Car Buying - US - January 2011

This report explores the automotive retail market in the U.S. It provides insight into the external market and internal/industry factors affecting new vehicle sales, consumption and dealership trends—and what they mean for future sales, promotional campaigns, and industry innovations within dealership groups.

Scope and Themes
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising creative
Abbreviations and terms
Abbreviations
Terms
Executive Summary
U.S. unit car sales increased in 2010 for the first time since 2000
Mintel forecasts that dealership sales will likely increase 21% in 2010
Dealerships are shrinking, especially among those selling less inventory
The average U.S. dealership sold 10% fewer vehicles in 2009
New vehicle registrations dropped 33% in 2009 from previous year
Consumers are holding onto cars longer, creating pent-up demand for new
Spouse or partners help influence car buying
Test drives are more important than ever in determining buying
A third of respondents purchased new since recession
Average spend on new vehicles: $27K
Midsize sedans, small cars purchased during recession
Consumers may still be hesitant to purchase new following recession
Two thirds of respondents connect domestic cars with U.S. economy
Insights and Opportunities
Dealerships should offer prepaid gift cards as a brand marketing tool
Dealerships should take advantage of Cyber Monday promotions
Integrate technology integration more seamlessly into sales platform
Develop buyer relationships that are designed for the long, not short term
Inspire Insights
Trend: Simplicity and Convenience
Dealerships will benefit by allowing convenience to start from home
Market Size and Forecast
Key points
U.S. sales reach 11.6 million units, the first year-to-year increase since 2000
Figure 1: Total U.S. vehicle sales, by units, 2005-10
Dealership revenues plummeted 17% in 2008 but recovery started in 2010
Figure 2: Total sales at new car dealerships, at current prices, 2005-10
Figure 3: Total sales at new car dealerships, at inflation-adjusted prices, 2005-10
Market Drivers
New vehicle registrations dropped 33% in 2009 from previous year
Figure 4: Total number of U.S. motor vehicles in use, new vehicle registrations, scrappage and licensed drivers, 1991-2009
Consumers are holding onto cars longer, creating pent-up demand for new
Figure 5: Median age of automobiles and light trucks in operation in the U.S., 1990-2008
Cut-rate financing, shorter loan terms trending to help generate sales
Persistent unemployment drives consumers to consider low financing
Figure 6: U.S. unemployment rate, by month, July 2008-October 2010
Disposable income remains limited in many households
Figure 7: Real disposable personal income, January 2007-January 2010
Consumer debt declining in 2010
Figure 8: Consumer debt, Q1 1999-Q1 2010
New Car Dealerships
Key points
Total U.S. new car dealerships fall 11% between 2008 and 2010
Figure 9: Number of dealerships selling new cars, 1990-2010
Total number of new car franchises drop 9% between 2009 and 2010
Figure 10: Number of car and light truck franchises in the U.S., 2009 and 2010
California boasts the highest number of new car dealerships
Figure 11: Number of new car dealerships, by state, 2010
The average U.S. dealership sold 10% fewer vehicles in 2009
Figure 12: Number of new vehicles sold and average selling price, 1997-2009
Top U.S. Dealership Groups
Key points
AutoNation
Penske Automotive Group
Figure 13: Top 20 dealership groups in the U.S., by the total number of new vehicle units, 2009
Online Car Buying
Key points
The internet now an essential element of the car-buying process
eBay Motors aiming to increase new vehicle inventory
Industry still experimenting with selling new vehicles online
GM tried but failed in partnership with eBay Motors
Ford taking online sales to the UK
AutoNation expanding online effort in three states
Kia partners with eBay in the attempt to increase U.S. brand awareness
Figure 14: Kia Motors/eBay Motors ad, November 2010
Volkswagen raising Jetta profile through luxury goods retailer promotion
Dealership Qualities
Kentucky Toyota-Scion dealership creates community destination
Dealership uses naming rights of city park to bring vehicles to people
Innovation and Innovators
Phone app allows users to connect with automaker before, after purchase
Ford steers test drives of new F-150 pick-up to buyer homes
Corvette enthusiasts enticed by opportunity to participate in engine build
Nissan invites ‘Mommy Bloggers’ to test drive updated minivan
Partnership with truck company brings messaging to the streets
Marketing Strategies
Strategy: Test drives as a VIP exclusive event
Figure 15: West Herr Ford direct mail ad, 2011
Strategy: Turning the test drive experience into a family event
Figure 16: General Motors Mark of Excellence Test Drive Experience direct mail ad, 2011
Strategy: Marketing trade-in process as upgrading your lifestyle
Figure 17: General Motors Mark of Excellence Test Drive Experience direct mail ad, 2011
Ford shows how swapping your ride can help you in the long run
Figure 18: Ford ad, 2011
Chevrolet suggests consumers “switch” to their vehicles
Figure 19: Chevrolet ad, 2011
Strategy: Providing all the information buyers need at their fingertips
Figure 20: Bankston Ford ad, 2011
Participation in New Vehicle Purchasing
Key points
A third of respondents purchased new over the last three years
Figure 21: Participation in new vehicle purchasing, by gender, age, household income and race and Hispanic origin, September-October 2010
When New Vehicle Purchasing Took Place
Key points
Recession incentives motivated car buying during troubled times
Figure 22: When last new vehicle was bought, in past 3 years, by gender, September-October 2010
Recession purchasing highest among middle-aged consumers
Figure 23: When last new vehicle was bought, in past 3 years, by age, September-October 2010
Future New Vehicle Purchasing
Key points
Consumers may still be hesitant to purchase new following recession
Figure 24: When next vehicle purchase is planned, by gender, April-June 2010
Those aged 18-24 are most likely to purchase within the year
Figure 25: When next vehicle purchase is planned, by age, April-June 2010
Higher-income households most likely to purchase within the year
