Car buying journeys are likely to become longer more complex in 2023, as the cost of living crisis affects consumer behaviour.
James Tew, CEO, at motor retail technology business iVendi, said that because their personal finances were under pressure, individuals were likely to take more time and put more effort into the purchasing process.
He explained: “The economic situation is going to affect a very large proportion of the population to varying degrees and that will inevitably have an effect on their approach to buying a used car. Simply, people are going to be more concerned when it comes to choosing a vehicle that is likely to be reliable, ensuring that it has the right aftersales package such as a warranty, and that it is financed in a manner that is affordable.
“All of this will feed directly through into the way in which they shop and the buying journeys they take. We are already seeing some evidence through our platform that customers are spending longer in the research phase before looking at the specifics of each vehicle in greater detail.”
The challenge for dealers in 2023, according to Tew, would be to give customers the means to make choices with which they were comfortable.
“For us, much of this is about a return to the fundamentals of motor retail following a period of time since the pandemic when dealers have been very profitable,” he said.
Research by eBay Motors revealed that 70% of in-market buyers want to view and test drive their next car at a showroom and, when ready, purchase it from the dealer.
Around one in five (19%) say they plan to visit dealerships to view and test drive cars and then buy them online, while just 11% say their preferred choice is to view and purchase cars solely online.
Dealers will need to ensure that vehicles are imaged comprehensively and that full details are provided about the car, that the standard warranty and upgrade path are presented correctly and crucially, that finance options are explained clearly and tools such as calculators and pre-qualifiers are provided.
There could also be a renewed emphasis on in-person activity, with prospective buyers wanting to spend more time examining and test driving the vehicle. It is therefore important that consumers can switch between online and showroom channels seamlessly.
Tew added: “An important element is also to recognise that, during a time when stock shortages are likely to continue, the vehicle parc continues to age, and prices are likely to stay historically high, that customers will probably be paying more for older vehicles. They are likely to need not just a lot of information but a high degree of reassurance.”
The approach would very much harmonise with the FCA’s new Consumer Duty responsibilities of placing customer needs first.
The new rules will require firms to focus on supporting and empowering their customers to make good financial decisions and avoiding foreseeable harm at every stage of the customer relationship.
Firms will have to provide consumers with information they can understand, offer products and service that are fit for purpose and provide helpful customer service.