Description

“As if car buying wasn’t stressful enough, consumers are now faced with the possibility of buying a vehicle during a global pandemic. Vehicle affordability and cleanliness are the two main factors that keep consumers up at night. While the impact of COVID-19 has negatively affected short and medium term vehicle sales, the good news is that consumers are still actually buying vehicles, albeit at a slower pace. Those who are unwilling to buy now are willing to ride out the COVID-19 crisis, and the most traditional purchase behaviors so far have remained unchanged.”
– Hannah Keshishian, Automotive Analyst

This report examines the following issues:

  • Impact of COVID-19 on the car purchasing process
  • Plummeting car sales will have longer term effects on auto maintenance
  • Social distancing has led to a resurgence of “car culture”
  • Low new vehicle sales have unintended consequences for the used vehicle market

Table of Contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary 

          • What automakers and dealerships need to know
            • What automakers and dealerships can do to succeed
              • Market overview
                • Figure 1: Total US sales and forecast of market, at current prices, 2015-25
              • Impact of COVID-19 on the Car Purchasing Process
                • Figure 2: Short, medium and longer term impact of COVID-19 on the Car Purchasing Process, July 2020
              • Opportunities and Challenges
                • Plummeting car sales will have longer term effects on auto maintenance
                  • Social distancing has led to a resurgence of “car culture”
                    • Figure 3: Kia “Let’s Road Trip” Campaign, June 2020
                  • Low new vehicle sales have unintended consequences for the used vehicle market
                    • Where do we go from here
                    • The Market – What You Need to Know

                      • New car sales are down without signs of a rebound any time soon
                        • Low consumer confidence will cause consumers to think twice before buying a car
                          • COVID to push more consumers to a two-car household
                          • Market Size and Forecast

                            • US auto sales expected to shrink by 20% in 2020
                                • Figure 4: Total US sales and forecast of market, at current prices, 2015-25
                            • Market Breakdown

                              • New car sales remain down despite month over month rebound
                                • Figure 5: US auto sales by brand performance, June 2020
                            • Market Breakdown: Vehicle Ownership

                              • COVID-19 could push more households into buying second vehicle
                                • Figure 6: Vehicle ownership, April 2020
                            • Market Factors

                              • High unemployment rates cause consumers to hold off on car buying
                                • Figure 7: Unemployment and underemployment, January 2007 – July 2020
                              • Low consumer confidence correlates to tanking car sales
                                • Figure 8: Consumer Sentiment Index, January 2007 – July 2020
                              • Low gas prices
                                • Figure 9: Consumer Sentiment Index, January 2007 – July 2020
                            • Key Players – What You Need to Know

                              • Automakers risk pricing consumers out of the new vehicle market
                                • Infiniti sets the standard for a digitized car purchasing process
                                  • OEMs continue to pursue an electric future
                                  • What’s Happening

                                    • OEMs respond to COVID-19
                                      • Hyundai
                                        • Carvana
                                          • Subaru
                                            • CarMax
                                              • Chevrolet
                                                • Ford
                                                • What’s Struggling

                                                  • More automakers send sedans to the chopping block
                                                  • What to Watch

                                                    • Despite low gas prices and only moderate interest, automakers forge ahead with EVs
                                                      • Infinity takes virtual showrooms to new heights with video conferencing
                                                      • The Consumer – What You Need to Know

                                                        • Despite decreasing new vehicle sales, consumers want new cars
                                                          • Consumers seek out the dealership with the best price
                                                            • Price haggling remains a point of contention for car buyers
                                                              • Consumers aren’t going to forgo test drives any time soon
                                                                • Cleanliness emerges as a top consumer concern
                                                                • Vehicle Purchase Intent

                                                                  • Consumers are still looking to buy new
                                                                    • Figure 10: Vehicle purchase type, April 2020
                                                                  • Pandemic has yet to significantly change vehicle purchase timelines
                                                                    • Figure 11: Purchase intent, April 2020
                                                                  • Used vehicles largely appeal to young consumers; older consumers plan to purchase new
                                                                    • Figure 12: Vehicle purchase type, by age, April 2020
                                                                  • Financially struggling urban consumers are least likely to own a car
                                                                      • Figure 13: Vehicle ownership, by current financial situation, by area, April 2020
                                                                      • Figure 14: Purchase intent, by current financial situation, by area, April 2020
                                                                    • Financially stable male consumers are more willing to purchase a car in the next six months
                                                                      • Figure 15: Kia “Accelerate The Good” program, June 2020
                                                                      • Figure 16: Buick GMC “Here to Help”, April 2020
                                                                      • Figure 17: Purchase intent, by current financial situation, by gender, April 2020
                                                                  • Pre-purchase Research Methods

                                                                    • Incentives, car performance and features are the most researched items
                                                                      • Figure 18: Pre-purchase types of research, April 2020
                                                                    • In 2020, consumers are looking for a deal
                                                                      • Figure 19: Pre-purchase types of research, year over year, April 2020
                                                                    • Consumers prioritize competitive pricing over sales incentives
                                                                      • Figure 20: Pre-purchase incentive related research, April 2020
                                                                    • Test drives maintain popularity despite the need for social distancing
                                                                      • Figure 21: Pre-purchase incentive related research, April 2020
                                                                    • More consumers beyond Gen Z and Millennials use social media for vehicle research
                                                                      • Figure 22: Consumers who use social media as research, April 2020
                                                                  • The Future of Car Buying

                                                                    • Consumers hope for a more convenient future car purchasing process
                                                                      • Figure 23: Consumers attitudes toward the future of car purchasing, April 2020
                                                                    • COVID-19 has brought an appointment-based sales process
                                                                      • Figure 24: Attitudes toward appointment only vehicle sales, April 2020
                                                                    • Car buyers envision a DTC car buying model
                                                                      • Figure 25: Attitudes toward buying cars direct, by age, April 2020
                                                                    • Consumers scale back beliefs that Amazon will sell cars
                                                                      • Figure 26: Attitudes toward buying a car on Amazon, by age and gender, April 2020
                                                                    • Consumers continue to hold out for no-haggle pricing
                                                                        • Figure 27: Attitudes toward no-haggle pricing, April 2020
                                                                    • Attitudes toward the Car Purchasing Process

                                                                      • Cleanliness becomes a top concern for car buyers
                                                                        • Figure 28: Attitudes toward car cleanliness, April 2020
                                                                      • Car buying continues to put stress on consumers, especially during the pandemic
                                                                          • Figure 29: Attitudes toward car cleanliness, April 2020
                                                                        • Consumers view sales events as the prime time to purchase a car
                                                                          • Figure 30: Attitudes toward sales events, by generation, April 2020
                                                                        • Vehicle awards hold more importance to young car buyers
                                                                          • Figure 31: Attitudes toward vehicle awards, April 2020
                                                                        • Consumers want to purchase from OEMs who take care of their employees
                                                                            • Figure 32: Attitudes toward OEM treatment of employees, April 2020
                                                                        • Appendix – Data Sources and Abbreviations

                                                                          • Data sources
                                                                            • Sales data
                                                                              • Fan chart forecast
                                                                                • Consumer survey data
                                                                                  • Direct marketing creative
                                                                                    • Abbreviations and terms
                                                                                      • Abbreviations
                                                                                      • Appendix – The Consumer

                                                                                          • Figure 33: Purchase intent, by current financial situation, by household income, April 2020
                                                                                        • Young consumers have the most immediate need for a vehicle
                                                                                            • Figure 34: Purchase intent, by generation, April 2020
                                                                                            • Figure 35: Financially impacted consumer car buying concerns, by current financial situation, by household income, April 2020

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