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Data and Analytics in The Drivers Seat of The Used Car Market
Data and Analytics in The Drivers Seat of The Used Car Market
Data and Analytics in The Drivers Seat of The Used Car Market
Omnichannel Sales
Transforming the purchase journey to include both online and in-person
touchpoints is key for automakers to remain competitive.
By Eric Zayer, Mary Stroncek, Thomas Wendt, Klaus Stricker, and Raymond Tsang
Copyright © 2021 Bain & Company, Inc. All rights reserved.
Cracking the Code on Automotive Omnichannel Sales
The idea that consumers would add a car to their online shopping carts was once unfathomable.
As online sales have become more routine—and amid a dramatic push to avoid in-person purchasing
during the Covid-19 pandemic—there’s a new reality today. Customers expect to not only explore
detailed car configurations online, but they want to buy there as well.
However, focusing solely on e-commerce lacks the nuance of what today’s auto buyers prefer. There are,
and always will be, a few vital things that web browsing doesn’t offer.
For most, buying a car is a significant investment that requires a high level of trust. Many customers
still would not consider a purchase this large without some level of physical interaction. In fact,
more than 80% of car buyers consider the test drive to be an important factor in their decision,
according to new research by Bain & Company, and about 70% find physical interaction with a local
representative increases trust.
As a result, the customer journey is more complicated than a simple “add to cart.” While customers
predominantly collect information online and make many decisions before entering a dealership for
the first time, a car sale hinges on multiple channels across a longer user journey. The transaction
doesn’t happen all at once—our research shows the process is typically eight to ten weeks. A car
buyer will visit multiple websites and dealerships before finally making a purchase.
To account for this, and keep up with consumer preferences and behaviour, automakers must invest
in a robust omnichannel sales strategy. Combining offline and online channels will create an optimised
customer experience and, in turn, a competitive advantage for manufacturers.
Today, car buyers have multiple online and offline touchpoints throughout the buying process.
Before ever stepping into a dealership or showroom, it’s very likely that the customer has done a
significant amount of online research. This includes multiple visits to the car manufacturer’s and
dealer’s websites, testing or advice websites, and apps, as well as social media channels.
Still, most drivers prefer test driving a car, speaking to a dealer in person, and closing the deal face
to face. For many, their online journey will lead them offline, where the purchase will finally be made.
Bain recently surveyed 1,500 car buyers across three key markets: the US, Germany, and China.
These markets offer a variety of global perspectives, with auto industries in different stages of
development. Most notably, car ownership in China has boomed over the past two decades, and the
country has nearly twice as many touchpoints in the sales process as Germany. Both the US and
German markets are more mature, though the European market is more saturated with dealerships
than the US market.
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Cracking the Code on Automotive Omnichannel Sales
Bain’s survey offers five revealing insights from these three markets about customer expectations
across channels:
1. Car sales are a true omnichannel play with new customer expectations, especially ensuring
“one price” across all channels
Car buyers average more than 20 online and offline touchpoints while researching cars
(see Figure 1). Although they have twice as many online touchpoints as offline, both carry
significant weight in a buyer’s decision. As they navigate these channels, more than 50% of
survey respondents agree that a consistent price across all channels is important—no matter
where the sale happens.
Other key features of the omnichannel experience include users being recognised across all
channels, receiving targeted or personalised offers, and being able to opt for longer tutorials
or explanations. At the same time, carmakers can focus the user journey for those who have
already decided, and they can be present and approachable across several channels, such as
video chat, online chat, or telephone.
Figure 1: Online and offline touchpoints both play an important role in purchase decisions
Which channels did you use to do research on the car you were interested in, and how often did you reach
out to them?
~13.4 ~6.9
~25.6 ~11.1
China US Germany
Source: Bain Automotive Consumer Survey July 2020 (Germany, US, China), overall n=500 per country
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Cracking the Code on Automotive Omnichannel Sales
2. Buying a car online is more acceptable now, especially for younger generations
Once they have decided on a vehicle, almost a third of survey respondents would consider buying the
car online. Enthusiasm for buying a car online without physical touchpoints is highest among
US customers, outpacing German customers by 16 percentage points and Chinese customers by
11 percentage points.
