Presented at the recent AADA Convention, the ‘Connecting the Disconnected in the Car Shopping Journey’ report revealed that “transparency is the new currency in car buying” which calls into question many of the longstanding sales practices used the meet sales goals and boost the bottom line. (See main article.)
The study is said to be unusual in that researchers normally interview one population; either it is consumers or dealers. But the Gumtree Cars survey is unique in that it sought a 360-degree view by capturing buyers and also the sellers.
Gumtree commissioned international research company BrandSpark International to survey more than 1000 consumers and more than 100 dealers in Australia.
Highlights of the wide-ranging study include:
Before entering the dealership:
- Car buyers spend an average of six weeks researching before setting foot in a dealership.
- More than half (52%) of customers use the internet as their first port of call.
- Online classifieds are the preferred research tool for research.
- Gumtree, Australia’s largest secondhand marketplace, generates the highest ROI of all the digital channels for dealers that use Gumtree.
- Overall, online classifieds (64%) and dealership websites (55%) are used by more than half of consumers. In contrast, social media is used by only 15 per cent.
- Two thirds of auto dealers say the ongoing changes in how consumers shop for cars are a challenge to deal with.
- More dealers (73%) now see digital advertising as significantly more important than traditional advertising (24%).
- Dealers are still underspending on digital relative to where consumer time is spent.
- Only 58 per cent of dealers spend the majority of their budget on digital media.
- Dealers also often overinvest in quality of pictures, seeing it as the #1 most important factor in a buying decision, whereas customers rank it near to last (13th). However, both agree that the quality and accuracy of the information provided is crucial to pique car buyers’ interest.
At the dealership:
- A third of car buyers only visit one dealership, emphasising the need for dealers to shift their efforts to the online research stage of the car buying process to ensure their dealership is the one customers visit.
- About 40 per cent of the consumers walking through a dealership door feel prepared to buy.
- A good deal is the best way to get consumers to visit a dealership. The vast majority (70%) of consumers say price is the most important factor in deciding which dealership to choose, ranking it the number one influencer in the path to purchase. Yet not even three quarters (67%) of dealers always have this information available online.
- Trust and transparency are major considerations throughout the consumer buying journey, especially during negotiations and in-person engagements at the showroom.
- The three things that most drive trust for consumers is being open and honest, offering fair prices, and being easy to deal with on issues. There is a strong shift to the appreciation of soft skills in the buyer-seller experience, with consumers saying that dealers are more trusted than five years ago (38%).
- Geography is less of a barrier than dealers think, with consumers willing to travel an average of 65km to save $500, 120km to save $1000 and 280km to save $1500.
- Queenslanders are more willing to travel to save money than people in other states.
After their visit:
- More than half (55%) of dealers feel customers are less loyal than five years ago, and 68 per cent find it more difficult to retain customers today than five years ago.
- A third (34%) of consumers indicate they are loyal to the dealership they purchased from.
- Women and over-55s are particularly loyal customers – 42 per cent of women said they would return to a dealer for the next purchase, and nearly half (49%) of over-55s said they would return to the dealership for aftersales service.
- Customers want to be followed up, especially by email – but the desired frequency for these follow-ups varies widely. For example, about half of customers want to be contacted seasonally (or more frequently), and about half annually (or less).
Other key trends from the report:
- Generational divide: Younger consumers (millennials) are looking for a new vehicle based on need, but almost half of the ‘baby boomers’ (46%) are buying just because they want to, and have the luxury of seeking out newer models. Boomers are also more loyal and likely to recommend dealers.
- Future prospects: The industry trends most concerning to dealers are: rising fuel prices (64%); government regulations (56%); growth of group dealerships (49%); and declines in new-car sales (46%). About one-half of dealers have taken steps to prepare for each of these concerns, except for the growth of group dealerships which only one-third have prepared for.
Key Gumtree stats:
- On average, more than 150,000 listings on Gumtree Cars.
- On average, more than 6000 new listings each day on Gumtree Cars.
- The average car dealer listing price is more than $23,000.
- Car buying intenders spend 30 minutes on average on site per visit.
- 1600 dealers currently subscribed to Gumtree Cars.
- 7m Aussies visit the site each month according to Average Jan-April 2018, Nielsen digital panel.
- On average, 850,000 Aussies visit the site each day according to Average Mar-June 2018, Nielsen content ratings.
Richard Dicello, head of motors at Gumtree Australia, said in a statement: “It’s a challenging time for car dealers due to reasons out of their hands, but the growth in digital technology brings many possibilities.
“Dealers have an opportunity to rise to the challenge and adapt to new car purchasing trends, for example by recognising the important role of online classifieds and communicating with transparency.”
“The digitisation of the car buying process has opened up the door for smart dealers to reach even more customers and ensure they come back post purchase. With over seven million monthly visitors and 6000 new cars on our site every day, Gumtree Cars offers a simple way for dealers to engage with new-car buyers in a way that is cost-effective, targeted and transparent,” Mr Dicello said.
By John Mellor