cars online 2010 2011 listening to the consumer voice

8/6/2019 Cars Online 2010 2011 Listening to the Consumer Voice

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Automotive the way we see it

Cars Online 10/11

Listening to the Voice of the Consumer


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Contents

Introduction 3

ExecutiveSummary 4

DevelopingMarkets:FocusonaLocalizedApproach 6

BeforeTheyBuy:UnderstandingConsumerBehavior 9

TheRoleoftheWeb:SocialMediaEvolvesRapidly 14

OnlineBuying:Cheaper,Faster,Easier? 18

GreenVehicles:FromMileagetoMobility 22

CustomerInteraction:PriceandSellingProcessDriveSatisfaction 26

Aftersales:QualityIsKeytoServicingDecisions 32

ConclusionandRecommendations 36

2010 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini.


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Introduction

CarsOnline10/11 3


France, Germany, India, Russia, theUnited Kingdom and the UnitedStates.

In this edition we examine top-of-mind issues such as online buyingof vehicles, alternative-fuel/electricvehicles, mobility programs and thegrowing use of social media as amarketing and communication tool.

You will nd both quantitative andqualitative consumer views on thesetopics and more. We urge you tolisten and respond to the voice ofthe consumer coming through in thesurvey data as well as the direct quotesthroughout the report.

As one of our respondents fromIndia noted, A car company mustascertain and understand the nature ofthe customers buying behavior if it is tomarket its product properly and enticeand persuade consumers to buy thatproduct.

We are condent that the ndingsofCars Online 10/11 will providevehicle manufacturers and dealerswith insights into changing consumer

dynamics in both mature anddeveloping markets, and will help theindustry gain a better understandingof consumer buying behavior as theautomotive marketplace continues toevolve.

What a difference a year makes.

In 2009 the automotive industry wascharacterized by signicant volatility,including mergers and acquisitions,bankruptcy lings, governmentintervention, vehicle scrappingand rebate programs, and the endof a number of historical vehiclebrands. In contrast, this year has seenmovement toward stability and evengrowth in mature markets as vehiclesales gradually improve, togetherwith continued strong expansion indeveloping markets such as China andIndia, which looks set to continue.

To avoid being left behind in this

rapidly shifting environment,companies must continue to pay closeattention to the voice of the consumer.Cars Online 10/11 Capgeminis 12thannual global automotive study provides an opportunity to listen tothose voices. The study offers insightinto how consumers around the worldshop for vehicles, what leads them tobuy, and what they are really lookingfor during the buying and ownershipstages of the lifecycle.

This years report again focuses onboth mature and developing markets.The scope of the research, however,was broadened to include more than8,000 consumers in Brazil, China,


A car companymust ascertain andunderstand the nature

of the customers buying

behavior if it is to market

its product properly and

entice and persuade

consumers to buy that

product.

Indian consumer


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Key Findings

The research uncovered a number ofkey ndings.

1The vehicle buying cyclecontinues to shrink, with morethan hal o consumers starting

their research within just twomonths o purchase. A few years ago,the car buying process was believedto last at least six months. In recentyears, however, it has become evidentthat vehicle buyers are beginningthe process much closer to theirplanned purchase, leaving automotivecompanies with less time to inuencepurchases. Similarly, showroom visitsare occurring later, with almost 40%of respondents visiting the dealership

for the rst time within one monthof purchase. This short periodbetween the beginning of the researchprocess and the showroom visits isthe critical point of interaction withpotential buyers. Once they enter adealer showroom it may be too late toinuence buying decisions, as manyconsumers have already narroweddown their consideration set to a well-dened shortlist.

2The use o inormation

sources varies widely bycountry, requiring a fexible andtargeted approach to marketingand advertising. Although the webhas become the primary sourcefor vehicle information for mostconsumers today, usage of specictypes of sites is not consistent acrossmarkets. The same is true for non-web-based sources. For example,in the U.S., dealer websites, searchengines and independent car valuation

services are the top three informationsources. In France, however,manufacturer-specic franchisedealers, manufacturer websites andspecialist motoring/automotive press

Indias Car Sales Hit All-Time High

The Wall Street Journal

Brazils auto sales, output continue

to rise Steel Business Briefng

China Car Sales Soar Again

Edmunds Inside Line

Thanks to encouraging sales reportsin many markets, cautious optimismappears to be the order of the day inthe automotive industry. Sales gainsare mirrored by improvement inconsumer satisfaction with the vehiclebuying process, which increased thisyear in a number of countries.

At the same time, however, there isevidence of consumer frustration withthe status quo. For example, about40% of the respondent base continuesto exhibit a latent demand for onlinevehicle buying (the end-to-endprocess, not just the upfront research).In addition, this years surveyreected steady gains in ownershipof fuel-efcient and alternative-fuelvehicles, with 73% of consumersexpecting full electric vehicles to bea viable option within ve years. Anemerging trend evident in this yearsreport showed that more than one-third of respondents are interested in

alternatives to the traditional vehiclepurchase/lease model, using conceptssuch as mobility programs.

Capgeminis Cars Online researchexamines these shifting buyingpatterns in order to provide insightthat can help automotive companiesrespond faster and more effectivelyto changing consumer needs anddemands.

Executive Summary

top the list. And in India, family andfriends, manufacturer websites andTV advertising are the most frequentlyused sources.

3Consumers are increasinglylooking to nd both qualitativeand quantitative vehicle inormationin one online location. Inrecent years, vehicle buyers havedemonstrated a clear web usagepattern, starting with search engines,then moving to manufacturer anddealer sites for factual informationabout vehicles, and more recentlyto consumer-to-consumer toolslike social media for qualitativeinformation and opinions. However, inthis years survey, a signicant numberof respondents indicated they wouldlike to nd it all in the same place what could be called the Amazon.com effect. While consumers stillpoint to factual information like priceand product details as the numberone web option, two-thirds say it isalso important to have user-generatedcontent such as consumer reviews onmanufacturer and dealer sites.

4Consumers in developingmarkets especially China areparticularly demanding with veryexacting needs. This years surveyreinforced a trend that began to appearin earlier editions ofCars Online, withrespondents from the BRIC countries(Brazil, Russia, India, China) beingespecially demanding in severalareas. For example, only about 40%of respondents from the developingregions will travel more than 10 milesto a dealership to purchase a vehicle,compared with almost two-thirds of

consumers in mature markets. Andin China only 24% will travel morethan 10 miles. Similarly, consumersin developing countries consider a farwider range of factors when making


5/40CarsOnline10/11 5


their vehicle choices and are muchmore demanding about the responsetime they expect from dealers andmanufacturers to their inquiries.

5A latent demand or onlinevehicle buying is being drivenby expectations o price reductionsbut increasingly also by a desireor a aster, more ecient sellingprocess. For the past several years,about 40% of consumers have madeit clear they want to have the abilityto buy vehicles over the Internet(the complete end-to-end process).This is particularly pronounced inthe developing markets of Brazil,India and China. The primary reasonconsumers cited was the expectationof a price discount, named by 36% of

Soon, buying avehicle will be no morecomplicated than ordering

a pizza over the Internet.

Detailed Internet catalogs

will present makes and

models, and the vehicle

purchase will match what

is shown in the catalog.

German consumer

About Capgeminis CarsOnline Study

Capgemini worked with SmartRevenue,

a Ridgeeld, Connecticut-based

research rm, to conduct the survey

for Cars Online 10/11. All analysis and

interpretation of the data has been

made by Capgemini in collaboration

with the Car Internet Research

Program (CIRP) of the University ofOttawa, Canada. In total, more than

8,000 consumers were surveyed in

eight countries: Brazil, China, France,

Germany, India, Russia, the United

Kingdom and the United States.

The composition of the consumer

sample in each country was based

on projectable national samples

representative of the population in terms

of region, age, gender and ethnicity. All

consumers surveyed were in-market

(23% plan to buy or lease a vehicle

within two months; 34% in two to six

months; 32% in seven to 12 months;

and 11% in 13 to 15 months).

respondents. This year, 30% also saidthey expect an easier, faster transactiononline, which represents an increaseof eight percentage points over theprior year. While some respondentsidentied barriers to online buying,including the inability to test drive

vehicles or see photos and videos,most of these hurdles seem to besurmountable. And even in an onlinebuying environment, consumersexpect dealers to play a role byproviding test drives and servicepackages.

