Although consumers hold the key to margin growth for the automotive industry, they are not getting everything they want from dealers and vehicle manufacturers, according to a survey conducted by Cap Gemini Ernst & Young (CGEY).
The firm's fifth annual Cars Online study showed that, across the vehicle lifecycle, consumers demonstrate needs, wants, and preferences of which the automotive industry does not appear to be aware.
The study revealed misalignment in areas such as advertising and marketing, internet capabilities, and after-sales servicing. However, it also identified strong consumer loyalty to automotive brands but less to dealers. According to the report, the brands inspiring the greatest loyalty were Toyota, Audi, and Volvo.
CGEY's survey examined the opinions of consumers, dealers, and manufacturers in the US, Canada, the UK, France, Germany, Sweden, and Italy, comparing their actual needs, demands, and preferences with dealers' and vehicle manufacturers' perceptions.
Key findings
The Cars Online 2003 survey revealed a number of interesting findings, many of which identify potential areas of hidden value in the areas of customer acquisition and retention, improved channel mixes, and opportunities stemming from changes to 'block exemption', including:
- Loyalty lies with the brand, not with the dealer. Three-quarters of consumers said they expect to purchase the same make as their current car, while only 38% said they were likely to go back to the same dealer. Leading the brand loyalty list were Toyota, Audi, Volvo, BMW and Ford (US).
- Dealers and OEMs are wasting money, focusing primarily on broad-based marketing and advertising efforts instead of taking a more integrated approach that includes targeted direct marketing. Only 18% of consumers said TV advertising influenced their buying decisions, compared with 76% of dealers and 57% of vehicle manufacturers who believed TV advertisements were influential. In contrast, almost half of consumers said a direct-mail offer or advert from a dealer or manufacturer would be influential.
- Consumer segmentation is critical to profitability - but it goes largely unrecognised by the industry. Dealers and vehicle manufacturers appear to treat consumers as one mass market rather than a segmented group of individuals with varying needs and preferences. The study identified distinct consumer groups among car buyers: 'utilitarian' versus 'trendy'; used car buyers versus new car buyers; build-to-order versus buy-from-the-lot.
- Manufacturers' internet capabilities are misdirected, and are inadequate to meet consumers' needs. A high proportion of consumers start the vehicle research process six months before purchase, with the internet increasingly being used as a research medium. Almost two-thirds of consumers want to find detailed price information on the web, while 53% want cost calculators, and 50% want trade-in information. Surprisingly few (41%) of vehicle manufacturers provide detailed price information on their web site, while only 30% offer cost calculators, and a mere 11% offer trade-in information.
- Improved response speed helps keep customers. Most consumers said they expect a response to an e-mail or web site query within 24 hours, and that a slow response time would lead them to silently go elsewhere. Some 81% said they would look for a new dealer if the response time was too long, and almost half said they would look for a new manufacturer.
- Incentives are here to stay. Some 57% of consumers said that 0% or low financing was an important factor in their buying decision, while only 30% of vehicle manufacturers believed financial incentives were important to consumers.
- Dealerships are missing the mark on many of the after-sales service features they emphasise. 'Friendly staff' ranked as the leading feature consumers look for when choosing a dealer for servicing, cited by 81% of respondents. However, only 42% of dealers said they focus on friendly staff. The leading service differentiator identified by 63% of the dealers was being a 'one-stop shop' (having servicing, insurance, accessories, and financing all under one roof). Less than half of consumers said this was important.
Conclusion
The strong brand loyalty demonstrated by consumers in the survey indicates that the vehicle manufacturers have an opportunity to build direct relationships with consumers in order to gain a better understanding of their customers.
According to Michael Wujciak, vice president and leader of CGEY's Global Automotive Practice, "This improved understanding can in turn help auto companies reduce costs, build more effective customer relationship management programmes, better manage their marketing and promotional efforts, and increase the effectiveness of their after-sales operations as they strive to accurately meet consumer needs and demands."
"Cars Online 2003 makes it clear that the automotive industry must gain a better understanding of how consumers shop for vehicles and what factors lead them to buy," concluded Wujciak.
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