Figure 26: When next vehicle purchase is planned, by household income, April-June 2010
Amount Spent On New Vehicle Purchase or Lease
Key points
Respondents spending an average of $27K on new vehicles
Figure 27: Amount spent on most recent vehicle purchase/lease, by gender, April-June 2010
Type of New Vehicle Purchased
Key points
Midsize sedans and small cars bought during recession
Figure 28: Type of new vehicle purchased, by gender, September-October 2010
Those aged 25-34 purchased SUVs more than older peers
Figure 29: Type of new vehicle purchased, by age, September-October 2010
Crossover SUVs allowing taste of luxury for middle-income households
Figure 30: Type of new vehicle purchased, by household income, September-October 2010
Where New Vehicles Are Purchased
Key points
Brand dealerships dominating outlet where respondents purchased new
Figure 31: Where new vehicles are purchased, by gender, September-October 2010
Dealership groups rated highest among those aged 25-34
Figure 32: Where new vehicles are purchased, by age, September-October 2010
Dealership groups rated highest by those from lowest-earning households
Figure 33: Where new vehicles are purchased, by household income, September-October 2010
How New Vehicles Are Researched
Key points
Automaker sites first stop for respondents in researching vehicles
Figure 34: Where new vehicles are researched, by gender, September-October 2010
Under-45s rate automaker websites higher than older peers
Figure 35: Where new vehicles are researched, by age, September-October 2010
Respondents from higher-income households researching more
Figure 36: Where new vehicles are researched, by household income, September-October 2010
Who Influences New Vehicle Purchase
Key points
Majority of purchase decisions made with help from spouse or partner
Figure 37: Who influences new vehicle purchases, by gender, September-October 2010
Respondents aged 25-34 more influenced by friends than older age groups
Figure 38: Who influences new vehicle purchases, by age, September-October 2010
Children most influential in $100K+ households
Figure 39: Who influences new vehicle purchases, by household income, September-October 2010
What Influences New Vehicle Purchase
Key points
Test drives dominating influence for respondents when purchasing car
Figure 40: What influences new vehicle purchases, by gender, September-October 2010
Test drives rated highest by those aged 25-44
Figure 41: What influences new vehicle purchases, by age, September-October 2010
Higher-income households interested in test drives
Figure 42: What influences new vehicle purchases, by household income, September-October 2010
Attitudes Toward Trade-In Process
Key points
Female respondents feel less satisfied regarding trade-in price than men
Figure 43: Attitudes towards trade-in process, by gender, September-October 2010
25-34 year olds most likely to feel ‘ripped off’
Figure 44: Attitudes towards trade-in process, by age, September-October 2010
Attitudes Toward New Car Purchasing
Key points
Two thirds of respondents connect domestic cars with U.S. economy
Figure 45: Consumer attitudes towards new car purchasing, by gender, September-October 2010
25-34 year olds most likely to purchase to ditch clunker costs
Figure 46: Consumer attitudes towards new car purchasing, by age, September-October 2010
Impact of Race and Hispanic Origin
Key points
White respondents purchasing SUVs more than Hispanics
Figure 47: Type of new vehicle purchased—white vs. Hispanic, September-October 2010
Asian respondents most likely to purchase new within the single year
Figure 48: When consumers plan to make their next vehicle purchase, by race and Hispanic origin, April-June 2010
Neighborhood lots used more by Hispanic respondents than by whites
Figure 49: Where new vehicles are purchased—white vs. Hispanic, September-October 2010
Hispanics less inclined to use automaker sites than whites
Figure 50: Where new vehicles are researched—white vs. Hispanic, September-October 2010
White respondents more likely to seek advice from spouse or partner
Figure 51: Who influences new vehicle purchases—white vs. Hispanic, September-October 2010
White respondents more likely than Hispanics to be influenced by test drives
Figure 52: What influences new vehicle purchases—white vs. Hispanic, September-October 2010
Hybrid technology more essential for Hispanic respondents than whites
Figure 53: Consumer attitudes towards new car purchasing—white vs. Hispanic, September-October 2010
Cluster Analysis
Brandies
Demographics
Characteristics
Opportunity
Improvisers
Demographics
Characteristics
Opportunity
Indies
Demographics
Characteristics
Opportunity
Cluster characteristics
Figure 54: Car buying clusters, September-October 2010
Figure 55: Type of vehicle consumers purchase, by car buying clusters, September-October 2010
Figure 56: How consumers research car buying, by car buying clusters, September-October 2010
Figure 57: Factors that influence vehicle purchasing, by car buying clusters, September-October 2010
Figure 58: Attitudes towards car buying, by car buying clusters, September-October 2010
Cluster demographics
Figure 59: Car buying clusters, by gender, September-October 2010
Figure 60: Car buying clusters, by age, September-October 2010
Figure 61: Car buying clusters, by household income, September-October 2010
Figure 62: Car buying clusters, by race, September-October 2010
Figure 63: Car buying clusters, by Hispanic origin, September-October 2010
Cluster methodology
Appendix: Other Useful Consumer Tables
Participation in new vehicle purchasing and household income
Figure 64: Participation in new vehicle purchasing, by household income, September-October 2010
Attitudes towards new car purchasing and household income
Figure 65: Consumer attitudes towards new car purchasing, by household income, September-October 2010
Participation in new vehicle purchasing by race and Hispanic origin
Figure 66: Participation in new vehicle purchasing, by race and Hispanic origin, September-October 2010
Attitudes towards trade-in process by race and Hispanic origin
Figure 67: Attitudes towards trade-in process, by race and Hispanic origin, September-October 2010
Appendix: Trade Associations

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