CarGurus (Nasdaq: CARG) released its sixth annual U.S. Consumer Insights Report, revealing how shoppers’ habits have shifted in response to an automotive market where interest rates and costs continue to be elevated, selection is growing and there are more opportunities to do more from home.
The survey of recent car purchasers and/or sellers examines factors influencing why and where people buy and sell, as well as their preferences to navigate a transaction online. For a complete picture of the buy/sell journey, the survey also considered sentiment after the transaction.
Leading findings include:
- Vehicle reliability and costs were more important to consumers compared to prior years. While vehicle costs and reliability remain the dominant factors influencing decisions, shoppers today are likely to cite reliability (41% vs. 35% in 2022), finding a vehicle that fits their budget (40% vs. 33% in 2022), and expected costs (26% vs. 21% in 2022) as the most important factors in selecting a vehicle.
- The best price often determines where consumers buy. According to findings, price remains the top priority, with 55% of respondents saying it’s the most important factor, followed by inventory selection (34%), and availability of financing or special offers (26%). Notably, confidence in being treated fairly increased (23% vs. 17% in 2022).
- Consumers are more open to selling their vehicle entirely online. 82% of consumers are open to selling their vehicle entirely online (up from 77% in 2022). In tandem, 69% of shoppers say they want to conduct more of the buying process from home, particularly price negotiation and trade-in estimates. The preference to do more from home has remained unchanged year-over-year since rising from 60% in 2021, indicating a lasting shift in behavior.
- Financing declines year-over-year. 42% of buyers apply for financing before a dealer visit. However, 56% of respondents say they financed (down from 60% in 2022), with many opting to buy in cash due to higher interest rates.
- More young buyers purchased their first car in 2023. Of those who bought or leased their first car in 2023, 27% were Gen Z which was up from 20% in 2022. The most popular brands among Gen Z respondents as a whole include Toyota, Chevrolet, Honda, BMW, and Ford.
- Electric Vehicle (EV) consideration continues to grow. More shoppers are considering EVs (27% vs. 22% in 2022 vs. 16% in 2021). However, purchase rates among respondents remain low, with 8% reporting an EV purchase (up from 5% a year prior). According to findings, 84% of those that had purchased a gas vehicle are sticking with gas, while 20% of those who purchased an EV, and 25% of those who purchased a hybrid, switched to gas.
“The automotive market has seen incredible change within the last few years, with pricing and inventory levels in flux, EVs becoming more mainstream, and more paths to purchase–especially online–available for shoppers,” said Alison Ciummei, director of product marketing at CarGurus. “As we examine how these factors have impacted buying and selling habits, there is a consensus: consumers are taking control of the process in a way that makes the most sense for their individual goals for pricing, convenience, and confidence in the transaction. Whether that involves exploring financing options, considering a trade-in, or comparing vehicles against specific needs, shoppers are looking to both digital retail tools and dealership support to tailor the most seamless experience possible.”
Read the full report here.