6Green is a real, but rapidlyevolving, market. In this yearsstudy, 43% of respondents say theyown a fuel-efcient or alternative-fuel vehicle, up from 41% the prioryear and 36% two years ago. Thisrapidly changing market will continueto be impacted by a wide array offorces including consumer demand,government and regulatory pressures,battery technology and price,infrastructure investment, fuel pricesand supply, and city-center congestionconcerns. Many of these same forcesare also driving an emerging interestin new, more environmentally friendlyalternatives to the traditional vehicle

purchase/lease such as mobilityprograms (see next nding).

7Alternative buying options suchas mobility packages, vehicle-sharing programs and ride-shareservices are growing in popularity,especially in developing markets.

Among these, mobility packagesare the most popular, with 40%of respondents saying they wouldconsider a mobility package as an

alternative to the standard buying/leasing. In Brazil, that number reached79%; in China, it was 64%; andin India, 57%. Mobility packagescenter around buying services such

as car club memberships, softwareupgrades or battery charging hoursfor electric cars on a regular basis,rather than just a single product everyfew years. These types of alternativebuying models offer cost savings andconvenience to consumers and are

viewed as being more environmentallyfriendly. For the industry, however,they raise questions about the need fornew business models and technologysystems.

While this topline review provides asummary of key ndings from thisyears Cars Online study, the sectionsthat follow offer more in-depth dataand analysis focused on key topicssuch as shopping patterns, socialmedia usage, online buying, greenvehicles, customer interaction andaftersales/servicing expectations.


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Buying Patterns Differ in Matureand Developing Markets

Given the relative newness ofthe developing markets, it is not

surprising that vehicle buying patternsdiffer from those in mature markets.Many consumers are rst-time carbuyers and as such have differentperspectives on what is important. Inaddition, our research supports theview that consumers in developingmarkets tend to be extremelydemanding with very exacting needs.

This is particularly evident in theresponse time consumers expect fromdealers and manufacturers to their

inquiries. In China and Brazil 60% ofconsumers expect a response withinfour hours, compared with 29% inGermany and 34% in France.

Similarly, consumers in developingmarkets base their vehicle choices ona far wider range of factors, includingthose that tend to be more temporaryin nature. For instance, cash-backincentives are important or veryimportant to 69% of consumers in

the developing markets but to only46% of those in mature markets.Low or 0% nancing is important to73% of respondents in developingmarkets, compared with 62% inmature markets. And coupons/optionsfor third-party providers are cited asimportant by 65% of consumers indeveloping markets but by only 46%of those in mature markets.

Car buyers in developing markets arealso less exible about the distancethey will travel to a dealership; theywant dealers to be in close proximityto their homes. For example, 56% of

While vehicle sales in the developingmarkets slowed due to the globalrecession, volumes are beginning toincrease once again. Thats good news,as the BRIC (Brazil, Russia, Indiaand China) markets, in particular,are expected to account for the bulkof the automotive industrys futuregrowth. Understanding vehicle buyingbehavior in these countries is essentialfor success in the coming years.

Developing Markets: Focus on a

Localized ApproachDifferences between developing and mature markets are still pronounced as

are specic variances among the individual country markets, necessitating a

localized approach in each country.

6




Over time, we expect that thedisparities between mature anddeveloping markets will lessen. Asconsumers become more familiarwith vehicles and the vehicle buyingprocess in those countries, theirpurchasing patterns will likely shifttoward those in mature markets;

we see a few signs of this already.However, it will be a slow processand will not be as apparent in somemarkets as in others. The bottom lineis that localization will be essential tosuccess in these rapidly developingvehicle markets.

All Developing Markets AreNot Alike

While developing countries aredifferent in many ways from the

mature markets, these high-growthmarkets are not all alike. The researchidenties distinct variances in buyingbehavior from one developing

respondents from the BRIC countriesexpect to travel less than 10 miles toa dealership to purchase a vehicle. Incontrast, the majority of vehicle buyersin mature markets will travel more than10 miles. In fact, 30% of consumersin mature markets say they will travelmore than 20 miles to a dealership topurchase a vehicle.

In China, only 24% are willing totravel more than 10 miles. Similarly, afull 88% of respondents in China saythey will travel no more than 5 milesto a service location and half expectto travel only 2 miles. This may be areection of the fact that most of the

car buying population in countrieslike China and India is based inurban areas, which is also where thedealerships tend to be located. Soconsumers may see no need to travela longer distance. Nevertheless, itis evident from these ndings thatvehicle manufacturers buildingup their dealership networks indeveloping markets, especially China,need to saturate the market in order tobe close to the consumer.

Differences between developing andmature markets are also apparent inthe types of information sources used.Overall, consumers in mature marketsrely primarily on web-based sources,while those in developing markets usetraditional information sources as wellas online resources. For example, 23%of respondents in developing marketsuse TV advertising as a resource whenresearching vehicles, compared with18% in the mature markets. And

24% of those in developing marketsvisit auto shows during the researchprocess, compared with 18% inmature markets.

Distance Willing to Travel to a Dealership - Mature vs. Developing Markets

(% consumers saying)

6

14

29

42

35

28

30

16

0%

20%

40%

60%

80%

100%

Mature Markets Deve loping Markets

More than 20 miles

11-20 miles

5-10 miles

Less than 5 miles

Source: Capgemini

The greatest change

in car buying will be in the

buyer/seller relationship

via manufacturer and

dealer sites with improved

communication and

dialogue.

Brazilian consumer


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The vehicle research patterns withinthe developing countries also vary. InIndia, for example, consumers indicateabove-average use of family and

friends, TV advertising, Internet newssites and auto shows. Chinese vehiclebuyers rely heavily on informationwebsites, family and friends, andmanufacturer-specic franchisedealers.

And Russian respondents seem tobe particularly information hungry,posting higher-than-average use ofmany types of sources, includingmanufacturer and information

websites, family and friends, specialistmotoring/automotive press, searchengines, and web forums, blogs andother Internet discussion sites.

country to another. For example,in contrast to the other developingmarkets, Russia continues to mirrorthe mature markets in many respects.

One example is the used car business.More than one-quarter of Russianrespondents expect to buy a usedcar, similar to the results in the U.S.and France. In contrast, the otherdeveloping countries are heavilydominated by new car buyers.

In addition, satisfaction rates tendto be lower in Russia than in theother developing markets. In Russia,61% of respondents said they were

satised with the vehicle buyingprocess (similar to the results in themature markets), compared with 93%in Brazil, 84% in India and 83% inChina.

Use of Information Sources Varies Across Developing Markets (% consumers saying)

InformationSource AllMarkets Russia Brazil India China

Top threeinformationsources

ManufacturerInternetsites 48 56 23 43 38

Familyandfriends 42 54 25 51 51

Searchengine 38 52 19 38 32

Informationwebsites 37 54 17 32 53

Dealerwebsites 37 35 18 36 32

Manufacturer-specicfranchisedealer 34 26 25 33 49

Specialistmotoring/automotivepress 30 52 19 23 30

Internetnewssites 25 37 18 34 19

Independentcarvaluationservices 22 18 14 20 17

Webforums,blogsorInternetdiscussiongroups 21 44 12 20 27

Usedcardealer 21 7 11 21 14

TVadvertising 21 13 17 41 22

Autoshows 21 12 31 34 19

Independente-tailersites 18 22 13 11 24

Printadvertising 17 21 15 24 8

TVnews 14 9 15 29 15

Source: Capgemini

I would like to seefaster procedures whenyou buy a car taxes,

insurance, license

registration, loan

application approval.

Chinese consumer




a link so that immediately the buyer canview the car.

The Incredible Shrinking BuyingCycle

The availability of huge amountsof vehicle information online hashad a signicant impact on thebuying cycle. A few years ago, theautomotive industry thought of thecar buying stage as lasting at leastsix months with consumers visitingmultiple dealerships. But now that carbuyers do the bulk of their researchonline, they begin their researchand visit showrooms much closer totheir planned purchase. This leavesautomotive companies with much lesstime to inuence vehicle decisions.

This year more than half of consumerssaid they start their research withineight weeks of purchase, up from

43% the prior year.

Web Drives the InformationSearch

Clearly the Internet has become theprimary information source for mostvehicle shoppers today, with nearly

90% of respondents saying they usethe web during the research stage.As web-based sources have becomemore popular, traditional informationsources continue to decline, withprint advertising, auto shows andTV advertising posting lower usagethis year. In contrast, the use ofmanufacturer websites, search engines,information sites and dealer sitesincreased.

It is important to note, however, that

usage of different types of sites varieswidely by country. The same is truefor non-web-based resources. Forexample, in the U.S., dealer websites,search engines and independent carvaluation services are the top threeinformation sources. In France,however, manufacturer-specicfranchise dealers, manufacturerwebsites and specialist motoring/automotive press top the list. Andin Germany, manufacturer Internet

sites, family and friends, and searchengines are the most frequently usedsources. Given this disparity amongmarkets, a exible and market-specicapproach to marketing and advertisingis essential today.

