SalesTech Star

A ‘Now or Never’ Moment: Why (and How) Car Brands Must go Digital

Jean Ortiz-Luis, Marketing Communications Specialist, AdColony

The pandemic impacted all industries this year, and the automotive industry wasn’t spared. Between the disruption in Chinese parts exports and large-scale manufacturing interruptions across the U.S. and Europe, car makers scrambled to adjust.

But how did consumer behavior change? It’s clear that everyone has now shifted to online shopping, and despite their higher price point, cars are included.

Read More: SalesTechStar Interview with James Heller, CEO and Co-Founder of Wrapify

For instance, in AdColony’s car-buying survey of 1,700 consumers conducted over the summer of 2020, we found that nearly one in four (23%) respondents said they are hesitant to visit dealerships in person and would prefer to buy online.

The more forward-thinking dealerships quickly reacted and started to adapt to customer preferences, offering online sales and contactless pickups, and rapidly shifting to digital channels across every customer touchpoint – because that’s what consumers needed.

As McKinsey once put it, it was just one of many “now or never” moments that occurred this year. If you didn’t pivot to online services, you would be left behind. However, I would go one step further and suggest that if you didn’t pivot to making mobile the primary way to reach consumers, you will get left behind. Or, more accurately, lose to Carvana.

Just as many DTC brands disrupted incumbents across multiple categories over the past few years because they were “digital natives” versus making the transition to digital from brick and mortar. We now see that “mobile natives” like Carvana, Vroom, and Shift are disrupting established companies like CarMax.

Collectively, those three companies sold 125,411 vehicles at retail in the first half of 2020, a 36% increase from the same period a year earlier. Carvana’s stock is up 172% so far this year.

Why is mobile so critical? Previously, the customer journey took place across several channels. Consumers would become familiar with new models through TV commercials, which were mainly broadcast. Then, if they were interested, they would do some online research, either on desktop or mobile web, and head to a few dealerships before making a final decision.

In the previous edition of our Car Buying Survey, more than half of the respondents said mobile devices were important while car shopping, but this rate has gone up significantly. In 2020, 69% of car buyers said it is very important or important to have their smartphone with them while shopping for a car, a 15% jump from last year.

It’s now evident that the car buying process has moved to an all-digital and mostly-mobile model. Consumers are not only using mobile devices to help with researching models and pricing; they are buying vehicles directly from their phones.

Read More: Gatekeeper Revolutionises Self-Service Contracts With The Launch Of ‘Touchless Contracts’

When asked if they had ever bought a car online and had it delivered to their home using a service like Carvana or Vroom, or used a delivery option from a major automaker (Audi, Tesla, etc.) 22% said they had used a service like this and 37% said they would be interested.

As online-only car dealers gain more credibility, interest in buying cars solely online will jump in the next several months. And based on the survey data, the customer journey isn’t just ending online – it’s where it starts.

We asked car buyers how they consider and interact with auto ads. Over half of respondents (56%) said they consider relevant auto ads when shopping for a car. Additionally, 51% said they have clicked on an auto ad while looking for cars online.

So, if you’re an automaker without a mobile-first, fully digital customer journey fully baked, the game isn’t over yet! You can still execute effective ad campaigns to attract your target audience, especially with the vast amount of contextual data (e.g., location) available today. 

Carvana was so successful not just because they did something that consumers were excited about – removing the car salesperson negotiation portion of the purchase experience — they won 2020 because they recognized how dramatically consumer behavior changed this year.

They realized you can acquire and convert users, covering the entire customer journey, 100% on mobile. The best part is, it’s possible for everyone else, too – you just have to commit to it!

Read More: SalesTechStar Interview with Jim Nystrom, Chief Sales Officer at Cogito

About the 2020 AdColony Car Buying Survey (US)

The AdColony Car Buying Survey 2020 was distributed globally and garnered over 1,700 responses. This report focuses on results specifically from the United States. The survey asked respondents, aged 14 years old to over 75, 15 questions about their car shopping behavior, dealership visits, device usage and ad engagement.

There’s A lot to Uncover From Our Recent Episodes of The SalesStar Podcast: Hear More: