The Evolution of the Online Car Buying Process - MaxTradeIn

The Evolution of the
Online Car Buying Process
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Table of Contents Introduction
Introduction
Consumer Car Buying Habits and Frustrations
The Evolution of Car Shopping
1. Online Penetration
2. Demographic Data on Car Shopping
3. Percent of Customers Who Trade In or Sell Their Old Car
to Purchase a New Car
Top Consumer Frustrations in Car Selling/Trade In Process
1. Dealing with Salespeople
2. Spending Time on the Process
3. Determining the Value of Their Used Car
Top Online Resources Used by Consumers to Determine the
Value of Their Used Car
1. Kelley Blue Book
2. Consumer Reports
3. Edmunds
4. MaxTradeIn
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The car buying process is making a huge shift to
digital, meaning car dealers need to adapt and
recreate the experience of the dealership online
to cater to the digital customer.
To better equip themselves, buyers are going
online, at an astounding rate of 83%, spending an
average of 18-19 hours researching before making
a vehicle purchase.
And as the industry shifts, consumers’ online
activity, including consumer research, interactions
with salespeople and actual purchases and sales
of vehicles, is growing at an overwhelming rate.
If dealers fail to create an online presence to effectively
interact with today’s customers, they lose the
opportunity to put their dealership in front of over
half of those individuals looking to purchase a
vehicle.
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$370 billion
Increase in number of family members,
which leads to requiring a bigger vehicle.
The old vehicle breaking down frequently
and or requiring more maintenance than
it is worth.
Change over to a better looking or more
powerful model as people become more
affluent.
The sale and purchase of used cars is almost as old
as the automobile industry itself. As the largest retail
segment of the U.S. economy, the used car industry
is worth $370 billion a year and makes up almost half
of the auto trade.
While the used car market is lucrative, it can be a
pain and a burden for car buyers and dealers alike.
But with the emergence of software and technology,
the car buying process can be a lot easier and
beneficial for all parties involved.
So, why do people decide to buy and sell used cars?
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Consumer Car Buying Habits and Frustrations
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People upgrade to newer cars
for many reasons, including:

Many people cannot afford new cars.
Since used cars cost less, people can
purchase a higher-end model with their
budget.
People may want to reduce costs on
insurance and registration, both of which are
significantly lower for older cars compared to
newer cars.
Many people cannot afford new cars.
Since used cars cost less, people can
purchase a higher-end model with their
b d t
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Most people try to sell their cars to other buyers,
including both independent and franchised dealers.
That being said, many people are also waiting to
buy new cars and purchasing used cars instead.
There are buyers for used cars,
regardless of the wear-and-tear and the
increased maintenance these cars
require, because:
The average cost of a new vehicle was $30,500 in
2012, while the cost of used cars has decreased
for both franchised ($10,558) and independent
dealers ($9,158) in 2013.
2013
10k
20k
30k
40k new car
used car
franchised dealer
used car
independent
dealer