Some consumers expect that theirapproach to vehicle research may lookvery different in the future. Said aUK respondent, I expect there will bea central registry and people will inputinformation about the vehicle they arelooking for and every time there is a carthat matches the criteria, they will receivean alerting text message or e-mail with

Before They Buy: Understanding

Consumer BehaviorThe dynamics of consumer shopping patterns are changing as the vehicle

buying cycle shrinks and alternative buying approaches emerge.


10/4010

In this current marketplace,automotive companies must identifyviable leads and interact with themthrough the channel the consumerprefers. Social media, for example, isa growing tool to capture and convert

leads as well as to build customerrelationships both pre-sales and post-sales. (See following section, The Roleof the Web: Focus on Social MediaGrows Rapidly, for a closer look athow consumers are using social mediaand other types of new online toolsduring the vehicle buying stage.)

Once consumers make the decisionto visit a showroom they will likelyvisit only two or three dealerships.This again points to the importance of

actively engaging with buyers duringthe research stage as most consumersare unlikely to visit a wide range ofdealers. In the developing marketsthis may be due to the fact that thereare fewer dealers, and in the maturemarkets it may reect the fact thatmodel consideration sets have alreadybeen narrowed substantially by thispoint so there is no need to visitmultiple dealers.

Similarly, showroom visits are cominglater, with almost 40% of respondentsvisiting the dealership for the rsttime within one month of purchase,compared with 33% in 2009. Thistrend is particularly pronounced in

the U.S., where 45% of consumerswait until the last four weeks to visit ashowroom for the rst time.

This short period between thebeginning of the research processand the showroom visits is one of thecritical touchpoints for interactionwith potential buyers. Once they entera dealer showroom it may be too lateto inuence buying decisions, as mostconsumers have already narroweddown their consideration set by this

time.

The majority of vehicle buyersconsider two to three makes/models, which has been consistentfor a number of years. However, thecloser a consumer gets to the pointof purchase, the fewer makes/modelsthey will consider. Within a week,41% of consumers have narroweddown their choice to just one vehicle.The tipping point appears to be one to

two weeks prior to purchase when thedecision gets locked in. At this pointthe ability to inuence a consumersvehicle choice is minimal.

Vehicle Buying Cycle Continues to Shrink (% consumers saying)

All MarketsAll Markets




the lowest. The interest in mobilitypackages in the developing marketsmay reect the so-called leapfrogeffect, with consumers more willingto consider new ideas and approaches

because there is no entrenched buyingmodel.

Mobility packages center aroundservices rather than products. So,instead of just focusing on selling alarge product (the vehicle) one time, adealer or manufacturer sells additionalservices on a monthly basis such asbattery charging hours or batteryupgrades for electric cars, car clubmemberships, software upgrades, etc.

A sale or lease of a vehicle may beincluded but not necessarily. Mobility

Alternative Buying ApproachesEmerge

With a ood of rst-time buyersentering the market in developingcountries, alternative buying options

like mobility packages, vehicle-sharingprograms and ride-share servicesare garnering interest. Among these,mobility packages are the mostpopular, with 40% of respondentssaying they would consider a mobilitypackage as an alternative to thestandard buying/leasing.

In Brazil, that number reached79%; in China, it was 64%; and inIndia, 57%. In fact, Brazil posted the

highest response rate for each of thealternatives, while Germany recorded

Likelihood to Consider Alternative Buying Approaches

(% consumers saying likely/very likely)

MobilityPackage Vehicle-SharingProgram Ride-ShareService

AllMarkets 40 32 33

U.S. 23 18 18

UK 23 15 16

France 29 14 20

Germany 20 11 13

Russia 25 13 17

Brazil 79 78 72

India 57 49 54

China 64 57 55

Lowest response rate for each buying alternative

Highest response rate for each buying alternative

Source: Capgemini

Consideration Set Narrows Closer to Purchase Point (% consumers saying)

41

14 10 10 10 12 13

39

64

6357 60

65 63

15 1723

29 2618 19

2 2 2 2 2 3 3

3 3 2 2 2 2 2

0%

20%

40%

60%

80%

100%

1 week 2-4 weeks 1-2 months 2-4 months 4-6 months 6-12 months 13-15 months

1 make

2-3 makes

4-5 makes

6-7 makes

More than 7 makes

Time Before Purchase (All Markets)

Source: Capgemini


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or alternative-fuel vehicles, andlike mobility packages, they tend toappeal to younger consumers: 37%of those aged 18 to 34 said theywould consider vehicle sharing, incomparison to 26% of respondents 50or older.

Ride-share services take a somewhatdifferent approach and typicallyfeature virtual notice boards thatmatch drivers with riders. As withvehicle-sharing programs, they tendto operate in urban areas with the ideato improve air quality and reduce citycongestion. Noted a consumer fromBrazil, The number of car users growsrapidly each day, so that in a few years it

will be almost impossible to get throughthe city.

Examples of ride-share servicesinclude Rideshare Online.com,MyLifts.com and Catchalift.com.Interestingly, 37% of consumers 50 orolder said they would consider sucha service, compared with just 22% ofrespondents aged 18 to 34.

With the growing focus on CO2

emissions reduction and city-centercongestion, alternative approachesmay continue to be of interest tosome percentage of the population,particularly those focused on electricand other alternative-fuel vehicles.(See section titled Green Vehicles:From Mileage to Mobility for furtherdiscussion on this topic.)

Vehicle Choices Rest on Safetyand Reliability

Consumers tend to focus on a few keyfactors when making their nal vehiclechoice: safety, reliability of the brand,price and fuel economy, followedclosely by the quality of exterior and

packages are of particular interest toyoung consumers due in part to theperceived environmental benets:44% of respondents aged 18 to 34said they were likely to consider suchan alternative, compared with 34% ofconsumers 50 or older.

One-third of respondents also expressinterest in vehicle-sharing programsand ride-share services. Vehicle-sharing programs (often referred to ason-demand mobility) have grown inpopularity in recent years especiallyin large cities. With these kinds ofprograms consumers drive only whenthey need or want to. Examplesinclude Zipcar, Car2Go, Mobility

Car Sharing, Streetcar and StattAutoCar Sharing. These programs oftenuse hybrids and other fuel-efcient

At a Glance: Vehicle Buyers By the Numbers

Newvs.usedvehicles:The number of new car buyers dropped this year, with 73% of

respondents indicating that they planned to buy a new car versus 77% the prior year. In

many countries, scrapping and other incentive programs in place in 2009 and early 2010

helped drive new car sales. As those programs ended, new car sales slowed in some

regions, impacting our sample base. Not surprisingly, developing markets (particularly

Brazil, India and China) are primarily new car markets, with 84% of respondents saying

they intend to buy a new vehicle, compared with 61% in mature markets.

Vehiclecostasapercentofannualincome: Respondents in mature countries spend

a lower percentage of their income on vehicles. For example, 49% of U.S. consumers will

spend less than 25% of their annual income to purchase a car; by comparison, in China

only 18% expect to spend that little, while half will spend between 26% and 50%. This is

not surprising as cars are relatively inexpensive and incomes are typically higher in mature

markets. However, as the income level in many of the BRIC countries begins to edge

upward, we expect to see this trend shift.

Typesofvehicles: Despite much focus on smaller cars, midsize vehicles continue to

dominate in most markets, with 43% of consumers saying they plan to buy this type of

vehicle. However, the research shows some variations by country. For example, 33% of

Chinese consumers expect to purchase a small car, more than twice the overall average

of 15%. In the U.S., 18% of respondents intend to buy a Sport Utility Vehicle, three times

the average of 6%.

Next time I might lookfor a exible service wherethe kind of car I need is

available at the time I

need it but I dont actually

buy an individual car. So I

wouldnt own the car but

would have a selection

of vehicles available to

choose from.

UK consumer




In a continuation of a trend wevenoted in recent years, consumers indeveloping markets tend to focusmore heavily on all the various factors,compared with their counterparts inmature markets. This is likely dueto the fact that they are less familiarwith the vehicle buying processand will therefore consider a widerarray of factors before making theirnal decision, together with a moredemanding approach to high-valueconsumer purchases.

interior styling. These factors haveremained consistent over the years,although some differences exist bymarket.

