COVID-19: The year that changed everything?
But when COVID hit in 2020, car sales plummeted across the board, with supply chains struggling to get parts into the country and people considering their four-wheeled friends non-essential for the first time.
Yet those who were in the market for a new car in 2020 unsurprisingly turned to online sellers, as their local dealership just wasn’t an option during the lockdown. Industry-leading car dealer, GForce – who counts one-third of the UK's franchised retailers as its customers – saw a 1228% increase in online car sales, showing promising things for automotive eCommerce.
Fast forward to 2021 and things are finally starting to return to normal. Businesses are back in operation, people are commuting to work again, yet the trend in automotive eCommerce and people buying their new cars online didn’t stop as some might have expected.
With national lockdown causing consumers to up their screen time in 2020, what was thought to be just a spike in online car sales has now ignited a shift in consumer behavior, accelerating the already promising growth of automotive eCommerce in 2019.
In fact, 32% of US car buyers were open to buying online pre-covid, compared to 61% today, showing an undeniable shift in the way we buy.
Automotive Ecommerce vs Traditional Car Sales
But why are consumers still choosing to buy their vehicles online? Why, if people can go to their local dealership and test drive the real thing, are they still turning to online retailers to buy their new vehicle?
Let’s compare the two and see.
|Buying a car online||Buying a car in-person|
|Simultaneously view cars, comparing brands, models, features and specifications||Typically one brand per showroom|
|The final price and payment plans in one click, with easy comparisons across different suppliers and vendors||Discuss offers and possible payment options with a sales representative|
|Electronic trade appraisal||In dealership trade appraisal|
|Electronic contracting||Going through the contract onsite|
|VR/AR car viewing||In-person test driving|
|Home delivery||Drive your car off the forecourt the same day|
There are clear advantages and disadvantages for both but it really depends on personal preference. Some people prefer the one-to-one service of a sales representative, while others prefer a more relaxed environment with less pressure.
One thing that is clear is eCommerce as a whole is growing rapidly, so it only makes sense that automotive eCommerce would follow suit. We just weren’t expecting it to happen so abruptly.
With COVID causing car companies to rethink their approach and focus their efforts online, consumers have been given a more convenient, hassle-free option when it comes to buying their new car. And by the looks of it – they aren’t going back to the forecourt anytime soon.
This doesn't come as a surprise given that a 2016 AutoTrader Car Buyer of the Future Study showed that 99% (yes 99%) of customers are not satisfied with the current buying process.
Other methods include:
- Social Media – Creating a page on social media for the dealership and posting frequently can help to increase awareness. The more engagement received on posts, the more the page will show up on other potential customers' feeds.
- Google and Bing Ads – Vehicles can be advertised online through paid ads on platforms such as Google and Bing. Google has actually introduced a new form of ads for automotive in March 2022. When someone searches for something related to a vehicle or brand, the ad appears in front of the potential customer as a related search. Not only can this lead to instant sales, but it also strengthens the brand as a whole.
The Next Related Read: [Case Study for Automotive] 620% Increase in Conversions with Automated Text Ads
- Virtual Showrooms – These are becoming increasingly popular amongst dealerships; especially following the COVID-19 pandemic where customers were no longer able to visit the cars in person due to non-essential shops having to close. The virtual showrooms will appear on the dealership's own website but be promoted via other media platforms. For example, Mercedes Benz has an online virtual showroom, which they have recently promoted via TV adverts. Viewing the car through virtual reality online is the closest thing to viewing the car in person.
- Expert Reviews – Reviews from experts have been used for years online as many consumers look for a trusted third-party opinion before making a purchase. A dealership can reach out to experts for a review of their automotive in hopes that their review will help influence the potential buyers however, many pride themselves on honesty and it could result in a negative view of the company.
- Article Marketing – Article marketing is where your advert is posted on established and related blogs or websites. This may not only generate a lead, but if consumers click on the advertisement, it can boost the search engine rankings of the dealership’s website. If the article itself is getting good traction and is ranking well, this can drive sales organically through search result traffic, too.
In the ‘Global Automotive Consumer Study’ conducted in 2018, the result showed the majority of participants are influenced the most by dealers' own websites, taking the majority vote at 36%. The least impactful information source was social media with 14%.
These are all common channels used by leading brands in the automotive industry today. It’s important to regularly review what your consumer’s needs are and act accordingly with your marketing strategy and advertising methods.
Industry giants such as Tesla, Carvana, Vroom and Walmart are just some of the names disrupting the automotive eCommerce market with new innovations in the space thanks to their huge financial resources. As of 2020, Carvana was valued at about $14 billion and Tesla at a huge $140 billion.
The newcomers of the field are in competition with traditional car companies and dealers; whereas Walmart decided to partner with the industry, enabling their 250 million customers to shop for automotives through their eCommerce platform, CarSaver.
Tesla may be paving the way for its competitors following the release of their Model 3, choosing to sell the car solely online. Because of this, Tesla managed to sell more cars, in more locations and at a lower cost – leading the way for others in the industry to jump on the eCommerce bandwagon.
