Perhaps the decision to buy a car doesn’t seem logical right now. But how uncertain are customers, really?
What incentives will stimulate the demand for vehicles in the short and medium term? And which sales channels are best for distribution? Here, our recent survey of German customers provides some concrete answers which may suggest likely scenarios in other countries too.
In our last blog, Car sales in crisis: A rocky road for manufacturers and dealers, we examined the impact of the pandemic on the automotive industry and especially on car sales. Now, with the help of a survey of 800 customers in Germany, we’ve been able to find out what effects COVID-19 is having on consumer, investment and mobility behavior, and what concrete expectations customers have in terms of mobility and vehicle purchase.
There is widespread uncertainty
Let’s start with the more challenging news. Well over half of respondents say they intend to postpone their plans to purchase a car because of COVID-19. In truth, this isn’t a good omen for a rapid recovery of the automotive market in Germany in the short term. The predominant reason is of course financial uncertainty in the coming months, with 40% giving this as the main reason for their decision. The restriction of mobility and freedom of travel is another reason for many of our respondents to postpone their purchase.
The desire for individual mobility is increasing
Targeted offers could convince many reluctant customers to buy
The overwhelming majority of those surveyed indicated that they could be convinced to buy a car in the near future with targeted offers. Around 50% of customers indicate that they would be ready to buy within the next 3 months if manufacturers or dealers contacted them with the right offers, such as targeted discounts or additional services.
Making the offer more flexible in response to the desire for individual mobility
Financially insecure customers can be convinced to buy with discounts, as well as with more flexible contract conditions. Both flexible payment options and shorter contract periods, allowing vehicle purchase at short notice, and with less time commitment, are particularly attractive.
Car dealerships are allowed to open again. So is everything back to normal?
Now that federal and state governments in Germany have eased restrictions, car dealerships are opening again. But anyone who expects customers to return in huge numbers may be disappointed. ‘Social distancing’ has changed customer behavior. The majority of interested customers want to buy a car with as little personal contact as possible.
In fact, 60% of our respondents say they’d be willing to buy their car online.
The development of digital sales channels is now essential and can no longer be an afterthought. In the absence of nationwide online solutions, many dedicated retailers created digital sales solutions on their own initiative during the shutdown. They digitized their sales teams and maintained contact with their customers using digital channels. Manufacturers are now called upon to provide solutions nationwide, or to interact with existing sales platforms, in order to avoid a fragmented digital retail landscape.
Learning from China – best practices in digitalization
To this end, it’s useful to take a look at China, where at short notice various manufacturers are focusing on the topics of contactless sales processes and the close integration of online and offline experiences.
The situation is serious, but there is hope
Our customer survey shows that the crisis is having a strong impact on the behavior and mindset of car customers, not just in the short term.
- Due to the high level of uncertainty among customers, demand will be slow to recover
- Incentives to buy are important, but it’s crucial to offer more flexible buying options
- Customers won’t return to the car dealerships in large numbers immediately
- The digitalization of the customer and purchase experience must be greatly accelerated
To a similar extent, the crisis has affected the entire automotive industry. Over the next weeks and months we’ll see who will be the losers and who will emerge stronger in the long term.
Visit How to get ahead in automotive recovery to see how we advise manufacturers and dealers on accelerating their recovery.