Nine months in and the Covid pandemic continues to sweep across the globe, impacting nearly every industry, including automotive. To keep a pulse on the virus’s impact on car shopping sentiments, CarGurus has surveyed over 2,000 car shoppers over three separate studies and benchmarked the results. Here, we break down our latest COVID-19 Sentiment Study conducted in November and share key takeaways on digital retail, supply, and financing.
Shoppers’ interest in digital retail remains steady.
At the start of the pandemic, shoppers expected they’d return to their normal shopping habits fairly quickly—which most have come to accept is no longer the case. Instead, shoppers have grown more and more comfortable and familiar with online tools as Covid has continued to disrupt all aspects of life. For dealers, this includes shoppers’ increase in openness and preference for digital retail. Before the pandemic, 35% of respondents said they were open to buying online. Now, 60% are open to the idea—and this openness hasn’t wavered since June (60%) or April (61%).
As buyers continue to enter the market, it’s crucial that dealers offer innovative online shopping solutions to address evolving consumer needs. Even if it’s providing just a portion of the process online. For example, shoppers are more likely to prefer online price negotiation (61%) and online financing (52%) than online purchase (41%).
Supply issues are impacting shoppers too.
Between the closure of in-person auctions, the drop-off of trade-ins as sales slowed, and a wave of consumers choosing to extend their leases so they wouldn’t have to deal with getting a new vehicle during the pandemic, wholesale vehicle levels in the US have been dramatically reduced. While buyers have felt Covid’s impact on inventory, they’ve had very different perceptions of selection and price depending on the months when they bought.
It’s the shoppers who bought from July through November who have really felt the crunch—17% of buyers during this time said the selection of available vehicles was much worse than expected, compared to only 8% of those who bought during the early months of the pandemic from March through June. The reduced supply was also reflected in prices. Those who bought later in 2020—July through November—were 2x less likely to say prices were much lower than expected, compared to those who bought from March through June. (16% vs. 31%).
Affordability concerns have shoppers staying open-minded about key decisions.
Affordability concerns have impacted those who’ve already bought during the pandemic and those still shopping today: 44% of total respondents said they’re less confident in their ability to afford a vehicle due to the pandemic (down slightly from 48% in June). This is only compounded by the fact that many shoppers assume the great deals during the early days of the pandemic are over. In fact, 26% of current shoppers expect prices to be higher due to the pandemic. As a result, many are staying open-minded about what vehicles to consider: 62% are considering more than one brand and 42% are considering more than one type of vehicle.
These widespread affordability concerns have led to an increase in demand for financing. Before the pandemic, 48% of shoppers were planning to finance their vehicle purchase—now, 62% plan to (or did). In addition to an overall surge in demand for financing, 52% of shoppers would now prefer online financing options. This includes easily getting pre-approved for financing on a dealer’s VDP, which a shopper can do through programs like CarGurus Pre-Qualified Leads.
Despite the challenges, dealers continue to adapt.
As the US braces for a second wave, dealers should continue to be ready to adapt to shoppers’ new buying preferences, increased openness around make and model, and additional financial stress. Consumers still need to buy cars, pandemic or not, and dealers will need to find a way to adjust to the new reality and keep selling cars.