“Any customer can have a car painted any colour that he wants so long as it is black.”
— Henry Ford, 1909
The good news is that data shows over 90% of households have at least one car, and 74% of car owners across the U.S. love driving their car. Nearly half (49%) of those who love their driving experience also state that their car reflects who they are as a person.
About 4 in 10 strongly agree that they love driving their vehicle. Almost 4 in 10 agree that they would upgrade their car before upgrading their home. More than half agree that vehicles are becoming more important in day-to-day life.
Understanding your buyer on a personal level is critical. Personalization cannot happen in aggregate, which means you need to have the right data at your hands to create tailored experiences across the entire lifespan from prepurchase information gathering through ownership.
With a more holistic view of their customers, OEMs can reach people across each phase of their buying journey. Across the U.S., 85% of shoppers looking for a vehicle have been looking for less than six months. The outlook for buying or leasing a new vehicle shows that about 25% of survey respondents are planning to purchase in the next year, and about 20% are planning to purchase one to two years from now.
Now is the time for OEMs to get into the nuances of the data and deliver cross-channel experiences where the brand fits so perfectly within a person’s lifestyle and life stage that the consumer forgets you’re an OEM and instead you become an extension of their life.
OEMs that can understand those buying, researching, and intent periods and provide consumers with relevant information and experiences at the right time and place will not only be able to win over new customers but also create an experience that lends itself to loyalty and increased customer lifetime value.
With inflation increasing drastically over the last several years, impacting critical aspects of American life, owning or leasing a car isn’t a reality for everyone across the country. In addition, many Americans are overpaying for their new car loans, making an average monthly payment of nearly $600 — up around 25% from a decade ago. It’s not surprising that these factors drive consumers to rethink big purchases such as cars and homes. Among households without a vehicle, 42% of Americans said the top reason for not having a vehicle was “it’s too expensive.”
Instead, those households without a vehicle said that walking and public transportation were their most common modes of mobility. The next most frequent mode of transportation for Americans was “rides from friends or family,” with 31% using this mode daily or weekly. About eight in 10 Americans without a car never use scooter-, bicycle- or car-sharing services.
Many aspects of the car buying and owning experience have ample room for improvement. First, there’s the prepurchase stage. People shopping for new cars still strongly favor the in-person experience, but there is room for improving online experiences. In the future, it’s predicted that a large portion of car purchases will take place online — possibly without ever seeing the vehicle in person. We’re not there yet though.
Research reveals that people believe the online shopping experience still leaves a lot to be desired. Across most aspects of the shopping journey, less than two in 10 Americans felt the online experience would be better than the in-person experience. Those aged 65 and above were more likely to expect a better car shopping experience in person compared to younger groups.
Across most aspects of the vehicle shopping journey, less than 2 in 10 felt the online experience would be better than the in-person experience. Most felt the in-person experience would be better or that the experience would be equal. The highest rating for online being better was about the ease of paperwork for a purchase. The highest rating for in-person being better was about the speed of getting a vehicle delivered.
That means dealerships still play a key role in in-person vehicle shopping. Ninety percent of U.S. consumers said they’re very or somewhat likely to buy from a dealership. Less than 10% say they’re very likely to purchase from alternative channels (e.g., online). Those numbers aren’t too surprising given that the primary channel for purchase in the U.S. is still at the retail location. However, the role of the dealership is ripe for change.
The industry is at a pivotal moment in creating new business models, and the dealer’s role in these new models is not just to sell a car but to educate consumers on an entire category (e.g., electric vehicles) and understand and act on the data and insights that come out of that journey. Given that a car is one of the biggest purchases in a consumer’s life, an OEM and dealer can be seen as a trusted partner in the presale, post-sale and services and customer lifecycle if this new model is executed correctly.
The bar is set high for customer experience given innovations from the likes of retail brands, and expectations need to be met for car buyers too. Not only does the consumer need the proper education on the car that suits their needs, but they also need a lot of education on what it means to own new mobility options like an electric vehicle, why they should consider it, what to expect post-purchase and what it means for the future of the planet.
As it stands today, consumers are left to fill in the gaps of missing information, which can lead to a lot of misinformation. Similarly, dealers need to get on the same page. Dealers need to be educated on more than features and functionality; they need to understand what these new mobility categories mean for someone’s lifestyle.
Shopping for and buying a car is just one part of the journey; there’s still everything that comes post-purchase such as maintenance and service. OEMs can and should expand their offerings to meet customer needs across the spectrum.
Consumers expressed interest in ideas such as memberships and subscription services that help them manage their vehicle. People are particularly interested in digital services that can make purchasing a car more convenient.
Six in 10 are interested in online scheduling of service appointments for their current vehicle. More than half of those aged 18 to 34 would be interested in an online tool to track monthly vehicle costs for their current car. Only about 24% of those 65 and older were interested in this type of product, which reflects the change in behavior across generations as younger generations lean into and embrace digital tools.
Research also shows that nearly half of consumers (49%) would be interested in being a member of a program that provides discounts on car parts and accessories. This is another avenue for OEMs to think about as they re-evaluate their afterparts market and shift strategically into commerce platforms.
The buzz around electric vehicles has been here for a while but it’s getting much louder. According to Statista, “electric vehicles are projected to account for 45 percent of the market in 2035, up from a forecast of 32 percent in 2030.”
