State of Automotive & Consumer Behaviors, week of 5/11
Friday, May 15, 2020
Key Industry Stat(s) of the Week
Consumer loyalty to car brands has historically been low during economic recessionary periods, as evidenced by Make Loyalty dropping to 42% among consumers during the 2009 financial crisis and recession. Since it is more expensive to acquire new customers vs. keeping existing customers, maintaining consumer loyalty will be key during this economic downturn (Source: IHS Markit Automotive Loyalty In the Wake of the COVID-19 Recession).
- Make loyalty was recently at an all-time high of 55% in 2019.
- While Pickups had a 3% month-on-month decline in sales from March to April, Pickup sales are actually up 6.3% year-to-date vs. 2019 (Source: IHS Markit)
Why It’s Important to Maintain or Increase Marketing & Advertising During a Recession
Kantar recently released their findings that assessed global consumer sentiment around COVID-19 pandemic (Source: Kantar, AdAge)
- Brands who “go dark” to save costs will see a 39% reduction in brand awareness and delay recovery after the pandemic.
During the 1973 recession, Toyota increased its ad spend when all other car brands had decreased theirs. Toyota became the top imported car maker in the US just 3 years later in 1976. (Sources: Digital Dealer; Forbes)
“Stopping advertising to save money is like stopping your watch to save time.” – Henry Ford
Changing Consumer Behavior During COVID-19
Automotive News Documents 5 New Consumer Trends Shaping the US Auto Industry (source: Automotive News). Highlights include:
- Despite so many Americans working from home, 93% of US consumers are using their car more often. This is driven in part by US consumers relying less on public transportation and ride sharing services.
- 18% of car shoppers would buy a vehicle sooner if there was an online purchase option, showing the increasing need for dealerships to digitize every aspect of the car buying experience for consumers.
Consumers Have High Expectations for Dealership Safety (Source: CBT Automotive Network, Expectations for Standardized Dealership Safety after COVID-19)
- Beyond digital retailing, consumers need dealerships to practice social distancing and keep showrooms and vehicles sanitized.
Nearly 30% of US car shoppers who weren’t originally open to buying a car digitally have since changed their minds. (Source: eMarketer)
Mexico To Reopen Auto Factories As Early as Monday
- Auto manufacturers in the US rely heavily on Mexico factories for production, with 39% of auto parts used in the US in 2019 being imported from Mexico. (Source: CNBC, Mexico To Reopen Auto Factories)
How the COVID-19 Pandemic Could Permanently Change the Auto Industry
- From traditional OEM “enemies” becoming friends/partners, to the closing of factories, to electric vehicles carving out a larger piece of the automotive retail pie, the auto industry may never be the same after COVID-19. (Source: New York Times, The Pandemic Will Permanently Change the Auto Industry)
- OEM Payment Relief Program: Updated and ongoing list of OEM payment plans and incentive programs
- Cars.com aggregated the current sales and service rules that each state has put in place for dealerships during the pandemic