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  • Automotive the way we see it Cars Online 08/09 10th Annual Global Automotive Study: Tracking Consumer Buying Behavior in Both Mature and Emerging Markets
  • Contents Introduction 3 Executive Summary 4 10-Year Review: What a Difference a Decade Makes 6 Emerging Markets: The Key to Future Growth 8 Brazil: Vehicle Buyers Know Green 8 Russia: Western Purchase Patterns Emerge 9 India: Tech-Savvy Consumers Turn to Online Tools 10 China: High-Growth Market, Demanding Consumers 11 Vehicle Research: Market Maturity Impacts Behavior Patterns 12 Going Green: Emerging Markets Focus on Fuel Efficiency 14 Web Usage: Interest in Online Vehicle Buying Jumps 17 Customer Interaction: A Holistic Approach to Building Loyalty 22 Customer Satisfaction: What Needs to Change? 25 The Next 10 Years: Conclusion and Recommendations 27 2008 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini.
  • Automotive the way we see it Introduction Welcome to the 10th annual The research for this years study Capgemini global automotive study involved more than 3,100 consumers Cars Online 08/09. in the United Sates, Western Europe (especially Germany, France and the This years study expands our coverage UK), Brazil, Russia, India and China. of consumer buying behavior beyond The executive summary provides an traditional mature markets such as the overview of key findings from the United States and Western Europe to research, and the sections that follow include several emerging markets: offer more in-depth data and analysis Brazil, Russia and India, in addition to on each of the emerging markets as China, which we have covered since well as key topics such as vehicle 2004. As these developing markets research, lead management and become increasingly vital for the customer loyalty. We also look at the automotive industry, companies must changes consumers expect to see in understand how consumer purchase the way they buy a vehicle in the patterns in these countries differ from coming 10 years. The whole vehicle or mirror the behavior of car buyers in buying process will be done with a established markets. click of the mouse, said a consumer from India, reflecting a sentiment This year we also take a deeper look expressed by the majority of at top-of-mind issues like fuel respondents in our study. efficiency and alternative-fuel vehicles, the use of new online tools such as We hope the findings of Cars Online blogs and discussion forums, and 08/09 will provide automotive customer satisfaction with the vehicle manufacturers and dealers with buying process, including consumer insights into changing consumer suggestions on what would improve dynamics in both mature and the buying experience. As this is the developing markets, and will help the 10th annual issue of Cars Online, we industry gain a better understanding have also reviewed results from the of how to successfully anticipate past decade to see just how much has evolving consumer needs and changed and what clues that can demands. provide about the decade ahead. During the past 10 years, Capgemini has surveyed almost 42,000 consumers across 15 countries, as well as 300 automotive Original Equipment Manufacturers (OEMs) and 2,500 dealers, which adds up to significant insight into vehicle buying behavior. Some of the consumer knowledge gained over the course of this research has been highlighted in fact boxes. Look for them throughout the report. Cars Online 08/09 3
  • Executive Summary It will be as easy to buy a vehicle online consistently rated among the most as it is to buy a book or bottle of perfume important decision criteria, there are over the Internet. significant differences beyond these common factors. In particular, Combustion engines will be just for consumers in emerging markets put classic cars. greater emphasis on more short-term factors such as 0% financing, cash- I hope we will be able to buy direct from back incentives and additional the manufacturer at the cost the dealer warranty coverage. pays so as to be able to get a better model for a fair price. All emerging automotive markets are not alike. Understanding both the Buying a car will be like putting together similarities and differences among the a Lego kit. You will choose standardized four developing markets studied is components from different manufacturers essential to succeeding in these high- that will be assembled into your car. growth regions. Brazilian consumers, for example, are far more likely than As these quotes from our Cars Online those in China, India or Russia to own 08/09 research make clear, consumers or have interest in fuel-efficient and have some very definitive ideas about alternative-fuel vehicles. Russian the way they expect to buy cars in the consumers demonstrate buying future. These qualitative comments, behavior that is closer to that of About the Study together with the extensive respondents in western markets. For quantitative data from the study, point instance, 21% of Russian respondents to the importance of understanding said they were likely to buy a used Capgemini worked with SmartRevenue, a Ridgefield, Connecticut-based consumer needs and behavior vehicle, the highest of the emerging research firm, to conduct the survey for patterns, particularly as automotive markets. Cars Online 08/09. All analysis and companies turn to new growth interpretation of the data has been markets to offset static sales in At the same time, the research made by Capgemini in collaboration traditional western markets. uncovered some consistent trends with the Car Internet Research Program among the emerging markets. (CIRP) of the University of Ottawa, Key Findings Respondents in all four developing Canada. In total more than 3,100 The research uncovered a number of economies indicated strong interest in consumers were surveyed in eight key findings: buying vehicles over the Internet, countries: Brazil, China, France, heavy