While the early pandemic months dealt a blow to auto sales industry-wide in the U.S., online shopper interest in the new vehicle market has clawed back from double digit year-over-year (YOY) losses in the spring of this year to just a few percentage points shy of last year’s shopper interest in the summer (and was even up YOY in July!).
Sales have been a bit slower to recover than shopper interest, but the data suggests there’s sturdy, if cautious, interest in new vehicles. Heavy incentives have helped coax some buyers back to the table, but many shoppers are approaching the process with more reservations than before the pandemic hit.
Sensitivity to rising prices, continued economic uncertainty, and thinning inventory from plant shutdowns in the spring have all provided grounds for pause and consideration. We’ve seen sizeable gains (both since April of this year and compared to last year) in “Build Your Own,” “Price Estimator,” and “Search Inventory” tool use on third-party automotive sites – a sign that folks in the current market are really weighing the value of the available model configurations and prices before deciding whether to purchase (and in many cases may be deciding to wait). This year, August’s industry-wide month-end days’ supply was 52 days, the lowest we have on record since 2015. Considering the economic turmoil, inventory constraints, and fact that folks may be delaying their in-person trips to dealers, there is less opportunity for “showroom redirect” – that is, when a dealer doesn’t have the exact model/trim that you want on the lot, but may make a convincing pitch for a similar alternative (e.g., running low on Honda Pilots, why not try a Honda Passport?).
Taking a look at Carvana, an online used car marketplace, we see interest in the used car market has ballooned since the start of the pandemic. August 2020 saw 58% more visitors than a year prior, and we’ve seen a sustained lift after the March/April 2020 lows mirrored in the new market. As with new vehicle shopping, use of Carvana’s “Car Finder” tool has skyrocketed, with August 2020 showing a 276% YOY increase in visitors. What’s more, the share of new vehicle shoppers now also shopping Carvana increased this summer to around 15% to 16% of the market, above the 10% or so overlap last year – another indicator that consumers are spreading their nets wide and spending more time searching for the right vehicle.
Though consumers may be more wary and particular given the times, there’s still evidence that shoppers will strike for compelling models. While industry sales were down, several top-shopped models met or exceeded their highest sales tallies for the year in August 2020: the Honda CR-V, Ford F-150, Ram 1500 and Jeep Grand Cherokee, to name a few. In August 2020, consistent with shoppers expanding the scope of their search, Jeep and Ram visitors drove DriveFCA.com (Fiat Chrysler’s online retail experience site) to its highest visitation since launching in April 2020, growing to a size comparable to 20% of FCA’s overall third-party site shopping. It was enough to boost its visitation above GM’s equivalent online purchase site in the last two months of the summer.
In August 2020, about 55% of DriveFCA’s traffic was referred from an FCA-associated page (Brand.com, Chrysler Capital, dealer site, etc.), with 34% coming from Jeep.com and 9% coming from Ramtrucks.com.Those two brands alone gained substantially more visits month-over-month (MOM) in both July and August 2020, especially Jeep. Another 16% of overall referrals came from lead generation sources, the largest of which only started referring in July and August 2020, immediately boosting visitation and contributing to 12-13% of DriveFCA’s visits each month. An additional 7% of referrals came from search, while just 2% came from third-party auto research sites.
Another example of the pent-up excitement for compelling models is the visitor boom shop.ford.com saw when the new Bronco and Bronco Sport were announced this July. By announcing the resurrection of the iconic model with multiple trims and configurations—a stylish challenge to the Jeep Wrangler’s off-road throne—Ford saw a 79% YOY boost in visitation to its shopper site, largely from folks exploring the “Build & Price” tool for the Bronco. August 2020 remained elevated, with the shopper site up 17% and inventory pages up 43% compared to August 2019.
Amid the myriad challenges that Covid-19 has brought, companies in all sectors have had to adjust to shifting consumer behavior. Automakers have thus far done a decent job responding to these headwinds by supporting and incentivizing consumers, implementing new safety protocols to get plants reopened, and working with dealers to launch novel shopping experiences both online and in person. On top of that, strong brands continue to reap the rewards of their years of tuning that created models appealing enough to overcome even pandemic-induced uncertainty and roll off the lot. With no near-term end to the Covid-19 pandemic in sight, it is critical that companies continue to take note of, and react to, these behavioral shifts in order to reach the buyers out there who are still searching for the right vehicle amidst it all, but require a bit more convincing. With this September’s sales rate coming in just shy of January/February forecasts for this year, at a monthly seasonally adjusted annual rate (SAAR) of 16.34 million, there is still potential for a stronger close to the year if shopping interest holds steady.
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