The 2013 Car Affordability Study undertaken by
Interest.com reveals a typical household cannot afford a
new vehicle. The study reveals that Washington is the
only state in the U.S. where a typical household can afford
the monthly payments that a new vehicle would demand,
with a median income of $86,680 a year. As new vehicles
become less affordable for buyers, the used car market
will continue to grow.
A survey by Maritz Research, which
surveyed 80,219 buyers of 2012 model-year
vehicles, revealed that 11.4% of buyers did not
take a test drive and rather relied completely
on online research. Even when scheduling
a test drive, 9.5% of the buyers used the
Internet to schedule a test drive.
People are now moving away from paid and
promotional content and increasingly seeking out
genuine user experiences and credible
third-party reviews. The rise of social media has
aided this shift. Consumers interact among
themselves, whether by computer, smartphone,
tablet, etc., to discuss products and
seek feedback, searching for product
information from various sources. And finally,
shoppers are shifting the paradigm by
approaching the marketer, initiating their
purchase from a position of knowledge and
strength.
Many people still think of the car buying process as very
traditional, with fast-talking car salesmen and high-pressure
negotiations. But with the rise of digital technology and
software, the car buying process has completely changed.
Online Penetration
83%
of the people
undertake online
research before
buying a car.
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A study by Think Insights and Google revealed that:
of new car buyers use the
Internet to gather information.
of new car buyers used the
Internet to compare vehicles.
of them used it to make
the final purchase decision.
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68%68% 69%69% 45%45%
i
A study by Arthur D. Little revealed that 32% of Americans may buy their new cars online by 2020, with little to
no interaction with the dealership selling the vehicle.
These statistics might be very disconcerting for independent and franchised dealers, as a dealer’s closing rate
increases dramatically when they can get car buyers into their physical dealerships. If buyers continue to rely on
online research instead of physical interaction with the car, it will be imperative for dealers to make the online
customer experience more user-friendly, interactive and engaging, in order to maintain their close rates. In other
words, dealers need to recreate the experience of putting the prospective buyer behind the wheel without
actually having them come into the dealership.

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Demographic Data on Car Shopping
Gender demographics have a profound impact on the
buying process. When trying to sell a new or used car,
it is imperative that dealers become familiar with their
target markets and how they can appeal to their needs.
In past years, men dominated the buying scene, but
recently women caught up and now have the same,
and at times, more influence in retail purchases.
Women now comprise 47% of the U.S. labor force
and are the sole or primary provider in 40.4% of U.S.
households today. Families where Dad is the
breadwinner and Mom is the homemaker have fallen
from 70% in 1960 to 31% in 2011.
A recent study, “The Female Factor” commissioned
by Women@NBCU, revealed a change in women’s
spending habits over the last decade.
Women are now more involved in the family’s
finances and have a big say or controlling interest in
big-ticket item purchases like cars. Actually, over
half of the car-buying decisions are made by women.
In 2011, 97% of women negotiated how much they
would pay for a car, while the corresponding figure
in 2000 was 86%.
70% 31%1960 2011 86% 97%2000 2011

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Women have a significant say in 85% of
all consumer purchases.
The product specific involvement is:
new cars
65%
92%
91%
vacations
80%
93%
healthcare
food
new homes
66%
PCs
According to consulting firm A.T. Kearney, women
purchase 60% of all cars.
However, 74% of women feel misunderstood by
automotive marketers, while only 59% of women
feel misunderstood by food marketers and 66% of
them feel misunderstood by health care marketers.
For example, male and female minds work
differently and they shop for vehicles differently,
making it that much more important for dealers to
recognize these differences when interacting with
prospective buyers.
According to LeaseTrade.com, men tend to rely
on assumptions and preconceived notions about
products, while women tend to ask more questions,
even ones which men consider as obvious.
When making a purchasing decision, women factor
in both emotional and rational sides, while paying

