By Lisa Whalen
February 2, 2022 at 12:01 am ET
Rising vehicle prices and reduced selection last year, along with health concerns deterring visits to dealerships, have fueled interest in a fully online vehicle-buying experience. Consumers are increasingly turning to — and reporting positive experiences with — online retailers such as Carvana, driving the digital transformation of the automotive industry.
As the global chip shortage has reduced inventory on dealer lots, sending vehicle prices skyrocketing, and COVID-19 fears have curtailed in-store activity, consumers are exploring alternative ways to purchase cars. Traditional dealerships should monitor this trend and adopt best practices from online retail to stay in the game.
A whopping 62 percent of those who plan to buy a vehicle this year said they would be interested in making their purchase entirely online. That’s a massive shift from the traditional brick-and-mortar model.
While negotiating deals and test-driving remained sticking points for many — favored by 66 percent and 76 percent of respondents, respectively — two-thirds of prospective buyers prefer to gather information about a vehicle online, and 30 percent prefer financing online. Given these findings, it’s important for automotive retailers to get on board with online enthusiasm — even in areas where it is just starting to grow — and out in front of online purchasing trends.
Net promoter score data — the likelihood that a consumer recommends a brand to someone else — shows that Carvana made a big splash last year compared with traditional automakers. Its NPS climbed from 0 at the beginning of 2021 to 22 points to kick off 2022. CarMax, a competitor, also enjoyed upward movement, rising from 17 to 25 points.
Millennials and Gen Z adults were especially enthusiastic about the two online brands over this period. Among these generations, Carvana’s NPS leaped from -2 to 27 points, while CarMax’s score increased several points from 18 to 26. The data clearly suggests that consumers who engaged with online retailers were left with a positive impression.
In terms of sales, Carvana dominated the online vehicle buying market last year, selling over 400,000 vehicles in the fourth quarter and surpassing 1 million cars sold since its founding in 2012. Monitoring the company’s progress along with that of other pioneers in automotive online retail — such as Vroom and TrueCar — will give vehicle manufacturers and dealerships further insight into effective approaches to luring customers in a pandemic-addled market.