CONSUMERS RETHINKING AUTOMOTIVE IN LIGHT OF COVID-19

By Rossi Fattori 

The Covid-19 pandemic has markedly altered the auto- motive landscape for dealerships. It has also impacted how consumers view transportation in general.

A recent study conducted by Deloitte Canada, in conjunction with the Trillium Automobile Dealers Association, contains a wealth of data about how Covid-19 is affecting consumer behavior in Ontario. The study – entitled ‘On the New Automotive Consumer Post Covid’ – was presented by Ryan Robinson, Research Leader at Deloitte Canada, at the TADA’s Virtual Auto Dealers Innovation Series & Expo on September 24th.

It covers a range of topics, including what consumers expect from new car dealerships, new automotive business models, vehicle electrification, mass transit, and ride-sharing. For instance, 40 percent of people polled have altered their timeline for buying their next vehicle, but not everyone intends on delaying it. Some consumers may be interested in taking advantage of incentives.

More than half of younger consumers (18 – 34) indicated that they would be interested in acquiring a vehicle as a way of maintaining social distancing while driving.

Some consumers are starting to think differently about the type of vehicle they would most acquire next – close to half are looking for a more affordable option. A significant number of people are also planning to drive less as a result of the pandemic. This desire to drive less may be linked to the fact that 41 percent of people intend on working from home at least twice a week, going forward.

The study also revealed that although consumers want to continue a virtual buying experience with automobiles, 78 percent of people in Ontario will want to buy their next vehicle in-person at a dealership. Sixteen percent of respondents indicated that they would prefer a partially virtual process (i.e., online shopping, physical test drive, digital document signing), while only six percent indicated a preference for a fully virtual process.

The main reason for wanting a virtual car buying experience was ‘convenience,’ and 26 percent of those respondents based their decision on health concerns about physical interactions. Not surprisingly, among consumers who indicated they aren’t interested in acquiring their vehicle by a virtual process, 84 percent based their decision on the need to see a vehicle before buying it, and 72 indicated their need to test drive a vehicle. Forty-nine percent indicated they would not feel comfortable making such a s large purchase online.

According to the study, some aspects of the car buying process never change. For instance, 69 per cent of respondents said that getting a good deal is still the most important; 57 percent said transparent pricing was the most important factor, and 49 percent said having all their questions answered rated higher than anything else. The study also examined the issue of new business models, such as automotive subscription services, where consumers pay a monthly fee that covers insurance, roadside assistance, maintenance, and, in some cases, the option of changing vehicles with a few days’ notice. A significant number of consumers said they would not pay a premium for a subscription service.

On the issue of the electrification of vehicles, consumer attitudes are shifting rapidly. Consumers indicated a stronger preference for buying a hybrid, as opposed to an all-battery powered electric vehicle.

The majority of consumers interested in an electrified vehicle expect to pay between $20,000 and $50,000 for this motive power option.

A big shift in consumer attitudes about transportation is ride-sharing. Prior to the pandemic, 39 percent of respondents admitted to using ride-sharing services, and only six percent said they would use this service more often in the future.

The ride-sharing stats would indicate that this transportation option has a long way to go before replacing the personal ownership option.

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