For example, reliability of brandtopped the list in the U.S., named by95% of respondents, compared with89% overall. This is likely a reectionof the highly publicized recalls inthe U.S. market during the past year.In some of the developing markets,especially India and China, aftersalesservice was also high on the list offactors. And in Brazil, consumersplace greater emphasis on hybrid/

alternative-fuel vehicles due to thelongstanding presence of ethanol andex-fuel vehicles in the market.

Importance of Factors in Consumers Choice of Vehicle (% consumers saying important/very important)

66

65

69

78

80

73

78

75

76

79

78

74

82

83

85

84

85

85

91

90

36

46

46

54

55

62

63

64

65

66

68

70

71

71

77

77

82

86

89

89

0% 20% 40% 60% 80% 100%

Hybrid or other alternative-fuel cars

Coupons/options for third-party providers

Cash-back incentive

Option for additional warranty coverage or service credit

Brand name of vehicles, products and services

0% or low financing

Treatment by the vehicle manufacturer during my previous ownership cycle

Low emissions

Treatment by the dealer during my previous ownership cycle

Product features/options to fit your needs

Ability to research information on the Internet

Extra options at no cost

Vehicle availability and/or reliability of sales and delivery date

Aftersales service

Quality of interior styling

Quality of exterior styling

Fuel economy

Price of vehicle

Safety

Reliability of brand

Mature Markets

Developing Markets

Source: Capgemini


14/4014

web. Additional quantitative featuresrespondents look for include theability to compare vehicles and costcalculators.

An additional group of features thatsome consumers look for are focusedmore on the ability to conduct anonline dialogue. These includecommunicating with dealers andmanufacturers online, the ability tocontact dealer sales staff and to havean open dialogue over the Internet.

The remaining web options thatrespondents point to fall under theheading of customer service andinclude the ability to get guidance

and advice over the web. Of lesserimportance are features like the abilityto schedule test drives and checkdealer inventory.

Over the years, vehicle buyers haveshown a clear web usage pattern,starting with search engines, thenmoving to manufacturer anddealer sites for factual informationabout vehicles, and more recentlyto consumer-to-consumer toolslike social media for qualitativeinformation and opinions. However,in this years survey it is clear thata growing number of respondentswould like to nd a wider range ofcontent all in the same place.

In terms of quantitative content,consumers point to price informationas the number one feature they lookfor on a dealer or manufacturer

website, followed by a full range ofproduct details. This has been the caseover the years, reinforcing the fact thatprice and product details representthe cost of admission today on the

The Role of the Web: Social Media

Evolves RapidlyWill an Amazon.com-like model prevail as consumers look for both

quantitative and qualitative vehicle information to be provided in one online

location?

Most Important Website Options (% consumers saying)

7

8

8

9

11

12

13

14

14

14

14

16

17

21

32

47

0% 10% 20% 30% 40% 50%

Ability to schedule test drives

Ability to locate a car anywhere in the country with exact specifications

Online information on latest advertisement

Trade-in value information for used vehicles

Ability to get a quote

Ability to have an open dialogue

Ability to negotiate price with the dealer over the web

3-D product presentation

Ability to contact dealer sales staff from the web

Ability to fully configure my own vehicle

Cost calculator for my desired vehicle

Ability to communicate with my dealer/car company online

Ability to get guidance and advice over the web

Ability to compare vehicles

Full range of product information

Price information (transaction, retail list, dealer invoice)

Source: Capgemini

In the next years,purchasing of vehicleswill be done with a click

of a button through

mobile phones, by using

the TV and through

manufacturers kiosks

conveniently located at

malls and test drives

will be done through

simulators at malls and

other locations.

Indian consumer




Looking for All the Informationin One Place

Interestingly, consumers also showa desire to nd user-generatedqualitative content on dealer and

manufacturer sites, cited by two-thirdsof respondents. The interest wasmost pronounced in the developingmarkets (83% in Brazil, 78% in Indiaand 80% in China), although 62% ofU.S. consumers also identied user-generated content as important.

This nding may be a reection ofconsumers desire to aggregate thevast amounts of vehicle informationon the web into one place, much theway Amazon.com includes reviews

by consumers and experts as wellas product details and price. Said aU.S. buyer, I wish that more kinds ofinformation about the vehicle I want to

Consumers Look for User-Generated Content on Dealer and Brand Sites

(% consumers saying important/very important)

6562

54

39

57

67

8378

80

0%

20%

40%

60%

80%

100%

All Markets U.S. UK France Germany Russia Brazil India China

Source: Capgemini


16/4016

than in the mature countries. This mayrepresent the same sort of leapfrogeffect that is visible with alternativebuying approaches. It may also reectthe fact that mobile phone penetrationhas grown rapidly in developingmarkets like India and China, causingan explosion in the mobile web. AMorgan Stanley study noted that asthe overlap between mobile users andsocial media users continues to grow,more and more users are accessingsocial networking sites from a mobiledevice.1

The primary reason consumers turnto social media sites is for opinionsand reviews about specic vehiclebrands and models (cited by 34%of respondents). Said a U.S. vehiclebuyer, Regular people talking about

purchase were easily accessible via theInternet. For example, real informationabout safety, fuel economy, handling andtrue pricing, not just advertisements ormanufacturer propaganda. But I alsowant to easily see customer testimonialsabout how good or bad a vehicle has beenfor them. Why do I have to go to so manydifferent sites to nd what Im lookingfor?

In addition to user-generated content,automotive companies should alsoconsider interactive features such asa Virtual Adviser service, whichprovides live, real-time virtualassistance during the critical researchperiod before a consumer enters the

dealer showroom. In one example, asubstantial percentage of consumersvisiting a manufacturers site areutilizing such a virtual-assistance tool.In our work with clients, we havefound that this type of service hasthe potential to drive an enhancedprospect funnel with improvedconversion rates.

Another approach to relationshipbuilding via the Internet could be

an online automotive community. Inour research 55% of respondents saidthey would participate in an onlinecommunity of like vehicle owners.The interest level was highest indeveloping markets: 91% in Brazil,83% in China, 69% in India and 57%in Russia. Among the mature markets,45% of U.S. respondents expressedinterest in an online automotivecommunity, compared with aboutone-third of consumers in the UK,France and Germany.

1 Internet Trends, Morgan Stanley, April 12, 2010

Use of Social Media and Other Online Tools - Mature vs. Developing Markets

(% consumers saying)

9

13

13

18

20

22

27

21

34

27

42

3

40

2

6

6

7

7

8

11

12

13

21

21

26

27

28

0% 10% 20% 30% 40% 50%

Other

RSS feeds

Social bookmarking sites

Mobile phone applications/advertisements

Social messaging/micro-blogging services

Photo-sharing sites

Professional social networking sites

Online video site/video-sharing service

Personal social networking sites

Third-party automotive weblog

Informational/encyclopedia site with user-generated content

Third-party automotive discussion group/forum

None of these

Dealer or manufacturer social media sites

Mature Markets

Developing Markets

Source: Capgemini

The Impact of Social Media onthe Buying Process

Consumer interest in getting morequalitative content on brand anddealer websites may stem from theirincreased use of a wide variety ofsocial media sites and other onlinetools during the vehicle buying stage.

More than one-third of respondentsuse third-party automotive discussiongroups/forums and dealer ormanufacturer social media sites likeFacebook and Twitter during thevehicle research process; 28% usethird-party automotive blogs; and24% use informational/encyclopediasites with user-generated content suchas Wikipedia.

Usage of these online sources tends tobe higher in the developing markets




In an environment where consumerviews and opinions are rampant andcan impact buying behavior, it isimperative that automotive companiesput into place dedicated programsand systems focused on social media.In our experience, some companiesare seeding content on a variety ofsites as well as using their contactcenters often in low-cost/best-costcountries to respond to questions,resolve customer issues and correctmisinformation that may appear onsocial media sites.

The increase in online interactionhas resulted in a large amount ofconsumer data. Some automotive

companies are beginning to useadvanced business intelligence toolsand analytics to track and measuresocial media content. This allowsthem to dive more deeply into onlineposts, tweets and other types ofcommunication. Such tools can helpcompanies sort through the dataand gain a better understanding ofconsumer sentiment about brands,buying intention and willingnessto participate in events and other

promotions.

As companies consider how to bestexpand and improve the experiencethey offer online, effective integrationof both quantitative and qualitativecontent and a dedicated social mediaprogram will be essential elementsof their Customer RelationshipManagement (CRM) strategies.

their experience with a particular vehicleor dealership is priceless in my opinion. Itcan be the best or worst advertisement.

