The future of car buying

Taking the auto industry into the future means making the jump to a new way of thinking about car buying.

While historically, the car buying process primarily started at the front doors of a dealership, consumers are increasingly turning to digital “doors” to initiate steps like researching vehicles, calculating their monthly payment and exploring financing options.

In this shifting world of car buying, dealers must meet consumers at multiple entry points to the process—both online and in person.

Buyers are demanding more information, transparency and choices through digital tools. They also value the in-person experience of visiting a showroom, meeting with a dealer face to face, discussing pricing and test driving the vehicle before they complete the purchase.

Addressing both the online and in-person aspects of car buying is the most important challenge dealers face today. The ones to succeed will make the jump to give car buyers the best of both, creating a model that combines innovative digital tools with the benefits of going into the physical dealership—or what I call a “digical” experience. Dealers will open more entry points online throughout the process, ensuring consumers can easily connect with them—and eventually make their way to the front door of the dealership when they are ready.

Dealers reading this may be thinking about how daunting this task is. But I believe by joining forces, we can work to tackle pain points in car buying and lead the industry in providing an amazing digical experience.

The case for digical

If you saw only television ads, you might think the entire car buying process is moving online, rather than the digical experience I’ve described. As in many other industries, auto faced a new demand for remote engagement during the COVID-19 pandemic, and digital pathways to research, shop and compare are more plentiful than ever.

While some corners of the auto industry would argue dealerships are becoming obsolete, I believe dealers who are willing to take on today’s challenges will become integral to the auto industry—and it shows in the data.

A car is one of the largest purchases people will make in their lifetime. In the 2023 Capital One Car Buying Outlook (CBO) survey—our annual study to better understand dealers’ and consumers’ perspectives on the car buying experience—two-thirds of car buyers told us they want dealers to enhance their digital tools. It’s not that dealers aren’t offering the tools, but car buyers’ expectations for how the tools create an easier overall experience are growing.

Even with digital tools, many more car buyers also say in-person aspects of the buying process are important to them. In fact, nearly three-quarters say they want to communicate with dealers entirely in person and 92% say the test drive is important. Perhaps the most compelling data point: Fewer than 5% said they’d like to buy a car fully online.

The data points to digical—but we can’t stop there.

The role of trust and transparency

The survey also gives us profound insights about the importance of trust and transparency in car buying. Simply put, every touch point needs to be consistent and lead to the same information.

The vast majority of car buyers (88%) say trust is important when working with a car dealership—but far fewer (44%) actually trust dealerships. One of the best ways dealers can build trust with car buyers is to increase transparency in the process.

It’s important to note that dealers have taken great lengths in recent years to increase transparency by using digital tools. However, it’s still not meeting the mark for today’s car buyer, where only 21% believe the car buying process is transparent.

Consistency is a critical component of transparency, and represents an incredible opportunity for dealers. Digital tools that consumers can use to research prices, options and terms can help address transparency, but those tools don’t truly solve the problem if completely different numbers emerge upon visiting the dealership. That’s why it’s so important to coordinate the digital and in-person buying experience, rather than treating them like separate channels.

Jumping to digical together

If you’re a dealer who agrees that a digical experience is the future, it still may seem like a long road to achieve it. But we are working with dealers to reach this destination—both in financing and in other aspects of car buying through digital tools like Capital One Navigator Platform.

We’ve been on a multi-year journey to help both dealers and consumers throughout the car buying process. And we’re continuing to drive innovation and evolve our suite of products to adapt to the changing landscape of the industry.

The future of car buying is about meeting consumers where they are to create a seamless and transparent digical experience. Together, we can make the jump and transform the auto industry.

Sanjiv Yajnik is President of Financial Services at Capital One, which includes overseeing the company’s Auto Finance business.