Stressed, but saving: understanding the pandemic’s impact on consumers’ needs for financing

Posted by Meg Bernazzani on August 12, 2020

Whether it’s due to a vehicle breaking down, a new commute, a growing family, or any number of reasons, a vehicle purchase is essential for many. That’s held true even during the current health crisis: 68% of those planning to buy this year cited the purchase as necessary, according to the CarGurus COVID-19 Sentiment Study in April. However, months later and our follow-up study found that about half (48%) of car shoppers aren’t as confident in their ability to afford a vehicle as a result of the pandemic.

As a result of consumers’ dwindling confidence, demand for financing is increasing. Before the pandemic, 49% of car buyers planned to finance their purchase. Now, 60% plan to or have already done so. Additionally, around one-third of those considering financing lost confidence in their ability to get approved (33%) and the financing rate they’d expect (34%).

Although the pandemic has caused financial stress for many car shoppers in the US, it’s spurring people to think long term about their financial future. More than a third (35%) of our survey respondents said they’re saving more than usual, versus 16% who are spending more than usual. Similarly, 46% are spending less on experiences, which could ease budgeting for durable goods. Overall, 42% said that the pandemic will cause them to be more careful about money management going forward.

For dealers, now isn’t the time to pressure shoppers into a purchase decision. Nurture shoppers down the funnel, keeping them engaged and answering their questions as they get closer to a decision. It’s also as important as ever to keep up with your digital marketing efforts. By continuing to market to consumers, you’ll stay top of mind so they turn to your dealership when they return to the market—and they will return.

Topics: consumer sentiment, financing, industry insights