Fuel for Thought: Automotive Retail - The Path Forward
Automotive Monthly Newsletter and Podcast
This month's theme: Automotive Retail - The Path
Forward
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Automotive retail is changing; the global industry knows this and
has seen this coming for years. However, this has been accelerated
likely 5-10 years due to the COVID-19 pandemic impact. The industry
players are looking at ways to engage consumers more broadly across
the entire life of vehicle ownership, looking at approaches not
encumbered by traditional models and investments and looking at
ways to target and engage specific consumers to most effectively
increase conversion and loyalty. There are new consumer
considerations, an increasingly electrified set of product
offerings and further shifting views of mobility overall. These
considerations are all set against a backdrop of a much smaller,
changed and increasingly competitive market. The IHS Markit August
Light Vehicle Sales forecast volumes have recently increased for
full-year 2020 as economic data continues to surprise on the
upside. North America is now expected to approach 16m units in 2020
(up 298k from previous July forecast). Europe will finish around
15.9 million units (+197k) and Greater China will end the year at
22.3 million units (+149k). The IHS Markit Purchasing Manager's
Index (PMI), a key economic measurement, continues trending in a
positive direction and registered economic growth for the first
time since January 2020.The global IHS Markit Composite PMI
registered 50.8 in July, up from a pandemic low of 26.2 in April
2020. The Eurozone is leading with a reading of 54.9 in July, China
is at 54.5 and the US is at 50.3. These are positive indicators
that the global recovery is underway despite the ongoing outbreak.
However, the pandemic will leave a lasting impression on the
automotive industry - particularly at a retail level.
Retailer and manufacturer creativity in response to the pandemic varied by market during the last several months, as dealership activities shifted from primarily in-person to online during quarantine, the US trailed China by 10% and UK by 9% in offering the consumer the ability to purchase online with over 40% of the US consumers surveyed not having an online option available at all - almost 20% higher than China. Covid-19 has changed the dealership experience, from the number of people needed to complete a vehicle transaction to non-traditional retail formats becoming more feasible for established manufacturers. This disruption is an opportunity to re-envision retail formats, adopt digitization and align closer to consumer's expectations. In the future, retail will continue to see disruption from the automotive megatrends in electrification and mobility.
COVID-19 has also impacted mobility trends, changing consumer
consumption of public transportation and mobility services - public
transportation usage was down 90% and Mobility-as-a-Service (MaaS)
saw demand plummet 75%-80% during the pandemic peak as many
consumers opted for active mobility modes like cycling and walking.
Consumers may not return to using public transportation or MaaS to
their pre-pandemic levels - opting instead to purchase a personal
vehicle - time will tell.
With additional disruptions in the US - consumer preference shifts,
a dramatic increase in pickup demand and purchase cycle
interruptions, extension of leases - there has been a greater
demand for data driven targeted marketing. Polk Audiences™ are
available to refine consumer targets based on key automotive
attributes at the household level. Providing the ability to reach
in-market consumers, loyal to the pickup segment with a thriving
credit score - as an example. It becomes extremely useful when you
have a $45,000 pickup whose payment drops from $750/mo to $536/mo
with an incentive enhancement. As interest rates remain
historically low, manufacturers with captive finance arms have an
advantage, are you maximizing your advantage by reaching the right
customers?
Dive deeper
COVID-19 ACCELERATES RETAIL
TRANSFORMATION
COVID RECOVERY SERIES
COVID-19: THE FUTURE OF MOBILITY
DELUSION WHITEPAPER
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