2013
1m
500k
new cars
used cars
On average, about 60% of a dealer’s used stock are trade-ins from buyers looking for new cars.
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close attention to detail. Therefore, layering emotional
decision-making opportunities (such as tying a vehicle’s
use to their family’s interests to stress practicality) while
also including rational information (such as information
about fuel efficiency, seating capacity, etc.) in the
message has the highest impact on the female buyer.
On average, women have an average of 171 contacts
in their email or mobile lists, and 92% of women pass
along information about deals or finds to others.
But this also means they can use those contacts to tell
others about negative experiences they've had with
a brand.
Making women feel more comfortable and in control in
a dealership will be key to closing more sales within
that target market. Furthermore, providing them with as
much information as you can online will encourage them
to consider your offerings over those of your competitors.
CNW Research estimates that 40.5 million used
vehicles changed hands in 2012, representing a
4.4 percent increase from 2011 figures. Of the
40.5 million used cars sold in 2012, only 1.8
million were Certified Pre-Owned (CPO) cars (i.e.,
were sold by franchised dealers). CPO cars represent
only 4.5 percent of the total used market.
New car sales, based on forecasts, should increase
by 1 million in 2013 and foster an additional 600,000
used car sales.
Percent of Customers Who Trade In or
Sell Their Old Car to Purchase a New Car
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Top Consumer Frustrations in Car Selling/Trade-In Process
Selling or trading in a car is always a tedious process,
which involves a lot of time, energy, and motivation.
Most car buyers report the top consumer frustrations
in the car selling or trade in process are:
Allow the buyer to guide the decision making.
An overwhelming 81% of buyers are less likely to buy
if they perceive a salesperson to be over-exaggerating
or plainly misrepresenting facts. Being too aggressive
can also kill a deal, especially with women.
Because women often feel ignored during the car
buying process and are generally intimidated by the
“know-it-all” approach, approaching women as a
knowledgeable partner in their search is more
important than ever.
Women tend to ask all of the questions they have,
even questions with answers that men might
consider obvious. Due to the fear of getting taken
advantage of, women are inspired to often over-
prepare and over-compensate with extensive
- Dealing with salespeople.
- Spending time on the process.
- Determining the value of their used car.
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-
-
Most car salespeople are seen as pushy, and this is
one of the main reasons why more people are going
online to do research and make transactions instead of
going to a physical dealership. In order to change the
general perspective, it’s important that dealers begin to
act as an accessory who can ease the process, rather
than making the process more stressful or forced.
Dealing with Salespeople

research ahead of time. They usually know exactly what
they want.
Evidence suggests a majority of people find dealing with
salespeople and buying a car stressful. Some major
stress points include:
Vehicle salespeople can help car buyers with the
following decisions:
Making the client feel comfortable is of the utmost
importance.
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• The overwhelming amount of choices available
in vehicle brands, models, etc.
• Time spent on researching vehicles.
• Dealing with salespeople.
• Haggling over the price.
• Lack of pricing transparency and wondering if
you’re getting the best price
•
•
•
•
•
● Find out which vehicles fit their needs
and budget.
● Read reviews to ascertain the advantages
and disadvantages of each vehicle.
● Compare websites to get an idea of the
overall price range for used vehicles and
trade-ins.
● Research financing, by seeking out
interest rates from local banks and credit
unions, rather than relying solely on dealer
finance.
●
●
●
●

Selling or trading in a car is a time consuming process for the seller and is best done after extensive research
and comparing offers.
Consumers who are looking to trade in their vehicle are:
● Resisting the pressure to buy immediately. Any offer is likely to remain that way for at least a few
days and is unlikely to be good only for that hour.
Walking out of a dealership and going somewhere else, to be exposed to a full range of information,
so they can comparison shop.
Providing the customer with the best information in the way they prefer will help you make sure they come
back to you to purchase their car.
Determining the value of the used car is the trickiest and most critical part of the vehicle trade-in process for the
buyer and the seller. If the trader prices the vehicle too low, then they have to pay more money out-of-pocket
for a newer vehicle. But the constant struggle is trying to find the middle ground for the buyer and the seller.
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www.maxtradein.com 1-855-NEEDMAX (633-3629)
Spending Time on the Process
Determine the Value of the Used Car
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On the other hand, many traders price their vehicles too
high, owing to:
This approach can be counterproductive as the trader
may end up making payments on new and used cars
at the same time.
Online websites offer a wealth of information, allowing
those looking to purchase a vehicle to gather in-depth
information on both their current vehicle and new
vehicles they may be considering, along with financial
options.
Tools that exist to assist consumers in determining
fair market value for their vehicle include:
Utilizing these tools correctly will play a major role
in how your customer determines the value of their
used car and how they perceive your dealership.
•● Bad research.
● Emotions attached with the vehicle.
● Wanting to drive a hard bargain.
•●
●
●
● Websites such as Kelley Blue Book
(kbb.com), Edmunds.com and MaxTradeIn,
which assist customers in determining
their vehicles’ worth.
● Newspaper and online classifieds.
●
●

