One of the most surprising findings of a recently released report from Reynolds & Reynolds is that 11.63% of consumers thought they purchased their last vehicle online—yet in reality only about 2.56% completed the entire process online, due to their in-person touch points with the dealership.
In an interview with Canadian auto dealer, the company’s Vice President of Sales Lance Alverson said that even if consumers are doing a lot of things online, they are still going for test drives and signing F&I paperwork in-person, among other things.
“It really brought out that dealers need to have a hybrid model that allows the consumer to have both the online experience, but then knowing they’re going to be able to pick it up in the store where they left off online,” said Alverson.
The report, known as “Car buying unfolded: A deep dive into today’s buying behaviours and preferences,” included 1,015 U.S. consumers as survey respondents, ranging from Generation Z consumers to Millennials, Generation X and Baby Boomers.
The majority of respondents (54.98%) completed their research for different vehicle makes and models online, while 50.74% researched dealerships, and 37.64% researched available inventory at specific dealerships. Calculating the estimated payment was done by 33.40% of consumers, followed by the estimated trade-in value (26.31%), filling out the credit application (15.96%), and submitting a lead for a vehicle (10.25%).
The data shows that fewer consumers completed each phase of the research process online, and that after the lead form was submitted, they either continued the process online or moved to the in-store portion of the journey. Interestingly, 64.41% of consumers plan to buy their next vehicle online, while 35.59% plan to buy it at the dealership.
“What was really interesting is that online buyers are (much) more likely to pay more for a vehicle if they’re given more options,” said Alverson. “And by that, I mean they are able to see the rebates, the discounts, the incentives, and are able to work on their exact payments online without being pressured by a dealer.”
The same goes for their ability to see and understand the F&I products after they purchase a vehicle and are able to sign all the paperwork, all online.
The report also looks at how familiar consumers are with the F&I department and traditional products such as GAP Insurance, service maintenance packages, and extended warranties. More than 12% were not at all familiar with these services, followed by 19.80% (not so familiar), 39.90% (somewhat familiar), 16.95% (very familiar), and 11.13% (extremely familiar).
Overall, the company said 28.08% of respondents were very or extremely familiar with traditional F&I products, while a combined 71.92% were somewhat to not at all familiar.
“I think that one of the things this study pointed out is that over 70% of consumers do not fully understand products sold in F&I, which really shows there’s still a big lack of knowledge for consumers for extended warranty for tires and wheels,” said Alverson. “So there’s still that real need we’re seeing based on this study that consumers need that interaction from somebody to really coach them through the process.”
When asked in the report how likely consumers are to pay more for a vehicle if certain services are offered online, 48.93% of respondents were extremely likely if they could fill out the credit application; followed by the option to select rebates, discounts or incentives (56.10%); working with the dealership to come up with an exact payment or price (60.68%); and providing a down payment (57.63%).
Another 59.49% are extremely likely to pay more for a vehicle if reviewing and selecting aftermarket F&I products (like GAP and service maintenance) was available online, and 58.48% are more likely if they can sign all the paperwork online.
Consumers perceive these options as providing convenience (31.27%), less pressure (29.07%), and safety (9.25%).
“It’s all about having that hybrid approach for dealers to allow the combination of both (online and in-store experience), as we continue to go down this journey of doing more things online,” said Alverson.
He said their study indicates that a quarter of respondents planned to purchase their next vehicle online.
“We know it’s going more and more that way,” said Alverson. “Our dealers really need to be able to meet that need with that hybrid experience so that (they) don’t sacrifice what’s important to them at the dealership. And that’s really the control and profitability of the deal, the accuracy of the transaction, and then also increasing the efficiency of their employees.”
