Rising interest rates and record-high price tags are still plaguing the auto industry, leading many Americans to say they’ll postpone purchasing a car. However, things may be looking up as of late.
With gas prices relenting and consumer sentiment trending upward, CivicScience finds that more and more U.S. adults are feeling better about making major purchases, including a new car. Concerns appear to have peaked in June, when an unprecedented 70% of Americans felt negatively about making a major purchase due to worsening economic conditions.
If this trend continues, what can we expect to see in the months ahead when it comes to car buying? How likely are car buyers to turn to online services to purchase their next vehicle, whether new or used?
Buying Used Holds a Strong Lead Over Buying New
As of July, a growing number of people (48%) say they plan to buy a used car for their next car purchase, whereas plans to buy new are down two percentage points from this time last year. Intent to buy used has been increasing throughout the year, as the price of both new and used cars has risen dramatically due to microchip shortages. Likewise, intent to lease saw renewed interest in Q1, but has since fallen to just 13%.
Online Car Buying Trends
CivicScience survey data finds that online car buying services that provide a fully-online shopping and purchasing process, such as Carvana and CarMax, have captured the attention of one-in-three U.S. adults. Although, adoption has not grown in the last year, and just 13% of U.S. adults plan to use an online dealer in the future.
Leasing Appeals to Online Car Buyers
Looking ahead, those who have previously purchased a car online are more likely to be interested in leasing their next purchase down the line, as opposed to people who haven’t used an online service and don’t plan to. Those who say they plan to try an online car purchasing service in the future are largely looking for used cars, although a high percentage of potential adopters are also interested in leasing.
EVs Likely Heavily Boosting Online Sales
Online car buying adoption has a clear connection to electric car ownership. Nearly half of respondents who say they’ve purchased a car online own an EV. For those who plan to purchase online in the future, half say they plan to purchase an electric vehicle.
New Car Buyers Shopping Online
The majority of new car buyers are highly interested in online car purchasing. More than a third of respondents who say they are at least “somewhat likely” to purchase or lease a new car in the next three months also say they plan to purchase or lease a car online. And likewise, an additional third of near-future new car buyers have already used one or more of these services.
What Online Car Buyers Want
Additional survey data show differences in vehicle choices among adopters and intenders. Those who have previously used a service such as Carvana are most interested in purchasing an SUV/crossover or truck for their next vehicle purchase. Intenders (those who have never bought a car online but plan to) are also highly interested in purchasing SUV/crossover models, but are also more likely to buy sedans/hatchbacks, as well as vans and wagons.
This may be related to price-point more than anything else. People who plan to buy a car online are likely to earn less annually on average than people who have used an online service, as well as those who have not and aren’t interested.
Also of note, younger buyers are far more likely to have purchased a car online or to plan to in the future. Gen Z and Millennial adults make up half of adopters and intenders, which could have a major impact on the auto industry and shift car-buying online.
Online Car Buyers Don’t Want to Wait Around
Finally, additional data looking at how new car buyers would react if the car they want is unavailable shows that adopters and intenders of online car-buying are far less likely to wait on their first choice. That could suggest that people are turning to online car buying instead of visits to dealerships in order to streamline and speed up the process of getting a new car, versus that buying online may just be more convenient.
As financial tensions ease a bit and Americans begin to feel more confident in purchasing a vehicle, online car buying may get a boost in popularity, especially considering the supply shortages that still abound in the market. CivicScience will be keeping a close eye on these unfolding trends.