The report, Auto 2025, analyses the latest reports into auto finance trends and consumer preferences to project what the auto retail and financing market might look like in 2025. The report found (amongst other trends) that there has been a large increase in people saying they would be comfortable buying a car online since the beginning of the pandemic. 

The report suggests that these shifts in customer behaviour are likely to become entrenched and spread across demographics.

“One of the biggest shifts we’re seeing is the move from bricks and mortar to online – exacerbated by the ongoing COVID-19 pandemic,” the Auto 25 report said. 

It quotes a recent study by British retailer Waitrose which revealed that 40 per cent of those who moved to online grocery shopping during lockdown now shop online regularly.  A separate McKinsey report found 70 per cent of people who tried online workouts intend to continue doing so. 

“The greater reliance on online engagement necessitated by the pandemic, while initially unfamiliar, has now become part of the way we shop across all sectors,” it said.

“The auto industry is experiencing a similar shift. Pre-COVID, UBS data suggested only 32 per cent of car loan holders stated they’d be willing to buy a car online, the Auto 25 report said. 

“In contrast, a 2022 study of Australian car loan holders by RFI Global suggested 67 per cent indicates comfort regarding buying a car online, either now or in the future.

“According to forecasts from UBS, 50 per cent of all consumer car transactions across the globe will be online by 2030, compared to just two per cent today. Interestingly, more of those sales (60 per cent) will be for used cars, with the remaining 40 per cent being new. 

“This trend has been emerging over the past four years, with Australian data from RFI Global showing the proportion of car loan holders who would be open to purchasing a car entirely online in the future growing from 29 per cent in 2019 to 38 per cent in 2021.

“However, the good news for dealers is that face-to-face business isn’t going anywhere soon, with 46 per cent of car loan holders stating they’d prefer a hybrid engagement model that combines online and in-person experiences.”

The report said that while most customers may not yet be ready for a purely online buying experience, they do want some parts of the journey to be digitised. For example, they would prefer to enter their sensitive financial details into a secure online form rather than hand them over to a staff member in a showroom. 

“In fact, Australian research from RFI Global tells us that a little over one in three prospective car buyers would like to arrange their car finance entirely online,” the report said.

The report said that, moving forward, it was essential for dealerships to advertise car finance options and enable customers to receive a quote and apply online. 

“This is because car financing considerations for many customers begin before they walk into a showroom and maximising finance penetration can only be achieved by starting the engagement earlier. 

“Data collected by RFI Global found 44 per cent of dealership customers started thinking about their financing options before starting down the purchasing process. 

“This figure is higher for direct to bank and lender customers, at 60 per cent.

“Not only does earlier finance engagement have the ability to improve penetration, it also helps set customer price expectations; facilitating more productive dealership finance conversations.”

The Auto 25 report said that age continues to be a factor when it comes to customer purchasing preferences. 

“But interestingly, age preferences may not correlate as you would think. For example, 38 per cent of 18-24 year old car loan holders believe they’d get the best finance deal if they were to apply face-to-face at a dealership. Close to 30 per cent thought applying in person at a bank branch would get them the optimal deal. And this demographic ranked online as their least preferred channel for securing finance – lower than the aged 55 and over demographic.

It concluded: “This youngest cohort is the least likely to prefer an entirely online application – opting instead for a hybrid online and face to face application.”

Asked which channels they thought would get a consumer the best deal on the loan, the report highlighted RFI Global data that found that face-to-face dealer engagement still remained key: 

• Face-to-face at a car dealer – 29 per cent
• Face-to-face with as bank or lender branch/store – 21 per cent 
• Online via internet using laptop/computer – 15 per cent
• Face-to-face with a broker – 14 per cent
• Over the phone – eight per cent
• Online via mobile/tablet – seven per cent
• Via email – four per cent.

So, what’s holding customers back from buying a car online? 

Customers listed three major issues (in this order): 

1. They want to test drive before buying. 
2. They want to evaluate the car models in person. 
3. They wouldn’t trust that the car matches the description – which is arguably more relevant for used vehicles than new ones. 

Interestingly though, whilst derived from research across all products, Shopify research found the lowest reason for returning a vehicle (at 5%) was that it was ‘not as described’.

How dealers are creating opportunity out of change 

The Auto 2025 report said that as the customer journey becomes digitised and streamlined, people would still want human interaction when buying a car and organising finance. 

“Forward-thinking dealers are seizing the opportunity to give customers this hybrid experience. 

Adelaide’s Jarvis Group is a large organisation with its own digital team to provide customers with an avenue to fully transact online. 

However, CEO Christian Di Lorenzo says in the report, that the Jarvis Group has found that the majority of customers are not yet ready to embrace a total online experience. 

“There’s always some kind of human communication. Customers want to know if you can do better on a trade, or what other colours are available in this model… I don’t think that the AI exists yet to answer all those questions,” Mr Di Lorenzo said.

But, the report said, “leading dealerships are aware that customers want the same seamless experience when buying a vehicle as they get when making other purchases”. 

“Many are engaging specialist expertise to ensure they can deliver an enhanced digital experience. For example, the von Bibra Motor Group (based on the Gold Coast) has enlisted a specialist marketing agency to engage customers on social media using audiences and lookalikes to target car intenders, rather than generic advertising.”

And Adelaide’s Jarvis Group uses a dedicated omni-channel contact centre to direct all their enquiries to the appropriate dealership or service department. 

“While there’s no one-size-fits-all approach to customer engagement, there are common patterns we are observing among dealers such as leveraging lifecycle data that they’ve harvested during servicing to better target, engage and convert vehicle changeover opportunities. 

“Another key trend among dealers is the re-focus from the initial transaction to ongoing customer engagement … throughout the ownership lifecycle. As cars and their owners become more connected through technology and data becomes more personalised, this will only accelerate.”

By John Mellor