Additional reasons include specialdeals and offers (named by 27%),helpful hints (26%), news aboutnew vehicles (24%), and discussionswith other consumers (24%) andautomotive experts (24%). Explainedanother respondent from the U.S.,I will use more social networking siteslike Facebook, because I can quickly getresponses from people by just posting aquestion. Then I will be more preparedwith my offer.

Such online discussions may affect

buying decisions. Two-thirds ofrespondents said they would bemore likely to buy from a particulardealer or manufacturer if they foundpositive comments about themonline. Conversely, nearly half saidthey would be less likely to buy froma certain dealer or manufacturer ifnegative comments appeared on socialmedia sites.

Making Social Media Work

Social media can be an effective and often cost-efcient way to getmessages out to consumers, interactwith potential buyers and gathercustomer feedback. These benetshave led the automotive industryto spend about $1.2 billion thisyear on some form of social mediaadvertising.2 And that number isprojected to grow to $4.6 billion by2015.

I think that bothsearching and sellingwill be done via social

networks and other types

of websites, withoutphysical presence at

stores.

U.S. consumer

2 Moving the Metal: How Automotive Dealers Can Take Advantage of Social Media,Ad Age Insights and

Automotive News,Aug. 16, 2010


18/4018

Over the past several years, a growingnumber of consumers in both ourquantitative and qualitative surveyshave made it clear that they wantthe ability to buy vehicles and partsand accessories over the Internet(the complete end-to-end process).This year 41% of respondents saidthey would be likely to buy a vehicleonline, consistent with the past fewyears. And more than half would liketo purchase parts and accessories onthe web.

Noted a U.S. consumer, You shouldbe able to specify exactly what youwant from the manufacturer and haveit delivered directly to you, no dealer

required, like buying a Dell computer.I would like to be able to buy the car

Online Buying: Cheaper, Faster, Easier?

A latent demand for online vehicle buying exists among consumers who viewit as a cheaper, faster and easier purchasing model.

Likelihood to Purchase Vehicle Over the Internet (% consumers saying)

41

3328

34

2823

75

52

63

33

43

45 32

34

51

13

24

13

0%

20%

40%

60%

80%

100%


Not likely or not at all likely

Likely or very likely

Source: Capgemini


19/40

entirely online instead of just partiallylike today.

The trend is particularly pronouncedin the developing markets of Brazil,India and China, although aboutone-third of consumers in the maturemarkets would also like to buy online,percentages that translate into millionsof vehicles. With the explosion ofInternet penetration and the mobileweb in the BRIC countries, it is notsurprising that rst-time car buyerswould be particularly interested in anonline buying model.

Said a respondent from India, Buyingon the Internet is much easier. We haveno hassles of driving for long distances tosee the vehicles.

CarsOnline10/11 19


which represents an increase of eightpercentage points over the prior

year. Consumers in Germany, Russiaand Brazil also pointed to the abilityto purchase a vehicle that was notavailable locally. Additional reasonsfocus on the dealer experience:Consumers do not want to interact inperson with the dealer, negotiate pricein person with the dealer, or be talkedinto buying something they do notwant.

Primary Reason to Purchase Vehicle Over the Internet (% consumers saying)

27 28 27

43

19 9

5

48

11 11

31

27

37

29

2426

13

9

13

23 3

0%

10%

20%

30%

40%

50%

Russia Brazil India China

36

32

44

50

38

6 6 84

410

12

9 9 10

30

35

28

25 25

14

9 610

17

4 5 5

2

5

1 1

0%

10%

20%

30%

40%

50%

All Markets U.S. UK France Germany

Expect price discount

Do not want to interact in person with dealer

Do not want to negotiate price in person with dealer

Ease and speed of transaction

Ability to purchase vehicle that is not available locally

Do not want to be talked into buying something I do not want

Other

Source: Capgemini

Consumers acquiring new vehicles aremore likely to purchase online (46%)

than those buying used cars (28%). Inaddition, consumers whose vehiclesare still in warranty are more likely tolook for their next car online (52%),in contrast to those whose cars are outof warranty (32%). And the youngestconsumers (18 to 34) are mostlikely to buy a vehicle online (46%),compared with 28% of respondents50 or older.

The primary reason consumerscited for their interest in onlinevehicle buying was the expectationof a price discount, cited by 36% ofrespondents. In addition, 30% expectan easier, faster transaction online,

I already get 90% of my information off the Internet

and I would like to buy online as well. So long as the

online merchant whoever that is is transparent

in every respect.

German consumer


20/4020

The fact that consumers see a role fordealers suggests that a multi-channelbuying model would be an option formany car buyers. Such a model wouldresemble the approach used by manyconsumers today, combining certainonline elements (research, pricequotes, perhaps price negotiation andnancing) with elements conductedat the dealership (test drives, servicecontracts and delivery of the vehicle).In this type of model, dealers andmanufacturers will need to ensure theyhave the right capabilities to integrateonline and ofine channels to provideconsistency and continuity of theoverall customer experience.

Some respondents identied barriersto online buying, including theinability to test drive vehicles, receivefull product and price information,and see photos and videos, butmost of the hurdles seem to besurmountable. In our experience, wehave seen examples of new businessmodels that address these issues, suchas a single location with multiplebrands for test drives. Such anapproach was suggested by a number

of respondents, including this buyerfrom France, Id like to be able to viewand test drive cars at a permanent expofeaturing (almost) all car manufacturers,and then I would order and buy online.

Other consumers suggested usingvideo conference technology tofacilitate price negotiation, and virtualreality or other simulation tools forvirtual test drives during the onlinebuying process.

Dealer Role Shifts in OnlineEnvironment

In an online buying environment,dealers will still have a role but itmay be different and more focused.

Respondents identied servicepackages as the primary role for thedealer, followed by test drives priorto an online purchase. And 21% ofrespondents said they would still wantto negotiate price with the dealer inperson.

Market variances were quite apparent.Consumers in the U.S., France andBrazil were most likely to still wantto negotiate price in person with thedealer even when buying a vehicle

online. Respondents from Russia andChina emphasized the importance ofservice packages. In India about one-third want the ability to test drive acar before buying it online, the highestof any of the countries. And in China40% of consumers want to view thevehicle in person before buying itonline, far higher than the average of

just 15%.

Many consumers noted that the

online buying model has benets fordealers as well as consumers. Saida car buyer from the U.S., I believebuying cars online would be benecial toboth dealers and buyers as the overheadcost for dealers would be lower and,hopefully, savings would be passed on tothe consumer.

Dealerships willbecome more and morevirtual, be more connected

to the web, appealing to

the mobile wi- crowd, butwill still provide service

and information.

U.S. consumer




more likely to be purchased overthe Internet than accessories such asspoilers and custom wheels.

The primary reasons consumers citefor their interest in buying parts andaccessories over the web mirror thosefor online vehicle buying: 35% expecta price discount and 30% believethe transaction will be easier andfaster. In addition, nearly one-quarterexpect a wider selection and greateravailability of parts and accessories on

the Internet. This factor is particularlyimportant to consumers in Russia andBrazil.

Strong Market for Online Partsand Accessories

The interest in buying parts andaccessories over the Internet is evengreater than that for vehicles. As withonline vehicle buying, consumerinterest in purchasing parts andaccessories over the web is highestin the developing markets. That isparticularly true in Brazil, consistentwith the results for online vehiclebuying.

The research indicates that practicalitems which tend to wear out tiresand oor mats, for example are

Barriers to Online Buying (% consumers saying)

45

37

31

25

23

22

21

17

17

10

8

1

44

33

30

21

24

20

17

16

15

8

6

2

43

36

36

21

23

18

19

17

14

10

8

2

0% 10% 20% 30% 40% 50%

Inability to test drive vehicle before making final decision

Inability to receive full product/price information

Inability to see photos/video of the vehicle inside and out

Inability to receive a report detailing the vehicles history

Inability to negotiate pricing online

Inability to match a vehicle to my exact specifications

Inability to contact and interact with a representative online or by phone

Inability to conduct final negotiation online

Inability to negotiate trade-in of old vehicle online

Inability to apply for financing and conduct financing approval process online

Inability of dealer or manufacturer to have vehicle delivered to my home

Other

2010

2009

2008

Source: CapgeminiNote: Multiple responses allowed


22/4022

Green Vehicle OwnershipGradually Grows

It has become increasingly clear thatenvironmentally friendlier vehiclesrepresent a real, but evolving,

opportunity. In this years study, 43%of respondents say they own a fuel-efcient or alternative-fuel vehicle,up from 41% the prior year and36% two years ago. How high willthis number go? It is still too early totell, and despite heightened visibilityaround electric and other alternative-fuel vehicles there will always be someconsumers who will still purchase alarge vehicle like an SUV.

