As a follow-up to the Consumer Sentiment Study we presented in April, CarGurus surveyed an additional 779 shoppers in June to see how their feelings toward car shopping have changed during the pandemic. Overall, the study shows that despite lingering near-term delays in car purchases, most sales are not expected to be lost in the long term. Here are the key takeaways for dealers – or you can read the full report here.
Sales are still lagging, but consumers are returning to market
Similar to what we reported in April, many shoppers are delaying car purchases. However, fewer respondents reported delays (69% in June versus 79% in April), and very few shoppers plan to delay purchases indefinitely (2% in June versus 8% in April). The decrease in delays suggests that consumers are returning to the market as dealerships across the US re-open. That also aligns with the activity we’ve seen on cargurus.com, with lead volumes returning to pre-pandemic levels by the middle of May and exceeding those levels in June.
And it’s not just shoppers who delayed their purchases that are buying. The pandemic has also stimulated some new demand, with 22% of those planning to buy reporting that they had not planned to purchase this year prior to the pandemic. The survey suggested several reasons for this increase in purchase intent:
- Many respondents indicated that the pandemic has changed their feelings towards mobility, particularly in the short term. 72% of those planning to travel this year say they intend to drive, rather than fly, for one or more trips.
- Additionally, 58% of shoppers are less likely to rely on ride sharing and public transportation moving forward, which means the demand for personal vehicles is likely to increase.
As both delayed and new purchasers enter the market, it’s crucial for dealers to offer innovative shopping solutions, both in-dealership and online, to address evolving consumer needs. According to the study, 61% of current shoppers would prefer to use contactless services like virtual appointments, at-home test drives, or home delivery. They also expect dealerships to take basic precautions like wiping down services (73%) and wearing masks (63%).
In April, we launched our Driving Difference campaign to support our dealer partners and help promote the creative ways they are evolving their businesses in this new environment. Now we’re inviting dealers to share their stories: tell us how you’re #DrivingDifference.
Economic uncertainty remains a leading barrier to purchases
Almost half of car shoppers are less confident in their ability to afford a vehicle purchase as a result of COVID-19. On the other hand, many respondents noted that they are saving more than usual, which suggests that this period of frugality could be followed by a surge in demand for large purchases such as automobiles. Regardless, 42% of respondents agree the pandemic will cause them to be more careful about money management going forward.
The widespread economic uncertainty is increasing consumer demand for financing. According to the study, 49% of car shoppers planned to finance their purchase before the pandemic. Now 60% plan to (or did). Furthermore, a third of those considering financing lost confidence in their ability to get approved and a third lost confidence in the financing rate they’d expect.
What does this mean for dealers?
As the US settles into a new normal and economic constraints begin to ease, it’s possible there will be a surge in demand for vehicles, both from purchases that have been put off, and from increased demand. Dealers should be ready to adapt to buyers with new motivations for buying, additional financial stress, and evolving expectations around in-store safety measures.