Among all demographics, customers say they’d buy online if they had the chance to interact with
their dealer in person beforehand. Premium car buyers (those considering brands like Mercedes,
BMW, Audi, and Lexus) are also slightly more likely to use online channels.
Perhaps not surprisingly, not only are younger consumers generally online more, but they’re
also more likely to feel comfortable closing the deal online.
While there may be far more online touchpoints than in-person interactions, car buyers still
consider dealers to be an important source of information when researching a car. In fact, car
dealers are a channel that more than 80% of respondents use in their deliberation. That includes
both trips to the dealership and the dealer’s website (see Figure 2).
Figure 2: Car dealers continue to rank as the most used channel across all regions
Which channels did you use to do research on the car you were interested in?
Germany US China
Car dealer 1 1 1
Car manufacturer’s website 2 2 5
Personal environment 3 4 2
Test and advice websites 5 5 3
Dealer’s website 4 3 10
Online shops 6 6 8
Social media 8 8 4
Print magazines 7 7 11
News websites 9 9 7
Forums and blogs 10 11 9
Trade fair/events 12 12 6
Car manufacturer’s app 11 10 12
Other 13 13 13
Notes: The average times a channel was used is calculated based on grouped data using the midpoints of classes to estimate a weighted average (never=0, more
than 10 times=15); we excluded “never” for average frequency (excluding non-users)
Source: Bain Automotive Consumer Survey July 2020 (Germany, US, China), overall n=500 per country
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Cracking the Code on Automotive Omnichannel Sales
When it comes to brick-and-mortar dealerships, car buyers still make in-person visits—
an average of two to three times—for test drives, configuration support, and negotiation.
At point of sale, more than 70% of survey respondents value the opportunity to close the deal with a
real person—partially because some consumers want to negotiate a discount face to face. When asked
where they would buy online if they were forced to, the majority said they would prefer to make the pur-
chase from the dealer’s website. The car manufacturer’s website came second. In the US and Germany,
the third preference was an independent car sales platform while online retailers like Amazon came
in third for Chinese consumers. Specialised car e-commerce sites like Carvana ranked lowest.
4. Buyers of internal combustion engine cars come to a dealership with their decision already made
Whether it’s personal experience with a family car, the result of months of online research, or just
a general preference for a certain look, most customers of internal combustion engine cars have a
high affinity to one brand when starting the buyer journey. Many will come to the dealership fully
decided on budget, brand, and model, and they aren’t likely to be sold on a different choice.
This means that the role of the traditional car “salesperson” at a brick-and-mortar dealership
shifts to become more of an adviser who explains the car’s features, especially technologically
advanced features like driver-assistance or infotainment systems. Salespeople support a final
configuration that is suited for a customer’s needs, as opposed to selling customers on a vehicle
they aren’t considering or haven’t researched.
5. The purchase journey for electric vehicles is quite different, creating new opportunities for
carmakers and dealers
Car buyers in the US and Germany are less familiar with battery electric vehicles (BEVs)—
three in five say they are unfamiliar with existing car options—so many don’t have a preference
for a brand or model. This creates a significant opportunity for carmakers to win new customers
for their BEVs. The opportunity is even larger in US and German markets, where twice as many
consumers as their Chinese counterparts lack a brand preference among BEVs.
BEV buyers first look for information online. Original equipment manufacturers (OEMs) and
dealers that provide the right information in the most convenient and understandable way,
paired with attractive and convenient offers, have a good opportunity to attract new buyers.
But the physical dealership still plays a role in the BEV customer journey. Because most buyers
are unfamiliar with many details of electric vehicle offerings, they have more questions, such as
how to charge the vehicle at home, how long the battery will last, and what the residual value
might be. Such buyers find critical value in a well-trained adviser. Also, they value the availability
of a local resource should they face an issue with the car.
So, the race is open: While several carmakers try to push BEV sales, relying heavily on online
approaches, dealers with physical representation have strong assets they can leverage.