use of new online tools such as Germany, India, Russia, the United Fuel economy is as important a blogs and web forums, and higher Kingdom and the United States. The composition of the consumer sample in factor in a consumers choice of levels of customer satisfaction with the each country was based on projectable vehicle as are safety and reliability. overall vehicle buying process. In national samples representative of the The impact of volatile gasoline prices some respects consumers in emerging population from the standpoint of can be seen in all markets, with nine markets demonstrate less sophisticated region, age and gender. All consumers out of 10 respondents pointing to fuel buying behavior than those in western surveyed were in-market (20% plan to economy as an important or very countries, but they are also extremely buy or lease a vehicle within three important consideration in their technology enabled, indicating the months; 25% in three to six months; vehicle choice. In Brazil, it was the potential to leapfrog established 40% in six to 12 months; and 15% in 12 number one factor, cited by 97% of practices in western markets in a short to 18 months). respondents. While reliability, safety, time. fuel economy and price are 4
  • Automotive the way we see it Consumers latent demand for This year saw a rise in green vehicle said they were satisfied with the online vehicle buying continues to ownership: 36% of all respondents process of buying a car. Its interesting grow. This year 44% of consumers said they own a fuel-efficient or to note that there appears to be an said they were likely or very likely to alternative-fuel vehicle, up from 28% inverse relationship between market purchase a car entirely over the last year. And half said they plan to maturity and satisfaction levels: The Internet if that capability were buy or are thinking seriously about more sophisticated the market, the available, up from 20% last year. The buying such a vehicle. However, most lower the degree of satisfaction. For interest level was particularly consumers are not prepared to pay a example, in the U.S. only 40% said pronounced in emerging markets like high premium to go green: The they were satisfied, compared with Brazil (88%) and India (67%). Interest research found that 85% of 84% of consumers in India. in online buying extended to parts respondents expect to pay less than and accessories, with 55% of all 10% extra for a fuel-efficient or And even those respondents who are consumers saying they were likely to alternative-fuel car. satisfied see room for improvement. At buy these items over the Internet. the top of the list is the vehicle negotiation Consumers are increasingly process at the dealership. Consumers said Interestingly, the barriers to online demanding about the speed of less haggling and pressure by dealer vehicle buying seem to be response they expect from dealers salespeople would increase their addressable. We expected respondents and manufacturers. Half of satisfaction level. Other areas for to voice concern about the inability to consumers said they expect a response improvement include better customer interact face to face or negotiate a to a web or e-mail inquiry within four service and greater transparency in trade-in over the Internet, but instead, hours, up from 39% last year. That pricing. they cited the inability to test drive a number jumps to 60% for respondents vehicle (43%) and the lack of full who are within three months of buying While this topline review provides a price and product information (36%) a car. Respondents in developing summary of key findings from this as more significant blockers. countries are particularly demanding: years Cars Online study, the sections Two-thirds of Chinese consumers that follow offer more in-depth data Consumers are confident in their expect a response within four hours, as and analysis, as well as a peek into the knowledge about green vehicles and do 57% of Russians and 55% of future as viewed through the eyes of are increasingly likely to own fuel- Brazilians. Failing to respond in a vehicle buyers. efficient and alternative-fuel cars. timely manner can lead vehicle buyers More than three-quarters of to vote with their feet: A full 75% of respondents said they are confident or respondents said they would switch very confident that they have a clear manufacturer, dealer or both if they understanding of what green vehicles dont get the response they expect. really means. The degree of confidence is highest in Brazil, where 92% of Most consumers are satisfied with consumers said they understood the the vehicle buying process, but they Fact Box environmental issues. This is not see plenty of room for improvement. surprising given that ethanol and The study uncovered both good news Italians see the Internet as a way to gasoline/ethanol flex-fuel vehicles have and bad news for the automotive eliminate the hassles of the dealership been popular in Brazil for a number of industry when it comes to customer experience and as a powerful tool for years. Almost one-third of Brazilians satisfaction. Two-thirds of respondents comparing cars and services against indicated that they owned or planned worldwide said they were satisfied or one another, and less for actually gathering information about specific to buy an ethanol or flex-fuel car, the very satisfied with the overall vehicle cars. highest among all the markets. buying process. While thats encouraging, its a decline from 10 Cars Online 2000 years ago, when 80% of consumers Cars Online 08/09 5