Ownership of both fuel-efcient and

alternative-fuel vehicles is higherin developing markets, comparedwith mature markets. This ndingis heavily inuenced by Brazil,which posts the highest levels ofgreen vehicle ownership at 72% ofrespondents. Although ownershiplevels in countries like the U.S. are notas high as in some of the developingcountries, consumer sentiment isstrong. One U.S. car buyer echoed thecomments of many others, noting: If

the federal government would get theirhead out of their behind and try to getaway from foreign oil, then we would seesome change in the kinds of cars peoplebuy.

The primary reason to own a greenvehicle continues to be fuel economy,followed by the impact on theenvironment, which has been slowlygrowing. Said another U.S. consumer,I will denitely be buying some type ofhybrid or electric vehicle for my nextpurchases. I will be looking more closelyat environmental impact, especially sincethe recent oil spill that happened in theGulf of Mexico.

Green Vehicles: From Mileage to

MobilityAs consumers increasingly focus on environmental issues as well as fuel

economy, new mobility options are grabbing their interest.

Id like to buy an electric vehicle. I hope soon there willreally be a wide choice among the makes and models ataffordable prices and youll be able to go for hundreds of

kilometers before recharging the batteries.

French consumer


23/40

In some markets, additional factorscome into play, although to a lesserdegree. For example, in the UK 12%of consumers point to other costbenets as a reason to own a greenvehicle. This relates largely to city-center congestion charges, which arelevied on non-green vehicles in urbanlocations such as London. More thanone-quarter of Chinese respondentsalso pointed to cost benets, althoughin this case it may relate more to

government incentives and tax breaksfor smaller, fuel-efcient vehicles. Arecently launched program currentlyin about 13 Chinese cities providessubsidies to buyers of electric andhybrid cars and may further increasesales of alternative-fuel vehicles in thecountry.

The subject of incentives for greenvehicles (and disincentives for gas-powered cars) was a common thread

among consumer comments. Forexample, a UK consumer said, Thereshould be discounts for fuel-efcienthybrids and surcharges for gas-poweredvehicles (a girl can dream).

CarsOnline10/11 23


Electric vehicles, particularly hybridgas/electric cars, are the mostcommercially mature and viableof the various kinds of alternativevehicles and have demonstrated thepotential to reduce fuel consumptionand exhaust emissions. Gas/electrichybrids are the primary type ofalternative-fuel vehicle that consumerscurrently own or plan to buy, namedby 34% of respondents. That numberclimbs to 58% in the U.S.

Additional green vehicles includenatural gas or natural gas hybrids(which were cited by more than one-third of Russian consumers), ethanolor ethanol-gas ex-fuel (named by35% of respondents from Brazil) andall-electric/battery-electric vehicles.

Will consumers pay for green?This remains an open question. Inour research, 57% of respondentssaid they would be willing to paya premium of up to 10% for analternative-fuel vehicle. Consumersfrom developing markets are willing topay more to go green. Almost 40% of

Ownership of Green Vehicles Continues to Rise (% consumers saying)

43

37

20

41

30

29

36

30

34

0% 10% 20% 30% 40% 50%

Own a fuel-efficient/alternative-fuel vehicle

Plan to buy a fuel-efficient/alternative-fuel vehicle

Do not own a fuel-efficient/alternative-fuel vehicle

2010

2009

2008

Source: Capgemini


24/4024

that theyll be economically viable foreverybody. Consumers aggressiveexpectations are likely due to thepublicity surrounding vehicles such asthe Nissan Leaf and Chevrolet Volt.

To meet these expectations, anumber of challenges must beaddressed, including performance

and price of batteries, infrastructureinvestment in recharging stations,market acceptance, government andregulatory pressures, ecological issuessuch as recycling of used batteries, fuelprices and supply, and technologicalmaturity. Consumers identied price,recharging locations, length of time torecharge and range per charge as keyfactors that will impact their decisionabout buying electric vehicles.

According to a UK buyer, The abilityto charge an electric vehicle at work orat supermarkets would inuence me topurchase such vehicles.

respondents from the BRIC countriessay they would pay a premium of 11%or more for an alternative-fuel vehicle.

However, what consumers say andwhat they actually do can vary. Pricesof new electric hybrid vehicles havebegun to drop somewhat, but it is stillearly in the cost-reduction curve. The

price gap between gas-powered andalternative-fuel vehicles will need toshrink further if the mass market is toaccept these cars.

The Future of Electric Vehicles

While full electric vehicles are stillfew and far between, consumersexpect that to change quickly: 73%of respondents said they believe fullelectric vehicles will be a viable salesoption within ve years, earlier than

many industry predictions. This sameview came through in the qualitativecomments, such as this one fromthe U.S., In ve years electric carswill probably be sufciently advanced

The commitment to theenvironment in relation tothe emissions of pollutants

will be more important as

time goes on, and a car

companys commitment to

society will also be more

valued when consumers

make decisions about

what cars to buy.

Brazilian consumer

Type of Alternative-Fuel Vehicles Consumers Own/Plan to Buy (% consumers saying)

1510

18

9 8

1714

1823

34

58

33

44

35 19

19

27

40

9

8

109

7

8

3

14

14

5

4

7 4

3

3

5

11

5

15

6

57

18

36

22

10

13

11

9

8 6

2

5

35 4

4

4

1

1010

5

7

1

4

1

6 6 9

19

2

1

12

11 4 3 2 3 3

0%

20%

40%

60%

80%

100%


All electric/battery-electric

Gas/electric hybrid

Plug-in hybrid

Hydrogen fuel cell

Natural gas or natural-gas hybrid

Ethanol or gasoline-ethanol flex fuel (dual fuel)

Biodiesel

Liquid petroleum gas

Other

Source: Capgemini




Focus Shifting to Mobility

Growing interest in green vehiclesis a factor driving a subtle shift fromproducts to services. Increasingly,green cars, especially electric

vehicles, are being viewed as partof an integrated mobility conceptcomprising services such as:

Battery recharging

Energy-contingent rates and at rates

Pay-per-mile concepts (similar to theutility industrys smart metering)

Hardware and software upgrades

Said a French consumer, In ve yearsI hope Ill be looking at electric cars in theform of a service and no longer owningthe vehicle. For example, batteries willbe rented according to miles traveled,at a lower cost as compared to a gas- ordiesel-powered vehicle.

A range of electric mobility (ore-mobility) models are expected toappear and it is still too soon to tellwhat type of model may ultimatelybecome the standard. One example isBetter Place, which describes itself asthe global provider of electric vehicle

networks and services. With thistype of model, consumers subscribeto energy, including the use of thebattery, on the basis of kilometers ormiles driven. The electric vehicle isprovided for free or a low fee. TheBetter Place mobility provider alreadyhas electric vehicle infrastructure inplace in countries such as Australia,Canada, China, Denmark, Israel, Japanand the U.S. Other e-mobility modelsmay involve purchasing the vehicle

as well as additional services for amonthly fee.

Electric Vehicles: Changing the Landscape throughCollaboration

The growth of electric-powered vehicles will underlie a fundamental shift in the existing

landscape in areas such as design and manufacturing, distribution and aftersales service,

and energy supply and infrastructure. Traditional and new players will need to consider thepotential impact of this emerging market on their business.

Traditionalplayers:Manufacturers will need to dene their strategy for positioning

the different clean vehicle technologies and rethink their design and manufacturing

capabilities as well as their supply chain. Automotive suppliers will need to adapt existing

products and develop new products to suit electric vehicles, while new suppliers with

products built specically for electric vehicles will enter the market.

Car dealers, service providers and spare parts vendors will need to adapt and transform

their activities to serve the electric vehicle market. Gasoline and tanker companies will

need to manage the transition to a new power source that will reduce the traditional heart

of their business. And large utilities will need to take into account the potential impact on

the grid, new rate structures and new types of services.

Newplayers:At the same time, new players, including vehicle and battery manufacturers,

will need to master the technology development and scale needed to serve the mass

market. Mobility service providers and car rental companies will also need to adapt their

business models for this new market. E-mobility gives many new players the chance to

position themselves with a new business model.

Electric vehicles have the potential to be a market-changing force. However, the continued

development of this business will require collaboration both within and, more importantly,

beyond the automotive industry. Parties including vehicle manufacturers, suppliers,

dealers, other retailers, consumers, electric/utility companies and governments must all

be aligned. This new focus on business integration will lead from a mileage to a mobility

orientation.


