Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, today released Cars Online 09/10, the 11th annual in-depth study of the global automotive industry. The study surveyed more than 3,100 consumers in eight countries: Brazil, China, France, Germany, India, Russia, the United Kingdom and the United States. Cars Online identifies a number of key trends which underscore the importance of understanding consumer buying behavior in today’s turbulent climate:
· Almost 90 percent of consumers today use the internet to research vehicles. Nearly 40 percent would like to buy a car over the internet, and half would purchase parts and accessories online, the main drivers being price discounts and dissatisfaction with the dealer/retailer process.
· Reinforcing the 08/09 findings, green vehicle ownership continues its upward trend: 41 percent own a fuel-efficient or alternative-fuel vehicle, up from 36 percent the year before, and 30 percent plan to buy one. Fuel economy and environmental impact are the primary reasons.
· Customer loyalty remains vital with 68 percent of respondents likely to purchase the same make/brand again as their current vehicle, up from 61 percent last year. In addition, 63 percent would purchase from the same dealer where they bought their current car.
· The vast amount of information available on the internet is resulting in a shrinking buying cycle. Over two-thirds of respondents begin the research process two to four months in advance. Over half of respondents expect a response to an enquiry made online within four hours, and nearly three-quarters said they would look for another company if the response was too slow.
· Less than half of consumers with cars still in-warranty have their vehicles serviced at the purchasing dealership, emphasizing the importance of delivering a strong aftersales and servicing experience. Spare parts and service typically offer a profit margin up to ten times greater than that of the initial sale.
The report highlights changes in consumer buying behavior at a time when the industry has been severely impacted by the economic climate and outlines new trends in online buying of vehicles, parts and accessories, alternative-fuel vehicles and aftersales and servicing. Early signs of convergence between the BRIC (Brazil, Russia, India and China) and the mature countries also indicate that the gap in factors impacting vehicle buying decisions is narrowing. These developments indicate that the successful automotive companies will be those that focus on longer-term prosperity with an emphasis on future differentiation and competitive advantage.
"During what has been a difficult year, the automotive industry has, understandably, opted for short-term measures such as cost-cutting and cash preservation. Our Cars Online study shows that they should now be considering how to address the shifting - and compressing - buying cycle by diversifying where and how they engage consumers," said Nick Gill, Capgemini Automotive Sector Leader. "They would also do well to consider the opportunities for growth indicated by the research. Aftersales and servicing in particular were highlighted as missed opportunities, given that less than half of in-market customers return to the dealer where they purchased their car to have it serviced."
Convergence between developing and mature markets
A rationalization has begun to take place with some of the trends in developing markets starting to move toward those found within mature markets. However, significant differences remain:
· The shift toward convergence is most pronounced in Russia, where consumers are more likely to rely on web-based information, similar to the U.S. and Western Europe. However, overall 30 percent of consumers in the BRIC regions use TV advertising as a source of information, compared to only 16 percent in mature markets.
· Respondents in developing markets who do use the internet are more likely than counterparts in mature markets to use new tools such as blogs, video sites and RSS feeds to research vehicle information.
· Short-term factors such as cash-back incentives and low financing options are still more important in developing countries as drivers for purchase.
· Over one-third of respondents in developing countries will consider four or more makes/models compared to only 17 percent in mature markets; Brazilian consumers displayed this trait in particular (over half of respondents).
Increasing focus on environmental issues in purchasing decisions
The top four factors that influence buying decisions remain reliability, safety, fuel economy and price, consistent with previous years. An increasing focus on environmental issues permeates the study, with 31 percent of consumers in Western Europe pointing to this as the key reason to own or buy a fuel-efficient or alternative-fuel car, up from just 22 percent the year before.
In the BRIC countries, this was also borne out: in India, 32 percent indicated environmental impact as a driver; 90 percent of Brazilian respondents claimed a strong understanding of green vehicles; and 32 percent of respondents in China said this was a primary reason for green vehicle decisions. Feedback from consumers included the hope that there will soon be 100 percent clean fuel, no emissions and that the automotive industry would ‘get off the oil wagon’. However, findings also show that consumers would be reluctant and, in some cases, unwilling to pay a premium of more than 10 percent extra for fuel efficient or alternative fuel vehicles.
The impact of the Web in the role of automotive companies
By the time a consumer visits the showroom, they will already have done a degree of research online and consequently it may be too late to influence the vehicle purchase decision. Search engines have jumped up to the third spot in the research stage, from seventh place last year, with respondents continuing to state they want a full range of product information and base pricing from manufacturer and dealer sites above everything else. In mature markets, cost calculators and comparators were important, while developing countries looked for guidance and advice over the web and to communicate with their dealer or car company online for problem solving and buying accessories. Blogs and forums play a pivotal role – 57 percent of respondents would be less likely to buy a particular make or buy from a particular dealer if they found negative comments on such sites.
Although consumers are less willing to buy a used car sight unseen, nearly 40 percent would purchase a new car through a completely online transaction if this capability existed, suggesting the role of the dealership is likely to change significantly in the next few years as this facility becomes available. For consumers in mature markets, inability to test drive a vehicle was a hurdle to online purchase whereas in developing markets, the lack of vehicle history was a greater concern. Many consumers dislike price negotiation with dealers, which is a key factor accounting for this shift online, although other respondents indicated that an inability to negotiate price would be a barrier to buying on the web.
Maintaining customer satisfaction across all markets offers the greatest potential for growth, and providing a viable online option as part of this is imperative to future success for the automotive industry.
To access the full report, please go to www.us.capgemini.com/carsonline
About the study
Capgemini worked with SmartRevenue, a Ridgefield, Connecticut-based research firm, to conduct the survey for Cars Online 09/10. All analysis and interpretation of the data has been made by Capgemini in collaboration with the Car Internet Research Program (CIRP) of the University of Ottawa, Canada. In total more than 3,100 consumers were surveyed in eight countries: Brazil, China, France, Germany, India, Russia, the United Kingdom and the United States. The composition of the consumer sample in each country was based on projectable national samples representative of the population from the standpoint of region, age and gender. All consumers surveyed were in-market (24% plan to buy or lease a vehicle within three months; 29% in three to six months; 11% in six to 12 months; and 36% in 12 to 18 months).
About Capgemini
Capgemini, one of the world's foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, the Collaborative Business ExperienceTM. The Group relies on its global delivery model called Rightshore®, which aims to get the right balance of the best talent from multiple locations, working as one team to create and deliver the optimum solution for clients. Present in more than 30 countries, Capgemini reported 2008 global revenues of EUR 8.7 billion and employs 90,000 people worldwide.
More information is available at www.capgemini.com.
About Capgemini’s Global Automotive Practice
Capgemini’s Automotive practice serves 14 of the world’s 15 largest vehicle manufacturers and 12 of the 15 largest automotive suppliers. The sector generates value for companies through global delivery capabilities and automotive-specific service offerings such as Integrated Lead Management, B2C Web Strategy, Service and Parts Management, Supplier Transformation, Optimization of Dealer-Focused Operations and Global Emerging-Market Sourcing.
For more information: http://www.capgemini.com/industries/automotive/
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