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As climate change forces a societal change to combat global warming, bans on conventional vehicles are set to start as early as 2030. Therefore, automotive brands are accelerating their plans to turn electric. The automotive industry is under scrutiny to take action, and is responding. Recent developments report that by 2030, half of UK cars will be electric. However, climate change isn’t the only pressure the automotive industry is facing.
COVID19 has impacted the amount people travel, and the way they think about their cars. In the UK, SMMT figures show the impact on sales albeit the EV sector is growing with BEVs (Battery Electric Vehicles) and PHEVs (Plug-in Hybrid Electric Vehicles) all showing increases.
What's changing for the Automotive Industry?
So how are people buying cars? The journey to buying a vehicle essentially starts online, with research. Vehicle choice happens through various online channels. The car dealership visit can be a long way down the process, if it happens at all. The use of test drives has been in decline. Car dealerships are seeing less direct sales as consumers configure and buy their vehicle online. Various studies suggest that 19 out of 24 buying touchpoints are digital. We hypothesise that COVID19 will accelerate this trend.
Throughout 2020, interest in this subject was low despite car dealerships being historically a key element in the car buying process. Despite the big switch to digital, we know that there are still consumer segments who would prefer to visit a dealership or have this as part of their buying process. Despite COVID19 lockdowns, we were surprised to see the entire lack of interest in dealerships.
What sets the Automotive Industry apart from others?
The car industry argues that buying a car online is unlike any other eCommerce website. You cannot return something if you aren’t happy with the quality/result. On the other hand, if a customer was to go into store, they could make the decision whilst there. Auto Trader (2020) researched into what consumers look for when purchasing a car online. Only 41% of respondents said they would complete the purchase online. On the other hand, 61% voted that they would be happier if they could purchase a car online and have it delivered to their home. However, sellers face the challenge of consumers desiring a 7-day window where they can decide whether they’d like to keep the vehicle.
The trends graph above compares the queries searched in the UK: “car dealership near me” and “buy car online” from the beginning of March 2019 to March 2020. The visual also illustrates the lockdown periods in the magenta line to show the effects of the lockdown on people’s searches. We can see that “buy car online” predominantly has the most searches over time in comparison to “car dealership near me”.
What happens to the trend during lockdown?
Moreover, when the UK national lockdowns occur, the gap widens between the search volume for these searches and “buy car online” consequently peaks in each lockdown. The peak is highest in the first lockdown, however tracking is still on-going for the third lockdown as at the time of writing this blog, the UK is still in a national lockdown. This suggests more and more people are interested in buying a car online as opposed to seeking a dealership (reflected by the search volume). This graph really highlights the growing divide between people searching for a car dealership or buying a car online. Also, this could showcase the change from the auto industry predominantly selling cars through dealerships to selling cars online. Therefore, the auto industry’s investment into digital marketing and online sales platforms ought to grow to accommodate what people are interested in. Will this trend stay the same or change post-lockdown?
UPDATE 25th June 2021 - What happened to the trend post-lockdown?
We have looked at the last 12-months from the 25th of June 2021 to see if the ‘dealership’ searches have recovered in search volume since the rules relaxed in May in the UK.
Searching for ‘buying a car online’ still dominated the search volume on google. However, the ‘dealership near me’ search did overtake the ‘online’ search in the second week of May (9-15th). This could have been people searching for a ‘dealership near me’ due to the excitement for the lockdown relaxing. We end at a very interesting point where the ‘dealership near me’ searches are increasing and ‘buying a car online’ searches are decreasing, will this trend continue? We will revisit this again!
Google search data is indexed so the previous highest point and lowest points have shifted with the change in time frame and trends as the search data is nor volume. Google index the search data to 100, where 100 is the maximum search interest for the time and location selected with taking trends into account. This normalises the data and makes it comparable. It we take Halloween for an example – if you look at any time in the year it may come up with Wikipedia, the film etc but if you look near Halloween e-commerce will come up so this is relative and taken into account with trends and seasonality.
Adroit will review the data once the UK restrictions have relaxed futher with our thoughts and findings so sign-up to our mailing list below to avoid missing out!
Market trend analysis is vital for your market research. A trend can be recognised early online by shifts in sentiment or engagement metrics. If there was a major increase in negative sentiment or a decrease in engagement, this could indicate a crisis in reputation or a competitor taking the share of voice. By online listening you can stay in touch with changes in your audiences’ needs. It is more than likely that your competitors are using online listening – don’t fall behind!
Social Listening in the Automotive Industry
Social and Online Listening is the act of tracking news/blogs/websites/social channels for a keyword to see when it is mentioned online. This can be used to create tangible insights. These insights can include things such as audience demographics, brand health, competitor analysis and content ideation. Future campaigns can utilise these insights.
Search listening uses search data from a range of sources to establish when search interest peaks and what people search for in conjunction with your brand or product, as well as what people feel.
We use a combination of methodologies in our digital research services to ensure the most accuracy. Namely, Audience Intelligence, Search Listening, Online and Social Listening. By using multiple technologies, we ensure the inclusion of millions of sources. These can be vital in understanding the conversation around your brand.
What will be the long-term impact on Automotive sales?
If COVID19 has taught us anything, it is that your financial status and personal or work life could change within a split second. With less people needing to leave the house and less money to spend, the demand for vehicles is decreasing. Mckinsey (2020) reported that “52% of respondents (vs. 58% in July) travel less than before COVID19”. People have nowhere to go so they don’t need a mode of transport. Shared ownership schemes in cities are increasing, which supports those with an occasional need for car usage.
On the other hand, more people are opting for their own transport instead of public transport. “In a survey of 1,051 consumers, some 48 per cent said they were less likely to use public transport because of fears of COVID19. More than half said owning a car in the future would be more important…” Car Dealer (2020). Reports claim that more people feel comfortable travelling in their own bubble. We note that the demand to learn to drive has also been on the rise.
What can we expect for 2021?
So is the industry expecting the same boom this year? When lockdown restrictions eased last year, the Automotive industry had a 70% rise in car sales (Autoexpress 2021). Although the country will still be in lockdown when new number plates are released in March, our view is that it is likely that there will be an increase in car sales. This belief is based on a decline in public transport usage and depressed sales figures seen after last year’s lockdown. Auto Trader (AM online 2021) commented “Along with the resilience and solid sales performance we’re seeing among our retailer partners, it gives us the confidence we’ll see a quick return to health once the restrictions lift.”
Longer-term COVID19 will change people’s needs and attitudes towards car usage. Digital will see a steady increase in both the sales and buying process, from influencing sales decisions to ownership and customer retention. Manufacturers need to build direct relationships with the end drivers and owners of their vehicles. Consequently, dealerships have to rethink their future and engagement with customers. It is a similar dilemma for Bricks & Mortar retailers vs online. There are attractions to being close to the product that is difficult to create online…