The transition to digital car buying has been in motion since the beginning of the pandemic. Now one of the industry pioneers is predicting the shift will be permanent. Cars.com released data and analysis this week that it says shows the pandemic will change car buying and selling for the better.
“The current climate drove dealerships across the country to quickly adapt to meet the changing needs of American car buyers,” said Alex Vetter, president and CEO of Cars.com Inc. “It has been incredible to witness an industry as large and established as automotive respond with new technology and adopt new processes to ensure a safe and frictionless car-buying experience. As the pandemic continues into the second half of 2020, more people will turn to car ownership to safely get around while social distancing. And I believe we will see durable changes to car buying and selling that deliver an improved experience for all.”
According to the company, only 54 percent of automotive dealers had the digital capacity to start the purchase process online before the pandemic. Cars.com says it saw a 250 percent increase in dealer inquiries for its digital retailing solution, Online Shopper. By May, consumer expectations had changed as 71 percent of shoppers want to complete a car purchase online.
“Nearly 20 percent of consumers who previously did not own a car are considering purchasing one as many Americans are concerned about using public transit and ride-sharing services,” the company said in a statement. “In addition, Cars.com expects this trend to emerge stronger in urban markets where a new generation of shoppers search for affordable rides to escape their homes safely.”
Meanwhile, JD Power says the automotive comeback is on hold for July. New vehicle retail sales in July are expected to be down from a year ago, according to the company. Retail sales are projected to reach 1,133,300 units, a 4.0 decrease from the company’s pre-pandemic forecast and a 9.5 percent decrease compared with July 2019.
“One factor contributing to the pause in recovery in July is inventory constraints for many vehicles,” said Thomas King, president of the data and analytics division at J.D. Power. “While this is constraining overall sales, new production is arriving at dealerships daily and is being sold quickly to consumers. This month, 41 percent of all vehicles sold will spend fewer than 20 days on dealer lots, up from 35 percent a year ago.”
The JD Power stats make sense in the context of what Cars.com calls an affordability crisis with new car prices reaching all-time highs. The pandemic has widened the gap with loans, which the company defines as zero percent financing for up to seven or eight years.
Added Vetter, “The long-term impact of COVID-19 on the auto industry remains to be seen, yet our data and research indicate reasons for optimism. Despite the pandemic, our site traffic has grown for 11 consecutive weeks dating back to the start of May, and leads from shoppers to dealers have increased for 14 consecutive weeks. There is significant activity taking place and in the midst of all this, our industry is changing for the better.”