Behind the Numbers: First-Time Buyers Test-Drive Online
A new survey reveals Web-savvy shopping habits of auto buyers
Buying that first car looms as the typical consumer's biggest purchase to date, especially for those in the 18- to 30-year-old range. They don't take the decision lightly, according to "Building the Pipeline: Insights on First Time Buyers," a report by Polk Center for Automotive Studies. It's no surprise that 35.3 percent of survey respondents, some of whom have been online since they were in Little League, named the Internet as their most important source of information for automobile research. In fact, the Internet outranked radio, television, magazines, and newspapers combined.
"They also trust less easily than their older counterparts, because they are more aware of the dangers of the Internet and spam," says Lonnie Miller, managing director of the Polk Center. Local events that cater to their lifestyle and behavior and get them engaged are more likely to drive interest, he says.
Existing, trusted relationships also play an important role. About 24.9 percent ranked parents' advice as the most important resource, and 13.4 percent said friends were most influential.
But don't expect young people to necessarily be loyal to their parents' dealership. Buying Mom or Dad's brand ranked last at 6.8 percent, and 54.1 percent of those polled said that where their parents bought is not at all important, showing that car dealers need to build relevant, one-on-one relationships with these buyers.
Where the Internet really shines is as a place for research before purchase.
"They're more likely to check blogs, chatrooms, and sites such as Edmunds.com, which has price comparisons, than absorb the message of a traditional media commercial," Miller says.
Southerners placed more importance on being treated well than those in other regions of the country. They were more likely to use traditional media, and parents' opinions mattered more, while Northerners were more likely to consider their friends' opinions of higher importance.
When asked what considerations were "very important" in their purchase decision, the leading answer, 55.7 percent, was the monthly payment, followed by the way they were treated by a dealer, 42.1 percent. Other factors were: fuel efficiency, 39.3 percent; availability of affordable credit, 35.3 percent; cost of insurance, 30 percent; and gas prices, 25.4 percent.
There are opportunities for financial services firms to build relationships. More than half of all first-time buyers said they took out a loan to cover at least part of the cost. And more than half, 57.7 percent, financed through the dealership, while 33.8 percent chose a bank. Just 27 percent paid cash.
Negotiating a deal wasn't as important, Miller says, except when buying a used car, which meant higher rates.
So what features most attracted a first-time or young buyer?
"MP3 players, multiple cell phone ports, and custom features," says Miller, who cited the Toyota Scion and Mazda.
Younger people also desire quality. They made the Honda Civic the top-selling vehicle for their age group because of its reliability and affordability."That's the price of entry," Miller says. "It's the basic expectation that everybody wants."