What makes people buy things? Despite the best efforts of millennia’s worth of marketing and advertising people, there remains no single, simple answer.
In today’s economy, consumers can choose between a variety of different products and brands for pretty much everything from coconut water to airlines, and particularly cars.
Behind a house, a new car is generally the second biggest purchase a person will ever make, and buyers spend a lot of time researching their new cars, as well as a lot of money – an estimated $1,653 billion a year, in fact.
Car Keys undertook a survey of 1,015 people to find out what they look for when making their next car purchase. Of those respondents, 53.3 per cent said that they were looking specifically to buy a brand new car in the next 12 months, while the remaining had bought a car within the past year.
That itself is a fairly significant finding. Here in the UK, the car industry has experienced a record growth in the past few years, with a total of 2,633,503 new cars registered in Britain last year, an all-time record.
So what tempts buyers towards new cars specifically? This survey exposes the things that buyers consider to be the most important when they look to buy a new car, and it will also explore some of the factors that affect which car they buy and when they buy it.
What matters most to people when they buy a new car?
From the statistics, the single most important thing to new car buyers is value for money, with around 85 per cent of the respondents listing value as the top thing they consider when buying a car.
After-sales and customer service are also vital to buyers, again with more than 80 per cent of those surveyed saying that they’d prioritise good customer service from their dealership over things like brand name and even previous purchase experiences.
This is an important factor for dealerships themselves, as the statistics suggest that buyers may be willing to forgive previous bad experiences if they’re treated right. Also, given that dealers typically make more money from add-ons than they do the actual sale of the car, it’s critical that dealerships are able to offer attractive after-sales packages.
Value for money deemed most vital
Would a buyer be tempted to spend more money on a car if they have a good experience at the dealership? Recent studies show that they may, with data from the likes of Auto Trader and French consulting firm Capgemini showing that increasing numbers of buyers are happy to pay full list price for a vehicle if they can avoid the old method of haggling with dealers to get the best possible deal.
Also noteworthy is the fact that those surveyed rated word of mouth recommendations as the second least important factor in deciding upon a new car. In the past few years, the meaning of ‘word of mouth’ in marketing spheres has shifted from meaning actual conversations to mean the influence of social media.
That means that the potential scope for word of mouth marketing to have an influence has widened considerably, but it’s interesting to note that despite its larger reach, word of mouth is still relatively far down in buyers’ priority lists.
After-sales and customer experience are important too
A previous study from Car Keys found that an overwhelming 97 per cent of new car buyers now use the internet to research their next vehicle purchase instead of relying on the advice of friends and family.
Of those, nearly two thirds said that they preferred independent, professional car reviews when researching their next car, and the data showed that 68 per cent of would-be buyers would be happy to place an order for a car less than a month after completing their research.
However, although just over 30 per cent of the respondents to the survey said word of mouth was important, nearly 80 per cent said it was somewhat important. As a result, it could be that buyers first do their research and then look into word of mouth recommendations to qualify and confirm their choices rather than relying on it as a primary source of information.
What influences somebody to buy a new car?
But how does a customer arrive at the decision that they’re going to buy a new car? How do buyers know when the time is right to upgrade their vehicle, and what kind of things have an influence on that?
Somewhat predictably, the statistics claim that the number one influence on the decision to get a new vehicle is the state of the buyer’s current car. A new car could potentially be more reliable and therefore cost less in terms of running and repair costs than an older model, while with extended warranty offers it could actually work out cheaper for the buyer to get a new one.
Other influences include keeping up to date with the latest version of the buyers’ current model, while more attractive offers from the dealerships to tempt buyers to trade up to a new model midway through a finance agreement were also listed as major reasons.
Attractive finance and leasing deals
The rise of leasing deals, which offer a more casual approach to new car ownership whereby buyers pay a monthly sum for a car and then simply hand it back at the end of an agreed term, could also tie in to this. The British Vehicle Rental and Leasing Association (BVRLA) found that throughout 2015 UK leasing brokers reported a 27 per cent volume growth over the previous year.
Leasing, otherwise known as personal contract hire, is an attractive option to buyers as it allows them to pay a lower deposit and lower monthly payments than other forms of finance, so motorists can have a more expensive car that could otherwise be outside of their price bracket.
More interesting is what doesn’t seem to influence buyers, with some of the most significant carrots the automotive industry attempts to dangle in front of them apparently having little effect in reality.
What turns buyers off?
Only 8.7 per cent of those who responded to the survey said that they wanted to buy a new car for the latest technology, despite manufacturers constantly pushing their latest and greatest technical advancements and achievements.
New number plates seem to similarly have little effect on buyers. Online research could play a key role here, as one of the most common pieces of advice in online guides is that buyers can save money by waiting for the plate change and then getting a better deal on an old pre-registered car.
As well as that, for all the millions of pounds that car manufacturers sink into advertising, under four per cent of people said that an advertisement would make them want to buy a new car. These days, are people wiser to ad campaigns and instead seek out actual reviews instead of simply swallowing the marketing fluff, or is it just that modern advertising is smarter and buyers are actually influenced without realising it?
What influences people to decide upon the car they want?
So far, the study has explored the factors that new car buyers rate as the most important when they make the decision to buy a car, and also what the biggest influences that tempt them to buy are.
Value for money stands out as the number one important factor for buyers according to the survey data, so does that hold true for when buyers decide which is the right car for them? How do they decide upon a particular model, and can they be tempted towards a different one?
