It used to be a relatively simple process to buy a car, and one most people undertook at multiple points in the course of their adult lives. Leasing and car rentals became options in the late 1940s and 1950s, but other than that, car buying experienced very little disruption. Until recently, when car subscriptions and car sharing were introduced, creating alternative solutions for car buyers. As car usership evolves, the volume of consumers taking advantage of subscriptions or still preferring to buy or lease appears to depend on a number of factors that are impacting all businesses in the digital age: convenience, mobile and personal connections.
Car Leases, Offering Convenience, Are Expected To Continue Growing
Leasing has become a significant player in the car market, particularly throughout the last 10 years. In 2019, more than 30% of new cars were on lease. But why lease when you can buy? For many buyers who’ve grown accustomed to the subscription economy and think about their finances more month to month than long term, car leases makes sense and may be cheaper than buying a car outright. The amount of cars priced below $30,000 is 20% less than in 2012, which can make the prospect of car buying intimidating. However, the average lease payment is $60 cheaper than a car payment, potentially providing increased accessibility.
Additionally, bundled services, an approach popular with subscription models, often means that maintenance is included with car leases. For younger shoppers, this added convenience could be a deciding factor pushing toward leases. In fact, data indicates there was a 49% increase in Millennials leasing cars between 2012 and 2016. Affordability and convenience are key factors for Millennials who lease, and the preference by Millennials for very safe and technologically sophisticated vehicles.
Car dealers generally see leasing as a contact point with a potential future car buyer. Millennials are extremely likely to be brand loyal when they’ve had positive and responsive interaction, so car dealers and manufacturers should cater to these preferences if they want leasers to evolve into buyers. Millennials are also deep-dive researchers, so understanding how to talk to them in a thoughtful way that supports their research and isn’t condescending is key to any marketing campaigns geared toward Millennials.
Car Subscriptions Continue To Evolve And Adapt To Market Preferences
Car subscriptions got off to a rocky start and multiple manufacturers have been tweaking their delivery system since entering the market several years ago. For example, Cadillac’s Book by Cadillac service was put on hold at the end of 2018, with plans to release an updated version that includes dealers and limits car swaps. However, not all car subscription reboots have been widely adopted. The cost of car subscriptions, particularly for luxury fleets, can be a hiccup for consumers and manufacturers who don’t base their models on current-day consumer lifestyles and demands.
Determined to find long-term success, many car manufacturers remain in the car subscription mix. Mercedes, Audi, Volvo and other top brands are trying out subscription services and offering a variety of different deployment options, including how often cars can be swapped and limits on which cars are available for subscription. Focusing on user experience (UX), it appears all successful car subscriptions share intuitive apps and user-friendly web access that make customizations and interactions seamless. This ease of use is very appealing to consumers familiar with subscription services. There are also car subscription services that aren’t linked to any one manufacturer. These services, like Fair, tend to be cheaper than the manufacturer-specific services and are entirely mobile-optimized.
Most car subscriptions offer bundled services, including insurance and maintenance, appealing in part to car-reluctant subscribers trying to avoid the hassles of ownership. Other niche audiences who enjoy car subscriptions include car aficionados who want to try out a variety of different cars and corporate travelers on long stints overseas who don’t want to ship their cars. Marketers should realize that the audience for car subscriptions can be varied, but is always likely to include tech-savvy consumers comfortable with alternative payment models.
Car Buying Remains Popular, But Consumers Want Digital Solutions And Personal Connections
Despite disruptions, car sales have been booming through much of the last decade. According to The New York Times, “Sales of new cars and trucks rose steadily from 2009 to 2016, the longest growth streak since at least before the Great Depression.” However, the auto sales market has slowed recently, even with popular SUVs and the allure of steep dealer discounts. The combination of rising car prices and more durable cars has decreased the need and desire to trade cars in, and consumers are being more cautious.
Many dealers are trying to nurture consumers with messaging that isn’t sales specific. “We’re doing free carwashes, service contracts, financing — the things that keep customers connected to us,” said Doug Waikem, who manages six dealerships in Ohio. More than half of consumers still walk into dealerships as their initial form of contact when car shopping, so dealers and manufacturers must build awareness in advance of the car buying experience and offer personalized connections that create ongoing relationships.
Manufacturer and dealer connections with consumers also offer opportunities to collect first-party data on walk-ins and better optimize future strategies to reach these consumers or convert browsing into buying. Many car buyers, particularly younger ones, don’t have positive feelings about car dealerships, and personalized approaches to engagement could alleviate some of that reticence.
Car buying is an industry with sales and buying practices that have been slow to adapt to new trends. This old manner of deployment is beginning to change as digital makes a greater impact in the auto industry, with 60% of shoppers researching cars online, 78% looking for cars listed on third-party seller sites and 71% using mobile for their car-buying searches.
Many consumers are searching for ways the digital car shopping experience and the traditional approach can merge — 80% of car shoppers would prefer a method of online payment when purchasing a car and 83% believe online buying technology would help them make buying decisions. Social media is also playing a role in car research. While only 10% of car shoppers say information on social media influenced their buying decisions, 70% of car shoppers who used YouTube to learn more about car models and features say it helped them make their final choices after watching test drives and car feature tours.
Understanding Auto Buyers, Leasers And Subscribers Can Create Better Car-Buying Relationships
The data-rich connections that can be made via car researching or shopping and the innovations that car manufacturers and dealers offer can create a variety of opportunities for brands to connect with audiences. Understanding the different types of consumers and their car ownership and car buying preferences is very important when optimizing any car-related marketing strategy. And, as with all businesses adapting to the rise of digital and incorporating seamless, mobile-first strategies that still offer personalized, quality engagement is the most effective way forward.
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