Car buyers like ordering but more unsatisfied with overall buying experience

Vehicle pre-ordering has emerged as a more satisfying option for consumers as they increasingly embraced online auto shopping in 2022. At the same time, car buyers were increasingly dissatisfied with their overall experience as they dealt with limited inventory and pandemic-driven supply shortages, two new industry studies have shown.

Pre-ordered vehicles encompassed 1 in 5 new-vehicle sales in 2022, largely because of inventory shortages. That's a nearly 90 percent jump over the previous year, according to Cox Automotive's 2022 Car Buyer Journey Study. What's more, just under 80 percent of consumers who ordered this way were more satisfied with the experience, the findings noted.

Similarly, S&P Global Mobility found that about 56 percent of U.S. consumers would wait more than a month for a delivery of a vehicle they ordered, and 30 percent would wait more than three months. Broken down further, 61 percent of luxury buyers were willing to wait more than a month for vehicle delivery vs. 46 percent for mainstream brands. Roughly 33 percent of luxury buyers were fine with waiting more than three months, vs. 23 percent for mainstream brands.

Both surveys reinforced the idea that consumers increasingly want to order their vehicles online.

Cox Automotive found that nearly 90 percent of consumers buying electric vehicles are willing to conduct their transaction fully online. Among those shopping for new internal combustion vehicles, 73 percent said they are willing to try a full digital buying experience.

"Our data shows that both consumers and dealers benefit from digital retailing tools," said Isabelle Helms, vice president of research and marketing intelligence at Cox Automotive. "Dealers cite efficiency, ease and profitability. Consumers cite efficiency, transparency and just an overall better experience."

The S&P Global survey found that 60 percent of customers now expect to complete their next vehicle purchase entirely online, up 8 percentage points from before the COVID-19 pandemic. In addition, 70 percent of U.S. customers were willing to work with dealerships farther away from home because they offered more online purchase and comparison options, the survey found.

This underscores the need for dealers to embrace digital selling technologies and the purchasing innovations they bring to the table, according to Treffen White, S&P Global Mobility's director of consulting.

"The dealer network of the past is not necessarily the network the industry will need for the future," White said. "Having the right digital tools will be more important than the size or appearance of the showroom, and this will impact how OEMs plan their physical locations for dealerships."

Additional results from both studies point to the challenges, opportunities and nuances the industry is confronting as digital demands increase.

For instance, just 61 percent of vehicle buyers in the Cox study were highly satisfied with their buying process in 2022, down from 66 percent the previous year and a peak in 2020 of 72 percent. At the same time, 2022 results mostly met pre-pandemic levels. The drop in overall satisfaction was largely driven by used-vehicle buyers, who tend to be more price-sensitive and are subject to higher interest rates, Cox said. In 2022, 58 percent of used-vehicle buyers said they were satisfied, down from 65 percent in 2021.

More than 10,000 consumers in the market for a vehicle in 2022 took part in the Cox study, which was largely conducted in the 2022 second half. The respondent breakdown was 4,150 vehicle shoppers and 6,118 vehicle buyers. Among the highlights:

• Vehicle shoppers spent 18 percent more time shopping for their vehicles than in 2021, boosting their shopping time online and in person at the dealership.
• More than half of vehicle buyers said they spent more time researching and shopping online because there was such limited inventory.
• Buyers who found vehicles also faced sticker shock, with more than 54 percent reporting prices as higher than expected. In 2021 the number was 31 percent. A whopping 63 percent of these buyers said they paid more than they intended for their vehicle, vs. 48 percent in 2021. Just under half of buyers said they were satisfied with the price they paid, vs. 63 percent the previous year.
• Vehicle shoppers visited an average of 4.9 websites in 2022, vs. 4 in 2021. The increase was widespread, involving automaker, dealer, third-party and used-vehicle online retailers.
• 37 percent of new-vehicle buyers purchased a vehicle from a brand they hadn't previously owned, up 6 points from 2021.
• About 64 percent of shoppers considered both new and used vehicles in 2022. That's a big jump from 55 percent who did so the previous year.

The S&P Mobility survey took place over the previous 12 months, with 1,000 new-car buyers and 450 used-car buyers in the U.S. responding. Car buyers in China, the U.K., Spain, Germany, Italy and France were simultaneously surveyed. Among the highlights:

• Most car buyers — 82 percent — still want to test drive a vehicle before making a deposit. That number is close to the 84 percent who felt the same before COVID-19.
• A majority of car shoppers don't want to go to the dealership for a test drive. Instead, they prefer the vehicle under consideration to be delivered to their home or office first, a practice that has doubled since the pandemic.
• Men were more likely to test autos at the dealership, while women would more often seize on the at-home option, as well as virtual reality or center test drives.

In the end, according to Cox Automotive's Helms, offering digital sales is not the only answer to auto retailer challenges.

"I think the lesson in the latest research is that dealers need to meet the consumers where they want to be, which requires providing both omnichannel and e-commerce experiences," Helms said. "Digital tools help, but there is not a single magic tool. Every deal is different."