The survey results show that reliability and quality of manufacturing have an overwhelming influence on buyers, with more than 90 per cent of respondents saying that they value reliability and quality over everything else.
It’s not surprising; it is after all how Japanese manufacturers got their foothold in the market back in the 1970s and 1980s, and the continued rise of marques like Toyota, Kia and Hyundai (both of whom rank highly on reliability surveys) echo the importance of reliability today.
Reliability and quality are key to buyers' decisions
It’s important to note that this doesn’t mean that people would rather have a Korean economy car than a luxurious German sports car. It simply means that reliability and quality are vital to all consumers, whereas some buyers might prioritise things like performance over other things.
Although price being in the middle of the list might seem incongruous with buyers’ affinity for value of money, it does still correlate with reliability and suggests that people want to ensure that their car is cost effective over its entire lifetime rather than simply falling for a lower list price.
It could also show that buyers aren’t fussed as much about list price so long as they know that they’re getting what they pay for.
Again, it’s not just what is important to buyers that’s interesting, but also what’s not so important. Throughout the survey, respondents replied that fuel economy was of negligible importance on their buying decision, and when it comes to choosing a new car, how much CO2 it emits is the third lowest priority on buyers’ lists.
Lack of interest in low-emission vehicles
Despite increased focus on behalf of manufacturers, governments and legislators on how economical and efficient new cars must be in order to meet environmental regulations, buyers just don’t seem to be responding.
The exact reason for this is unclear, but recent data from think tank Pew Research Centre shows that European countries are some of the most apathetic in the world towards climate change. Perhaps it’s a case that buyers are still too engrained in what they know, or perhaps issues surrounding range anxiety in electric cars is limiting their uptake.
The UK’s government has also been repeatedly criticised for its approach towards encouraging the uptake of low-emissions vehicles. Despite a fairly sizeable government grant available to reduce the costs of electric and hybrid vehicles, MPs just this month accused the government of falling behind on its environmental commitments.
It could also be marked down to the lasting effects of the Volkswagen ‘Dieselgate’ scandal, with buyers now more aware than ever that just because a car is advertised as being efficient and economical, it mightn’t necessarily be that way in real life. As a result, perhaps buyers prioritise the things they know they want rather than taking a gamble on a car that might not be as green as it claims.
What can dealerships offer people to get them to buy a car?
Previous research from Car Keys has shown that the vast majority of buyers have an idea of which car they want to get and at least some expectation of what they should be paying, this new study suggests that buyers could be convinced to buy from a different manufacturer or dealer depending on what they can be offered.
Additional warranties appear to be the most desirable extra according to the data, with 66.9 per cent of respondents saying that extended warranties would influence their decision when buying a new vehicle.
Free oil changes and money off services and other maintenance options is also a popular extra, but free extras are actually less important than things buyers would pay for according to the stats, with just 49.8 per cent saying they’d be influenced by freebies.
Even less attractive to buyers than free extras are things like discounts on car insurance, with only 24 per cent of respondents saying that would persuade them into buying, while a mere six per cent said they’d be influenced by gift vouchers.
What does the survey say about buyers?
One of the major things to take away from this survey is that buyers are apparently much more flexible in which car they’ll buy and where they’ll buy it from than might initially be expected.
Although the figures show that badge appeal is important to roughly three quarters of buyers, the 25 per cent who aren’t loyal to any one particular brand offer a huge potential market to manufacturers and dealerships.
Of the 2.6 million new cars sold in the UK last year, statistically 658,375 of them would have been bought by the quarter of buyers who aren’t particularly brand loyal. It could represent huge untapped potential for profit if manufacturers and dealers could tempt those buyers towards their deals and their brands.
What this means for the auto industry
Just over half of the respondents to the Car Keys survey said that they were looking at buying a brand new car within the next 12 months, while the remaining number said that they had bought a new vehicle in the recent past.
That’s positive news for the UK car industry, with the study suggesting there’s still a huge demand for new cars despite current economic uncertainties. It’s further backed up by recent SMMT data which shows that UK car sales are up for the second month in a row post-Brexit, and that the market has increased throughout all except one month in the past four years.
There are some interesting points for manufacturers as well, with the emphasis put on things like the latest equipment and technology seemingly having a relatively small effect on making people actually go out and buy a car. Is it time for a rethink of the way cars are marketed?
It could also explain the rise of budget brands like Dacia, which has steadily increased its market share since it was introduced to the UK in 2013. Dacia, which offers more basic cars but at hugely affordable prices, potentially shows that while people may be willing to pay more if they know they’re getting more, they’re also happy to get less so long as it’s reflected in their expectations and in the cost.
Finally, the results suggest that more may have to be done to convince buyers to choose low-emissions vehicles. Despite the fact that the sales of electric and hybrid vehicles have risen steadily in the past few years, the data shows that environmental concerns are low on the list of priorities for buyers.
What this means for dealers
The study shows that there’s now a huge impetus for dealers to tighten up their customer service, and also to offer competitive after-sales packages to buyers as evidently it’s not just the car itself that people are attracted to.
It’s good news for dealers overall though as the demand is clearly there, and the income potential from add-ons is huge. By offering better customer service, additional warranties and competitively priced extras like paint protection, dealers can draw in buyers and also potentially retain more of them more successfully too.
Naturally, dealers also don’t want to lower their prices, but the Car Keys data suggests that buyers may in fact be happier to pay a higher outright price provided that they feel that they’re getting more in return for it.