26/4026

Maintaining and improving customersatisfaction comes down to two keyfactors: price and the overall sellingprocess. In the area of price, manyconsumers identify the ability tonegotiate a discount as the key driverfor satisfaction, along with a singlesales price/no negotiation. In terms ofthe selling process, key factors includeless administrative effort during thebuying process, more knowledgeablesales staff, a shorter waiting time

to receive vehicles, and a simplerwarranty and service contract process.

There is both good news andbad news in the area of customerinteraction this year. On the positiveside, consumer satisfaction withthe overall vehicle buying processinched up, with 70% of respondentssaying they were satised or verysatised. The gains were greatest inthe U.S. and UK. The overall levels ofsatisfaction, however, remain higherin the developing markets of Brazil,India and China, reecting consumers

relative newness to the car buyingprocess.

Customer Interaction: Price and Selling

Process Drive SatisfactionLoyalty levels declined slightly this year, although customer satisfaction with

the vehicle buying process improved.

Satisfaction with the Vehicle Buying Process (% consumers saying satisfied/very satisfied)

67

40

52

60

5553

91

84

75

69

49

53

58

6665

87

80

77

70

57

61

58

66

61

92

8483

0%

20%

40%

60%

80%

100%


2008

2009

2010

Source: Capgemini

Id like to havea dialogue with themanufacturer over the

Internet, but only if the

response speed is fast.

Russian consumer




Variances by market are apparent.For example, in all the maturemarkets, the ability to negotiate adiscount topped the list of satisfactioncriteria. However, in India and China,consumers are looking for moreknowledgeable sales employees withbetter ability to answer questions. Saida car buyer from India, There is a lackof customer satisfaction due to the factthat salesmen do not have the knowledgeabout the products and features.

In Russia the focus is on reducingthe amount of administrative effort

during the buying process. Thatcame through loud and clear inboth the quantitative data and thequalitative comments. A Russianrespondent suggested the followingfuture scenario, There will be no redtape, wasted time and frayed nerves.IT capabilities will greatly shorten theprocess of selecting and buying a vehiclein Russia. Less time will be wasted oninspection and paperwork. But this willrequire dealers to work on another level,

an order of magnitude higher.


28/4028

Customer Loyalty DeclinesSlightly

Unfortunately, the improvedsatisfaction rates were not mirroredby loyalty gains. Loyalty to the brand,

purchasing dealer and servicingdealer all declined slightly in 2010.Some of the declines came in thedeveloping markets, which may reecta continuation of a trend towardrationalization that weve seen in thepast couple of years.

However, as with satisfaction,overall loyalty rates are higher in thedeveloping regions. Consumers fromBrazil (90%) indicate the highestbrand loyalty levels, followed by

China at 71%. France shows thelowest brand loyalty rate at 52%.

When it comes to dealer loyalty, Russiaposted the biggest decline to 49%,

down from 62% in 2009. On a morepositive note, the U.S. and UK bothposted slight gains in dealer loyalty.

Speed and Quality Are of theEssence

A key factor in improving bothsatisfaction and loyalty is the wayin which a dealer or manufacturerresponds to customer inquiries.Our Cars Online research has longdemonstrated the importance ofresponding quickly to web and e-mailinquiries. And it is a common refrainin consumer comments, like thisone from the UK: I expect to be ableto communicate more quickly with thedealership/manufacturer online. E-mailscurrently take a while to hear anythingback.

Likelihood to Buy/Lease Same Brand as Current Vehicle (% consumers saying likely/very likely)

5558

51

56 5552

61

55 55

42

58

53

85

70

48

68

64 63

59

51

66

87

66

70

65 64

60

52

56

60

90

70 71

0%

20%

40%

60%

80%

100%

AllMarkets U.S. UK France Germany Russia Brazil India China

2007

2008

2009

2010

Source: Capgemini




Nearly half of all respondents expectto receive a response from a dealeror manufacturer within four hours,and one-quarter expect to hear back

within one hour. Furthermore, buyersbecome more demanding the closerthey are to the point of purchase: 62%of respondents planning to buy withintwo months expect a response withinfour hours, compared with 46% whoplan to buy in three to six months.

What happens if the response timeis too slow? Most consumers willwalk away from the dealer and/ormanufacturer. In this years research,72% of respondents said they wouldlook for another dealer, anothermanufacturer or both if the responsetime was too slow.

Required Speed of Response from Manufacturer/Dealer to Consumer Query (% consumers saying)

8 7 63 4

68 9

16

18

14 16

139

22

31

16

23

21

2122

18

16

27

21

21

21

40

4444

4250

3830

35

33

11 12 9

1918

69

15

5

1 11 3

2 3 1

1 1 2 2 1 1 1 1 1

0%

20%

40%

60%

80%

100%


Immediately


30/4030

Some variances were apparent bymarket. For instance, recall alertsranked highest in the U.S., likely a

reection of the news headlines overthe past year. In Russia, the mostimportant item was personalizedcommunication after a complaint.

As in past years, we also askedconsumers which of these typesof post-sale communicationswere likely to inuence their nextvehicle purchase. It was evidentfrom the research that personalizedcommunication such as repurchaseoffers near the end of a lease orwarranty period or personalizedcommunications after a complaint were most likely to inuence futurebuying decisions.

Communication Is Key toLoyalty

While a customers buying experience

with a manufacturer or dealer mayhave a signicant impact on loyalty,post-sale communication can alsomake a difference. Respondents areopen to receiving various materialsand information after a purchase,particularly service reminders andother practical information such asalerts about sales and promotions,welcome packs, and alerts aboutvehicle or accessory recalls. Lessuseful are communications like brand

magazines, newsletters and invitationsto events.

Consumer Behavior if Dissatisfied with Quality of Response (% consumers saying)

43

5651

4442

51

38

30 29

11

7

8

11

10

5

23

15

12

26

2023

22

17

22

24

34 44

3

2 4

5

5

1

3

4

311 8

7

1022

14

8

8

7

4 2 3 33

53

84

2 5 3 4 2 2 1 1 1

0%

20%

40%

60%

80%

100%


Don't know/other

Contact the manufacturer

Contact the dealer

Look for neither

Look for both

Look for another manufacturer

Look for another dealer

Source: Capgemini




Channel Preference for Post-Sale Communications - All Markets (% consumers saying)

Type of Communication Regular Mail E-Mail Mobile Phone

Lowest rankedcommunication for eachchannel

Highest rankedcommunication for eachchannel

Welcomepackafterpurchase/lease 54 47 10

Brandmagazine 47 53 10

Personalizedcommunication/giftafteracomplaint 40 48 30

Brochures/informationaboutthevehiclethatyoubought/leased 40 65 13

Othersalesoffers 40 65 13

Personalizedrepurchaseoffer/promotionmatchedtoyourneedstwoyearsafterpurchase(ornearendofwarrantyorleaseperiod)

40 61 19

Invitationstospecialevents,clubs,open-housedays 36 64 25

Alertsandinformationaboutvehicleoraccessoryrecall 35 67 21

Newsletters 29 74 12

Servicereminders 28 61 33

Alertsaboutspecialsales,offers,promotions 26 73 18

Customersatisfactionsurveyafterpurchase 25 73 15

Post-testdrivesurvey24 73 16

Customersatisfactionsurveyafterservice 23 73 18

Source: Capgemini

I expect to be able tocommunicate more quicklywith the dealership/

manufacturer online.E-mails currently take a

while to hear anything

back.

UK consumer

E-Mail is PreferredCommunication Channel

In a reection of overall societaltrends, respondents prefer toreceive most types of post-salecommunications by e-mail, althoughregular mail was the preferred channel

for welcome packs. One-third ofconsumers would like to receiveservice reminders via their mobilephones, a trend expected to growin the coming years. Said a U.S.consumer, I want to be able to get moreinformation over a cell phone servicereminders, scheduling maintenance,scheduling a test drive via a websitebrought up on my cell phone.

Market variances are quite

pronounced. For example, 80% ofGerman consumers prefer regularmail for brochures and informationabout the vehicle they just bought.

In contrast 65% of Russian and 63%of Indian respondents would likebrochures/information sent via e-mail.India expressed the highest overallinterest in the mobile phone channel,not surprising given the explosionof mobile phone penetration in the

country. More than half of respondentsfrom India would like to receive salesoffers via their mobile, compared withthe average for all countries of just13%.

Developing markets were especiallyinterested in receiving servicereminders via their mobile phones:37% in Brazil, 54% in Russia, 56%in India and 60% in China. Thatcompares to 10% of consumers in the

U.S., 15% in the UK, 21% in Franceand 14% in Germany.


