AutoTrader.com President Jared Rowe spoke with Benzinga about the organization's recent Car Buyer of the Future study.
The discussion centered on Rowe's take on the study's results and how manufacturers and dealers have responded.
BZ: What are the big takeaways from the study?
JR: The two big takeaways that I have from the research we've done are that, increasingly, consumers focus on transparency and on control.
For years and years, consumers have felt they haven't had as much control over that process, and that's led them to a place where they haven't felt good about buying a new car. That shows up in the satisfaction rate.
BZ: In addition to transparency and control, is there anything else that stood out?
JR: What was also interesting to me was that females prefer to buy in person and that Millennials
Knowing this is important because females made 40 percent of all vehicle purchases last year alone, but influenced 80 percent overall.
When you think about Millennials, it's the largest buying population that we've seen since the Boomers. By the year 2025, Millennials will purchase 75 percent of all cars.
BZ: What else did you learn about Millennials?
JR: For one thing, we think of Millennials as wanting to transact online. That doesn't seem to be the case.
They seem to value that human interaction in a different way than maybe the folks who are older than them, but they still really value it.
It's not about being sold the car for Millennials; it's about reinforcing what they've learned. Because what we know is, those folks have researched extensively.
BZ: Sounds like this calls for a change of tactics. How have dealers shown willingness to try new things?
JR: We as an industry seem to be at a place where we're more willing to evolve the traditional retail process than we have at least, in any other point in my career, which spans the last 18 years.
For example, we see some dealers attacking the one price concept.
Some dealers are changing the interaction model with the consumer, meaning that they'll have one person take a consumer all the way through a sale – even including financing.
We see more dealers representing what it means to buy from them, which may include a guarantee around a return policy. Or, maybe they will add a warranty to a used car in a way they hadn't before.
BZ: One interesting discussion in the report concerns fixed price versus negotiated price. Could you talk about that?
JR: We as an industry have taught consumers that they should negotiate with us. We have more than 100 years of teaching folks that they should do it.
It's not surprising to me then that when we go to a one-price model, maybe we don't have the trust built up that we would want there.
The other interesting thing in my mind is consumers say they want to negotiate, and they do. Over half of consumers say they want to negotiate. Negotiation today, however, looks different from negotiation 10 years ago.
BZ: How does negotiation differ today from a few years ago?
JR: Pricing bands are narrowing. This means the price the dealer displays is closer to the price that the vehicle will actually sell for.
So, when a consumer says, I want to negotiate, there are a couple of things at play. Number one is we've earned, as an industry, a reputation that negotiation is part of this. So, there's a general skepticism if we're not going to do it.
The other thing, though, is what a consumer now experiences from a negotiation standpoint is in a lot cases quicker and easier than what they've had in the past.
BZ: The report indicates customers are not necessarily looking for the lowest price. What are they looking for?
JR: Increasingly, because the pricing bands are narrower, customers want to talk about relationship. Buying style, selling style. ‘Who matches how I want to buy a car?’ We're seeing more and more of that.
You see this in the increase in use of reputation services – consumers actually finding and wanting peer reviews of dealers.
We also are seeing a willingness to pay for things that are more aligned to how the customer is going to be treated.
BZ:The report also discusses how the test drive experience is changing. Explain that.
JR: Historically, the test drive has been a step on the road to the sale. The test drive was where consumers would learn about a vehicle. It wasn't a narrow band of learning. It was a fairly broad band of learning.
Now, if I'm going to spend almost 17 hours shopping, I know an awful lot about that car. It's less about learning. It's more about validating or invalidating what I've already learned.
BZ: What, if anything, is changing about the way financing is done?
JR: That's one of the big areas of opportunity. We're seeing an awful lot of innovation going on in that space right now.
I think the real opportunity is this — is to pull finance into the shopping process earlier. Digitize elements of it.
Let customers understand their financing options before they show up at the dealership.
BZ: What role do entities like AutoTrader, have in the whole car buying process?
JR: We view ourselves as a matchmaker. We view ourselves as allowing consumers, buyers and sellers to come together in a way that matches them both best.
Meaning that it's not just about the products and prices, it's also about who the dealer is.
It's also about the preferred buying style of the consumer.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
Image Credit: Public Domain© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