Amongst these industry giants is Ford, a 118-year-old motor company.
Ford was quick off the mark in 2020 and saw the pandemic as a chance to reinvent itself. The Ford team identified the industry changes underway, such as driverless cars, shared mobility and electric vehicles and new executives, Suzy Deering (global CMO) and Jim Farley (CEO) started making changes fast.
From their organisational structure to customer experience, Suzy and Jim left no stone unturned when preparing their new strategy. The trajectory of the automotive eCommerce industry was clear; so the pair set out to have technology at the heart of their new plan to keep up with the ever-changing demands of the modern-day car buyer.
- Ford decided the best way forward is to reimagine what auto brands do. They wanted to build software know-how within the company and invest in electric architectures. It was clear this was essential following the rise in demands and ever-changing steps in the automotive industry. They acknowledged that the biggest transformation for them is to a software services-dominated company and brand.
- Driving the ‘connected car’ experience forward meant that Ford is upholding their founder Henry Ford’s original vision, that “every American consumer can own a vehicle”. They do so by reimagining what vehicle ownership looks like today and giving customers what they want before they know it themselves. Ford hopes to bring the experience of using a car outside of just a mode of transport by making new digital products and integrating software into its vehicles through a first-of-its-kind partnership with Google. Millions of automotive companies' cars will be powered by an Android system by 2023, having Google’s apps and services built-in.
- Many businesses use a traditional acquisition model in order to attract consumers through ads and rebates. However, Ford is shifting focus to a loyalty-based model in an effort to look after the customers they already have. By nurturing the relationship and relying on first-party data, they aim to build upon existing knowledge of their customers and stay one step ahead of their customers' needs.
This blueprint is a huge transformation for Ford and the new technology and innovations they aim to bring to their customers will likely see them at the front of the pack in the automotive eCommerce space over the coming years.
So what can consumers expect when they buy a new car online?
Buying a car online clearly has its benefits, and thanks to covid-19, it just keeps getting quicker and easier than ever.
- Less pressure
- Unbiased information
- Easier buying process
- Home delivery
- More time to make an educated decision
- Easy website navigation
- Virtual showrooms
- Virtual reality test drives
- Augmented reality cars
In order for dealerships to stay ahead of the curve, integrating advanced technology into the buying process is a must. Many automotive manufacturers and dealers are making large investments in a range of consumer-focused digital technologies, from tablet-based product guides to virtual reality-enabled applications.
In fact, in an interview with Robert Forrester, stated that “car dealers must become technology companies”, a big statement from the chief executive.
It was also revealed that during the COVID-19 lockdown, 50% of their customers were happy to buy a car online without having seen it in person. With more and more dealerships turning to advanced technology for their online presence, many people believe the future of the automotive industry lies in the virtual world.
Virtual showrooms (VR) and augmented reality (AR) create new options for both customers and dealers. A customer may favor a car for a specific trim or feature, yet the traditional dealership cannot stock every car model in every different color, with every specification available. VR and AR make customization simple and are becoming increasingly popular amongst the industry.
Augmented reality can support the operations of car dealerships to enhance the sales process too, and many well-known brands are taking advantage of this.
Jeep is enabling their customers to conduct virtual walkarounds of their newest models, allowing you to view different colors, change the interior and even place the vehicle in the customer’s everyday environment.
Research from Close Brothers Finance highlighted that 43% of dealers used their time during the pandemic to build up their online presence in 2020. As a business, having a website alone is no longer enough. If the customer can’t easily navigate through, purchase using various payment methods and see recognisable logos, they will likely go elsewhere.
Some essentials for ease of use websites include:
- Professional layout
- Clean design
- Powerful visuals
- Fast loading time
- Search bar
- Multiple payment methods (e.g. Paypal, Mastercard, Visa)
- Recognizable logos (Well-known car manufacturers, Google trusted, etc.)
A UPS study showed that 52% of online automotive shoppers have purchased parts or accessories from their mobiles. Purchases made from tablets are on the rise too. So ensuring your website is mobile and tablet friendly is something to bear in mind.
What might the future of automotive eCommerce look like?
With manufacturers now dedicating lots of time, energy and resources into their online presence, consumers can expect a much easier, smoother and more technology-led experience when it comes to buying their new wheels online.
Brands like Audi and Mercedes are just some of the companies to provide a virtual and augmented reality viewing experience to help car shopping online feel more real. In 2025, the global automotive AR and VR market is forecast to reach about 673 billion U.S. dollars, showing a huge upward trend in virtual viewings.
In a 2019 auto shopper study pre-covid, 43% of auto shoppers said they wanted to complete the entire transaction online without ever visiting a dealership, and by 2022, it is predicted that over 60% of retail sales will be eCommerce.
I think we can expect big things from the automotive eCommerce industry in the coming years. Whether that’s launching new technologies, more user-friendly and efficient buying processes or simply better customer service – industry giants have had a serious wake-up call in 2020 and have adapted quickly.
With the current rate of innovation in the automotive eCommerce space, there’s no doubt it will continue to take huge leaps over the coming months and years and become a norm for car buyers everywhere.