volumes in 2020 could hinder vehicle purchases
                                              • Consumers are slightly more optimistic about the US economy
                                                • Figure 6: Consumer Sentiment Index, January 2007-August 2020
                                            • Market Opportunities

                                              • Facial recognition tech to serve as a staff COVID tracker
                                              • Competitive Strategies

                                                • How Carvana sells cars
                                                    • Figure 7: Carvana – Ditch the Dealership, August 2019
                                                    • Figure 8: Carvana – Pioneers of 100% Online Car Buying, June 2020
                                                  • How CarMax sells cars
                                                    • Figure 9: CarMax – Everywhere is a CarMax, July 2020
                                                  • How dealerships sell cars
                                                    • Jeep-centric dealerships find success during the pandemic
                                                      • Declining sales have dealer groups cutting their losses, and jobs
                                                      • The Consumer – Key Takeaways

                                                        • Despite pandemic, consumers’ car buying behavior stays consistent
                                                          • Consumers pick dealerships as the most popular retailer
                                                            • Young adults and parents of young drivers are looking for warranties
                                                              • COVID keeps car buyers hesitant to enter dealerships
                                                              • Vehicle Purchase Intent

                                                                • Despite pandemic, car buying behaviors remain unchanged
                                                                  • Figure 10: Purchase intent timeline, May 2020
                                                                • Most consumers plan to trade in their current vehicle
                                                                  • Figure 11: Trade-in intent, May 2020
                                                                • Adults want to buy new vehicles
                                                                  • Figure 12: Vehicle type consideration, May 2020
                                                              • Vehicle Retailer Locations

                                                                • Status quo helps dealerships thrive
                                                                  • Figure 13: Recently acquired vehicle location, May 2020
                                                                • Young car buyers more willing to try out third party dealers
                                                                    • Figure 14: Recently acquired vehicle location, by age, May 2020
                                                                • Perceptions of Vehicle Retailers

                                                                  • Retailer trust lags behind the best deal
                                                                    • Figure 15: Reason for purchasing from a specific retailer, May 2020
                                                                  • CarMax customers attracted to trust, reliability
                                                                    • Figure 16: Consumer trust among vehicle retailers, May 2020
                                                                    • Figure 17: Vehicle warranty as reason for retailer selection, May 2020
                                                                    • Figure 18: Ease of car purchasing process, by retailer, May 2020
                                                                  • Young car buyers and parents want warranties
                                                                    • Figure 19: Warranty as retailer purchase reason, by age May 2020
                                                                    • Figure 20: Warranty as retailer purchase reason, by parental status, May 2020
                                                                • Vehicle Retailer Attributes

                                                                  • Dealerships are the “worst,” unless compared to other vehicle retailers
                                                                    • Figure 21: Warranty as retailer purchase reason, by parental status, May 2020
                                                                  • Consumers tolerate dealerships, dislike staff
                                                                      • Figure 22: Perceptions of dealerships and staff, May 2020
                                                                    • CarMax crushes Carvana in car buyer perception
                                                                      • Figure 23: Perceptions of Carvana and CarMax, May 2020
                                                                    • Car purchasing process, not retailer, intimidates car buyers
                                                                      • Figure 24: Perceptions of intimidating retailers, May 2020
                                                                  • Vehicle Retailer Selection Factors

                                                                    • Consumers emphasize variety over value
                                                                      • Figure 25: Top factors when selecting a vehicle retailer, May 2020
                                                                    • Young car buyers prioritize health safety; older consumers prioritize price
                                                                      • Figure 26: Top factors when selecting a vehicle retailer, by age, May 2020
                                                                    • Brand name matters more to Boomers and Swing Generation
                                                                      • Figure 27: Top factors when selecting a vehicle retailer, by age, May 2020
                                                                      • Figure 28: Presence of favorite dealership, May 2020
                                                                    • Dealerships should lean into localism
                                                                      • Figure 29: Perception of dealerships as a local business, May 2020
                                                                    • Have deal, consumers will travel
                                                                      • Figure 30: Likelihood of travel for best vehicle deal, May 2020
                                                                    • COVID causes more hesitancy in young car buyers over old
                                                                      • Figure 31: Reluctance to enter dealership, by age, May 2020
                                                                    • Gen Z doesn’t buy into stigma of used car retailers
                                                                      • Figure 32: Consumer lack of trust in used car retailers, by generation, May 2020
                                                                    • Feelings of being understood could drive dealership loyalty
                                                                      • Figure 33: Consumer sentiment of being understood, May 2020
                                                                  • Appendix – Data Sources and Abbreviations

                                                                    • Data sources
                                                                      • Sales data
                                                                        • Forecast
                                                                          • Consumer survey data
                                                                            • Consumer qualitative research
                                                                              • Direct marketing creative
                                                                                • Manufacturer Retail Selling PriceAbbreviations and terms
                                                                                  • Abbreviations
                                                                                    • Terms

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