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Cracking the Code on Automotive Omnichannel Sales
For most consumers, the process of buying a car starts Given the impor-
with online research to consider their options and develop
preferences. The second half of their journey usually takes tance of dealers
them to a physical dealership, where they can test drive the
car and close the deal in person. Moving forward, car sales
and their dealer-
will be a true omnichannel play. specific websites,
Automakers can benefit from evaluating their omnichannel car manufacturers
touchpoints for ease and consistency. Mapping the customer
journey from the web to the sale creates the seamless experi-
need to find creative
ence that car buyers have come to expect in an age of speed ways to create a
and convenience. Unified IDs across channels help recognise
buyers and enable automakers to use knowledge from all seamless brand and
channels about cars the buyer already owns, the buyer’s product experience
preferences, driving patterns, and the size of their family,
so that the buyer can receive the best and most fitting offer. that extends from
The ability to tailor a sales journey to different customer
types and needs is key in reaching broader demographics.
their own websites
Additionally, dynamic options like length of explanations to dealers’ websites.
and tutorials and various outreach methods are important
to meet the customers’ ever-increasing expectations.
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Cracking the Code on Automotive Omnichannel Sales
More than half of consumers across all three geographies said they’d prefer to have a single price
across all channels and are more likely to close a deal if they feel the price is consistent online and
offline. Additionally, younger generations (ages 18–49) would be more willing to buy their car online
if they knew the price was the same as at a dealership (and across all dealerships).
If online and offline prices are not consistent, automakers create intra-channel competition as
opposed to a seamless purchase journey.
Achieving consistent prices across different channels is hard, however, in a world with independent
dealers. Automakers must either find creative solutions or adapt their distribution and retail setup
(where legally feasible) to leverage more franchised agents or retail.
Despite the introduction of digital channels and online sales platforms, dealers and their physical
representatives remain an integral part of the car-buying process for many consumers—and the
most-used channel across all geographies (see Figure 3).
Figure 3: During online research, car dealer websites are the online platforms of choice
If you were to buy online, how likely is it that you would use these platforms?
Germany US China
71%
68% 69%
61%
58%
56%
53% 52%
41% 41%
36% 36%
31% 29%
Website Website Indep. Leading Indep. Website Website Indep. Indep. Leading Website Website Leading Indep.
car manufacturer car online car sales car manufacturer car car sales online manufacturer car online car sales
dealer sales retailer platform dealer sales platform retailer dealer retailer platform
platform (buy platform (transfer (buy
(transfer directly) (buy to “real directly)
to “real directly) dealer”)
dealer”)
Source: Bain Automotive Consumer Survey July 2020 (Germany, US, China), overall n=500 per country
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Cracking the Code on Automotive Omnichannel Sales
7
Cracking the Code on Automotive Omnichannel Sales
Use data
Perhaps most importantly, carmakers need to consider new touchpoints and the generated customer
data as an opportunity.
The automakers and dealers that best understand their customers will be able to make better offers and
communicate those offers in a more targeted way, at the right time. Leveraging all available data points
is key. Automakers and dealers thus need to overinvest in data collection and storage—and ensure that
they develop the capability to analyse that data and make the best use of it. Changes in a car buyer’s
life situation (e.g., the birth of the first baby) or driving patterns (e.g., a move to the suburbs and
consequent shift in driving patterns) should be analysed, and implications on recommendations
for new cars, aftersales services, or mobility solutions should be drawn.
All told, the average car shopping window across both online and offline channels is about two months.
Manufacturers should be involved in every step of that process, ensuring the most seamless experience
from start to finish. Guiding a car buyer from research to purchase will create a competitive advantage
for manufacturers that implement true omnichannel sales processes quickly.
Manufacturers should plan for a future with a direct-to-consumer model that’s rooted in online sales.
The winners will implement innovative retail models, such as delivering a vehicle to a person’s home
for the test drive or allowing a two-week window for returns. In the end, we expect dealers, agents,
and service providers to serve in fulfilment roles while OEMs retain full control over vehicle pricing.
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