The automotive market offers an unprecedented variety of vehicles—from compact cars to SUVs—powered by diesel, petrol, natural gas, or with fully or partially electric engines. With hundreds of different colors, tires and interior designs, the configurations are seemingly endless.
And that’s just the hardware—with OEMs heavily investing in connectivity services and apps, consumers can in fact create their own and truly unique car.
But despite growing customization and new connected technologies, the worldwide automotive sales volume is declining. Even the largest automotive market, China, has recorded lower sales in 2018.
What has changed?
Inspired by their experiences in other industries and the rise of new technologies, customers are seeking a new, modernized automotive sales journey. Especially young customers are increasingly dissatisfied with the way cars are currently being sold.
Different demands from different customer types
Automotive buyers can be classified into three types (Changers, Boomers or Traditionalists) based on four criteria: how old they are, where they live, how much they earn and what type of car they drive. Today, OEMs make most of their business with Boomers (customers between 30 and 50 years old) and Traditionalists (customers above 50 years old). But the customers of tomorrow are those below 30 years old, and they have quite different demands. We call them Changers.
Car buying dissatisfaction
While customers are generally satisfied with the product itself, 1 out of 5 Changers are deeply dissatisfied with the way that cars are currently sold. According to our survey of automotive buyers in Germany, UK and France, the top reasons for this dissatisfaction are the need to negotiate prices, not being able to buy online, complicated financing options and slow delivery processes. What customers really want is:
Changers’ expectations of the automotive industry closely match what they are accustomed to from other industries. With subscription models becoming ubiquitous and financial technology start-ups disrupting the way consumers are paying for products and services online, the traditional way of buying and financing cars seems outdated.
Online versus offline
Our study shows striking differences between how Changers and Traditionalists purchase a vehicle.
While Changers use digital media and rarely visit a dealer, Traditionalists still appreciate the personal experience of visiting a dealership and the personal interaction with a salesperson. And while more than half of Changers compare prices online prior to making a purchase, only a quarter of Traditionalists that we surveyed reported using such online tools.
For OEMs, this means that a large share of customers have already made up their mind about which car to buy and where to purchase, long before visiting a dealership or talking to a sales person.
At the end of the day, it is the customer who decides whether they want to buy a new car or not. Today, even though customers increasingly inform themselves about current offers and models online, they tend to purchase a vehicle offline. However, with younger customers and changing consumer behavior, this process is being transformed. Automotive OEMs need to rethink their sales strategy to meet the demands of tomorrow’s customers and secure their market share.
Do you know how?