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few consumers use independentgarages, reecting the scarcity of thosetypes of businesses.

Not surprisingly, differences areapparent depending on whethera vehicle is in warranty or out ofwarranty. Forty-ve percent ofconsumers with cars still in warrantytake them to the franchised purchasingdealer for servicing, compared with31% of respondents whose vehiclesare out of warranty. Conversely, only9% of consumers with in-warrantyvehicles use independent full-servicestations for servicing, compared with23% of respondents with out-of-warranty cars.

With attractive revenues and margins,aftersales and servicing activities areon the management agenda in bothmature and developing markets. Inaddition, the service experience canalso play a role in driving customerloyalty.

Franchised purchasing dealers remainthe primary servicing location forconsumers in all the markets studied.Interestingly, the secondary locationvaries by market. For example, in theU.S. and UK almost one-quarter ofrespondents use independent full-service stations/auto repair shops forservicing, nearly as many as those whouse franchised purchasing dealers. In

markets like Brazil, India and China,however, very

Aftersales: Quality Is Key to Servicing

DecisionsQuality of service is the driving force in aftersales decisions, but factors such

as price, proximity and additional services like wireless Internet access also

play a role.

I would like to see

more convenience anda better service attitude

with aftersales service and

maintenance.

Chinese consumer


33/40

more than 5 miles for servicing.That was particularly true in Chinawhere 88% of respondents will travelno more than 5 miles and 39% willtravel only up to 2 miles to a servicelocation. This mirrors the earliernding with regard to the location

of purchasing dealers. It is clear thatconsumers in China demand highlevels of service and want to buy andservice their vehicles close to home.

Extending the ServiceExperience

Although about three-quarters ofconsumers said they were satised

Quality Drives AftersalesDecisions

Quality of service is the leading factorin consumers choice of servicinglocation in all markets. Additionalfactors include price and proximityto home. The importance of qualityis particularly pronounced in thedeveloping markets where consumershave had less experience withaftersales and servicing.

Proximity to home remains asecondary factor in most markets,as evidenced by the fact that manyconsumers are unwilling to travel

CarsOnline10/11 33


Primary Reason for Choosing Servicing Locat ion (% consumers saying)

22

29

24

20

2222

18

24 2523

9 4 8 8 7

3633

25

33 33

913

16

1012

23

3 4 3

0%

20%

40%

All Markets U.S. UK France Germany

Price

Location/proximity to home

Location/proximity to work

Quality of service

Existing relationship

Other

18

33

13 13

1917

27

23

312

9

17

46

33

44

40

12

5 7 72

0%

20%

40%

60%

Russia Brazil India China

Source: Capgemini

Id be willing to buy a

higher-priced automobile

if I knew beforehand

theyd stand behind their

product with a warranty

and reduced prices for

service.

U.S. consumer


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What Consumers Want in Vehicle Service Contracts (% consumers saying)

23

25

49

28

31

34

35

37

45

46

36

2

21

22

22

23

27

30

31

34

37

45

50

0% 10% 20% 30% 40% 50% 60%

Other

Leasing/financing of vehicle

Customer care

Vehicle insurance

Other repairs included

Tire replacement included

Wear parts included

Towing/roadside assistance included

Repair labor included

Inspection included

Extended warranty

Replacement vehiclewhen own car is being serviced

Mature Markets

Developing Markets

Source: Capgemini

with their most recent aftersales/servicing experience, many dealershipsand other types of service locationsare looking for ways to improvethe experience. While quality isclearly essential, consumers are alsointerested in other types of services tooccupy their time while they wait fortheir car to be serviced. Topping thelist is an Internet caf/wireless access,a reection of todays connectedworld. Following close behind arecar care tips, vehicle accessories forsale, food for sale/cafeteria, and TVor movies available for viewing. Lessdesirable are music listening stationsand a childrens play area.

Some variation was apparent bymarket. China, for example, ratedall these services highly. In the U.S.,almost half of respondents said theywould like to see TV or movies inaddition to wireless access; in theUK and Germany consumers wereinterested in having a cafeteria or foodfor sale; and French consumers putthe greatest emphasis on car care tips.In developing markets, consumersput particular emphasis on vehicle

accessories for sale and car care tips.

Preferred Services While Waiting for Vehicle Servicing (% consumers saying)

5

19

19

33

39

41

46

47

0% 10% 20% 30% 40% 50% 60%

Other

Childrens play area/babysitting

Music listening stations

TV/movies available for viewing

Food for sale/cafeteria

Vehicle accessories for sale

Car care tips

Internet caf/wireless access

Source: Capgemini




How to Optimize Aftermarket Performance in Mature andDeveloping Markets

The aftermarket has become an increasingly important revenue and prot stream for

automotive companies. However, success in the aftermarket is far from easy due to the

high complexity, large number of maintenance and parts activities, and critical supplychains involved.

To identify key factors for success in both mature and developing markets, Capgemini,

together with the University of St. Gallen, conducted an aftermarket analysis. The

research, which focused on Western and Eastern Europe, Russia, China and India,

is based on an in-depth survey as well as additional interviews with more than 150

aftermarket managers of the worlds leading automotive companies. The following key

conclusions were drawn:

1. TheWesternEuropeanaftermarketisfairlymaturewithatvolumes.The

competitive intensity remains at a high level and will be further accelerated by new

regulations and competitors.

2. Improvementofmarketingandsalesactivitiesisthemaindrivertoremain

competitiveinWesternEurope.Because of the at nature of the aftermarket,

marketing and sales activities must focus on keeping the customer loyal to dealers and

repair shops throughout the vehicle lifecycle.

3. Developingmarketsofferattractivegrowthrateswithrelativelymoderate

competitiveintensityinEasternEurope,RussiaandIndiabutwithhigh

competitiveintensityinChina. In the future, aftermarket competition in developing

markets is expected to increase to a level similar to Western Europe. To benet from

the attractive growth rates requires immediate action. However, low-performing

companies, in particular, need to focus on selected markets that best t their strategy

and their current capabilities.

4. Eachdevelopingmarketisspecicintermsofthecompetitiveenvironment

andcustomerneeds. The different characteristics of the markets require a localized

approach to the aftermarket. For example, Russias geographic expansion requires

improvements in distribution processes; Indias aftermarket is increasingly being

led by top-performing Asian companies; and Chinas more competitive aftermarket

industry brings the most challenges. Companies trying to exploit the aftermarket with a

standardized global approach will most likely fail.

(Note: The full study, titled The Aftermarket in the Automotive Industry, is available for download at www.capgemini.com/automotive.)

Service Contracts ImpactBuying Choices

Service contracts matter to vehiclebuyers. Nearly three-quarters ofrespondents said that having the right

service contracts available would makethem more likely to purchase fromthat particular dealer or manufacturer.But what constitutes the rightservice contracts? That depends on themarket.

Half of consumers in mature marketsexpect to have a replacement vehicleavailable, compared with only 36% ofrespondents from developing markets.In contrast, almost half of consumersin developing markets expect vehicle

insurance to be included in a servicecontract versus just 22% of buyers inmature markets.


36/4036

This years Cars Online research wasdesigned to help companies answerkey questions that impact theirability to sell more vehicles: How doconsumers shop for vehicles? Why dothey buy? What keeps them comingback? Following are recommendationsto help automotive companies applythe reports ndings to their ownbusiness.

1Seize the social media initiative.An opportunity exists to integratequalitative content (customer reviews,expert reviews, forums/discussions)along with quantitative information(price and product specs, inventory,conguration capabilities) on brand

and dealer sites. This type of approachoffers consumers a single location fora wide range of vehicle informationand provides automotive companieswith greater content control. Socialmedia is a powerful tool, but it needsto be carefully managed and mustoffer content that provides real valueto customers, not sales pitches. Onthe back end, companies need to takeadvantage of the emerging analyticaltools that can help them monitor

online conversations and measureresults.

2Link all consumer touchpointsto capitalize on the critical butshrinking research period.Webchannels, TV, print, outdoor, socialmedia they all must be part of anintegrated marketing/advertisingprogram. They cannot be standalonesilos. Companies must also look atintegrating new real-time tools likea Virtual Adviser to boost the lead

funnel and improve conversion ratesduring the crucial period betweenthe start of a consumers researchonline and before the rst visit to theshowroom.

Conclusion and Recommendations

Five years from nowwe will pay more attentionto wattage than mileage

when it comes to our

cars.

German consumer


37/40

3Investigate alternative buyingapproaches such as mobilitypackages, particularly or young,green-minded consumers. Theautomot

cars online 2010 2011 listening to the consumer voice

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