When it comes to consumer preferences toward buying an electric vehicle in the U.S., longevity matters. Research shows that Americans over 50 are more hesitant about startups and new brands like Tesla. Sixty-six percent of consumers are more interested in purchasing an electric vehicle from an established U.S. brand like General Motors (GM) or Ford and 59% from a non-U.S. brand like Toyota, Mercedes or Audi. The lowest interest was for a new auto startup or newer auto brand, with 34% being likely to consider a newer brand (9% very likely).
However, 54% of consumers 18 to 34 and 40% of consumers 35 to 49 are interested in startup brands like Tesla or Lucid. There is about double the interest for 18-34 year olds to consider a new auto startup/newer brand compared to older groups (54% likely by 18-34 vs. 21% 65+). Likelihood to purchase a USA brand and a non-USA brand was similar across all age groups.
How can established OEMs capitalize on brand loyalty and consumer preferences to purchase electric vehicles from them? More specifically, how can they create a better engagement and experience model for those under 50 years old who have an interest in startup brands as well. The competition for those buyers is high.
So, with all this interest in potential electric vehicle ownership, what’s causing consumers to pause in action? Research shows that there’s still a lot of educating that needs to happen as the market adapts and embraces the electric vehicle category. OEMs can own that information gap in partnership with dealers as new business models and go-to-market initiatives take shape in the coming years.
Across generations, only about 11% of Americans indicated they have excellent or very good knowledge of electric vehicles. Not surprisingly, 18- to 34-year-olds ranked the highest (7% excellent, 16% very good). Given this group’s appetite for the market, creating engagement models and personalized experiences will be key in winning hearts, minds and share of wallet.
In addition to a general knowledge gap, consumers continue to be worried about charging, costs, environmental impact and reliability. Fifty-six percent of U.S. consumers think they usually go on drives for longer than the life of an electric vehicle battery charge.
In addition to charging, there are underlying beliefs around price when it comes to electric vehicles versus gas-powered vehicles. Close to half believe that electric vehicles cost more than gas powered vehicles to operate. One in five believe the cost of operating electric and gas powered vehicles are equal.
For those buyers who are early adopters, electric vehicles align to their values. When people are considering purchasing an electric vehicle, they also think about the environmental impact. In fact, for those U.S. shoppers that are likely to buy in this category, the top reasons were: they’re better for the environment (69%) and they provide better fuel efficiency (53%). These are the consumers who have the potential to become brand advocates and ambassadors for the directional shift as the market moves to a more environmentally friendly automotive industry.
Among those likely to consider an electric vehicle, the top reasons were: better for the environment (69%) and better fuel efficiency (53%). Close to half also indicated that battery duration/range has gotten better (48%) and gas prices keep going up (46%) as reasons for being likely to consider an electric vehicle. The least likely reasons were wanting to have the newest types of vehicles and their budget for a car increasing (both less than 10%).
As this movement toward a more sustainable future takes shape, change doesn’t happen all at once. About 60% of U.S. consumers say hybrids have more appeal than electric vehicles at the moment, which could serve as a gateway to continuous learning for buyers as they understand more of the benefits of moving away from cars with internal combustion engines.
Incentives are key to driving behavioral change. Looking for ways to move the needle in the market? Consumers are willing to consider a new category such as electric if the incentives are right. The top three incentives for Americans are:
When it comes to automated car features, Americans aren’t buying it just yet. Sixty-eight percent of consumers in the U.S. don’t believe the self-driving capability is needed. How about self-parking? Still, 49% say it’s not necessary, whereas 45% say it’s a nice to have. The car is poised to be the platform of the future, and it needs to be talked about and communicated to consumers in this very way. These are far more than just nice-to-have features; they’re set to be enhancements to the entire vehicle experience.
Winning OEMs of the future are addressing rapidly evolving customer expectations and cultivating a deep understanding of consumer value along the car buying journey. What will set one OEM apart from another? Brands that can go to market holistically, understand consumer data and create strategies based on the nuances of individuals will not only be the car brand of vehicle choice, but the car brand for lifestyle choice.
If the car of the future is a platform — the OEMs of today need to double down on their shift in mindset, embrace tech company operating models and buckle up — because consumer demand is high for not only more cars but a much greater experience. The ROI is in the waiting once the experience delivers.
Data were collected through an online survey of 1,044 adults aged 18 and older in the United States. All participants were the primary or shared decision makers for automotive decisions in the home. The survey was fielded in September 2021 and collected in partnership with Epsilon.
Learn more about how Publicis Sapient helps transportation and mobility brands innovate for what’s next in the automotive industry. Continue the conversation:
ALYSSA ALTMAN
Industry Lead, Transportation and Mobility - North America
Alyssa.altman@publicissapient.com
Publicis Sapient is a digital transformation partner helping established organizations get to their future, digitally-enabled state, both in the way they work and the way they serve their customers. We help unlock value through a startup mindset and modern methods, fusing strategy, consulting and customer experience with agile engineering and problem-solving creativity. As digital pioneers with 20,000 people and 53 offices around the globe, our experience spanning technology, data sciences, consulting and customer obsession — combined with our culture of curiosity and relentlessness — enables us to accelerate our clients’ businesses through designing the products and services their customers truly value. Publicis Sapient is the digital business transformation hub of Publicis Groupe. For more information, visit publicissapient.com.