Mobile Phones, Online Research Shrinking Shopping Window, Study Shows
From start to finish, the time it takes consumers to pull the trigger on a vehicle purchase is shrinking. And according to a new study from Jumpstart Automotive, Millennials are the reason.
SAN FRANCISCO — From start to finish, the time it takes for consumers to pull the trigger on a new vehicle purchase is shrinking. And Millennials are the reason.
A Jumpstart Automotive study, which looked at the buying habits of women, Millennials, Asians and Hispanics, found that 74% of Millennials now take four weeks or less to find a new car. Mobile technology, social media and online research are all noted as reasons for the shift toward a shorter shopping window, said Libby Murad-Patel, the firm's lead analyst.
“This was one of the surprising elements for us as well, because, in reality, we’ve seen that the typical shopping window is four months,” Patel said. “Even though the majority still completes their research from start to finish in four months, 74% of Millennials are taking four weeks or less. They’re really doing the bulk of their process in a shorter amount of time, but also accessing more information throughout the entire process.”
However, it’s not just Millennials that are taking less time to buy a car. Every demographic observed in the study had a large percentage of respondents saying they spent four weeks or less to shop for a car. Sixty-eight percent of women, 65% of Hispanics and 62% of Asian respondents said that hey spent four weeks or less to complete their vehicle-shopping process.
Social media, Patel noted, has played a big part in reducing the shopping window because it increases consumer exposure to potential vehicles. “People are passively gathering information even when they’re not in market," she said. "A lot of that is even more exaggerated because of social media and the fact that we’re looking at Instagram and we’re sharing on Facebook. You see what your friends are driving outside of what you see on the roads.”
And that online shopping and research doesn’t stop once consumers get to the dealership, Patel added. Looking at study results, about 40% of consumers — about 66% for Millennials — use their cell phones inside the dealership to make sure they’re getting the best deal.
“They’re doing a lot of comparison shopping. Price is definitely a factor, it could be looking at the overall price or offers in the area. It could also be comparing features, trim and packaging that they could get from a similar vehicle that they were looking at,” Patel said.
The fact that consumers are using their cell phones to verify pricing while at the dealership should ring certain bells for dealers, Patel noted. Although the study found that 76% of respondents found their dealership to be trustworthy, three aspects of the dealership experience still brewed mistrust for a majority of them: trade-in appraisals, vehicle pricing and financing.
“When you look at what your vehicle is valued at, you see what you could get privately versus trade in, consumers are always going to try to push the dealer to get the best value for their vehicle," Patel said. "Because it is a sensitive point in the negotiation, I think the trade-in is one of those factors that they don’t always walk away feeling like they got the best value for their vehicle."
She noted, however, that there’s not much a dealer can do when it comes to vehicle appraisals. While there’s some room for negotiation, the amount a consumer can get for his or her vehicle is ultimately tied to the true value of their vehicle. The aspects of the car-buying experience dealers should focus on are vehicle pricing and financing, Patel said.
“I think this leads very much into the common theme that we saw throughout the entire study,” Patel said. “Authenticity — whether it’s advertising or at a dealership — is what [the dealership experience should be] about. If you’re advertising pricing, don’t advertise something that has 20 different caveats to it. Be forward and be honest with the pricing that you put out there, because if the customer comes to check the advertised price and its ends up being something that is really unattainable to them, they’re going to feel like they can’t trust the dealership in what they’re saying.”
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