● Kelley Blue Book (KBB)
● AutoTrader
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Top Online Resources Used by Consumers to
Determine the Value of Their Used Car
Consumers use tools like these to determine the
value of their used cars:
While the first three resources listed to the left are useful,
MaxTradeIn combines all of the benefits of car research
and purchases into one place. We spare customers the
painful process of driving around town to different
dealerships to negotiate the best trade in price for their
vehicle. At no cost, consumers list their vehicles as a
trade-in or sale to participating local dealers. Consumers
planning to trade in their vehicle choose a maximum of
six dealers to bid within a 48-hour window. Those
choosing to sell, determine how far they’re willing to
drive to transact. During the 48-hour period, the owner
can accept an offer of their choice and MaxTradeIn only
provides their contact information to the sole, chosen
dealer. If the consumer doesn’t choose a preferred bid,
their contact information goes only to the dealership with
the highest offer.
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● Edmunds3
● MaxTradeIn4

MaxTradeIn differs from KBB, Edmunds and AutoTrader in that it is user-driven and not another automated
service, thus giving the customer a specific value to their vehicle. Sellers enter their information, such as
make/model, VIN#, mileage and condition, then choose local dealerships to make an actual, real-time offer.
Dealers bid from their dealership and buyers take their vehicles directly to the dealership to close the deal. In
the end, dealers get the quality, used car inventory they need, without the expense and unknowns of traveling
to auctions, while consumers get the maximum price for their vehicle.
The car buying process has drastically changed over the past ten years and auto dealerships need to adjust in
order to take their piece of the pie. Changing the way you offer your products and services can attract even
more customers than you had before.
If you’re looking for an all-in-one package, contact us at MaxTradeIn to learn more
about our dealer solutions.
Learn More at: dealers.maxtradein.com

http://en.wikipedia.org/wiki/Used_car
http://www.cars.com/go/advice/Story.jsp?section=buy&story=nuIntro&subject=new_used
http://www.bankrate.com/finance/auto/5-smart-reasons-for-buying-a-used-car-7.aspx
http://content.usatoday.com/communities/driveon/post/2012/07/most-people-waiting-up-to-10-years-to-buy-a-new-car/1#.Uds0TD5AQRZ
http://editorial.autos.msn.com/blogs/autosblogpost.aspx?post=91bf2fef-50e6-4926-8f34-32fc16cbfebc
http://finance.yahoo.com/news/cars-increasingly-reach-many-americans-145957880.html
http://blog.autorevo.com/2013/03/important-stats-about-buying-a-car/
http://content.usatoday.com/communities/driveon/post/2012/08/more-car-buyers-refuse-test-drives/1#.Uds0YT5AQRZ
http://www.thinkwithgoogle.com/insights/library/studies/?cat=automotive
http://www.adlittle.com/downloads/tx_adlreports/ADL_Future_of_Mobility_2020.pdf
http://www.ana.net/miccontent/showvideo/id/ww20100602
http://www.m2w.biz/fast_facts.php
http://www.she-conomy.com/report/marketing-to-women-quick-facts
http://www.ogilvy.com/On-Our-Minds/Articles/digital_divas.aspx
http://editorial.autos.msn.com/blogs/autosblogpost.aspx?post=91bf2fef-50e6-4926-8f34-32fc16cbfebc
http://blog.autorevo.com/2013/03/important-stats-about-buying-a-car/
http://cars.about.com/od/buyingadvice/a/trade_in.htm
http://www.wikihow.com/Check-out-a-Used-Car-Before-Buying-It
http://www.caranddriver.com/features/showroom-turncoat-comes-clean-10-ways-to-avoid-getting-screwed-page-4
http://content.usatoday.com/communities/driveon/post/2012/08/more-car-buyers-refuse-test-drives/1#.Uds0YT5AQRZ
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The Evolution of the Online Car Buying Process - MaxTradeIn

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