  • 10-Year Review: What a Difference a Decade Makes Consumer usage of the Internet as a research tool during the vehicle buying process has had a profound impact on the power dynamics in the automotive industry. The Internet, with its increasing In fact, by our 2005 report, more than household penetration worldwide, is 60% of car buyers indicated that they expected to be the most powerful used the Internet as a primary source In 10 years I would expect to see vehicles that are less polluting and communication channel to support the more demanding, better-informed of information during the purchasing process. That number climbed to 80% use cheaper fuels. Cars should and increasingly segmented in 2006 and 88% this year. [automotive] customers.1 That also be more durable and have prediction lay at the heart of the first While consumer use of the web has simpler and cheaper technology. edition of Capgeminis Cars Online jumped dramatically, the key drivers But at the same time, we should study, published in 1999. The behind this trend have remained be able to have intelligent speed research was launched that year to consistent. Noted the 1999 study: systems to prevent accidents. help the automotive industry Customers state that a major Brazilian consumer understand the role that the Internet and electronic commerce overall advantage of the Internet is that it provides comparable data on the car might play in the way consumers market and that pressure is never put shopped for and bought vehicles. on the consumer on whether or not to buy.2 The primary options vehicle Since that time, Capgemini has buyers look for on the web today surveyed almost 42,000 consumers (price and product information) across 15 countries (Belgium, Brazil, havent changed over the past 10 Canada, China, France, Germany, India, years, with those two features Italy, Japan, Netherlands, Russia, Spain, swapping position but always ranking Sweden, United Kingdom and United among the top three (with vehicle States). In addition, 2,500 dealers and comparison capability included as 300 automotive manufacturers and well). At the same time, the national sales companies were entertainment-oriented elements of a interviewed over the decade. website such as dynamic graphics have been rated low on the list of While the inaugural research focused important web options in all years. exclusively on the Internet, the study has broadened over the years to The Balance of Power Shifts to incorporate additional topics such as the Consumer brand and dealer loyalty, Viewed in a vacuum, the evolution of environmental issues and customer the Internet as a research tool is an Fact Box satisfaction. The one constant, interesting phenomenon. However, it however, has been the examination of is the industry-changing impact of For the first time in the course of our the growing impact of the web, and this technology that has truly made it Cars Online research, the Internet has this is the area where Capgemini worth chronicling over the past 10 become the number one information found the greatest changes over the years. source used by consumers when 10 years of conducting the research. researching vehicles, surpassing family A decade ago, the balance of power in and friends and manufacturer-specific The first Cars Online report noted that the vehicle buying process lay squarely dealers. 11% of respondents used the Internet with dealers and manufacturers. They Cars Online 05/06 to research vehicles and predicted that had the knowledge and information the web was likely to influence 50% that consumers lacked, giving them an of vehicle purchases within five years. upper-hand in negotiations. Today the 1 Cars Online 1999: Empirical Study on the Potential for Automotive Sales and Distribution in Electronic Commerce, Capgemini. 6 2 Ibid.
  • Automotive the way we see it The Internets Rise as a Research Tool (% of consumers saying they use the Internet as an information source during the Fact Box vehicle buying process) The Japanese stand out for their enthusiasm for the Internet: 93% of 80% Japanese consumers had visited an OEM website. 60% Cars Online 2001 40% 20% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Capgemini power balance has shifted dramatically, although it typically remains higher The amount of information available with many consumers one step ahead than dealer loyalty. In 2005, for to consumers on the web continues to of dealerships and automotive example, 62% of U.S. consumers said increase with the emergence of online companies. they were likely to buy the same make consumer-to-consumer (C2C) tools as their current vehicle, compared such as blogs, web forums and Early signs of this changing dynamic with 55% this year. Internet discussion groups. In this were noted in the 1999 edition of Cars years study, 42% of respondents Online: The consumer can enjoy Continued evidence of the shift in the indicated that they use automotive unbiased online information gathering power dynamic was recorded in blogs when researching information and purchasing, which leads to a shift subsequent years of our research. during the vehicle shopping process; in bargaining power that comes in step The resulting pricing transparency 45% use discussion groups or forums; with a more transparent and from Internet-driven information has and 37% use information/ competitive market. Empowered by accentuated the buyers market encyclopedia sites with user-generated the web, the automotive customer is environment and shifted some of the content such as Wikipedia. better informed, diversified, heavily negotiation power to the consumer. In Consumers are relying on these new focusing on independent information todays environment, when a buyer tools to obtain supporting information and test reports and less brand loyal.3 arrives at the dealership he or she and a more objective viewpoint, all of often knows what type of vehicle he which will accompany them when The truth of that prediction is or she wants, where he or she can get they visit the dealer showroom or, apparent in customer loyalty data, the vehicle and how much the vehicle increasingly, when they look to the which shows that in most mature will cost, noted the 2002 edition of web to make a vehicle purchase. automotive markets, brand loyalty has Cars Online.4 been slowly declining in recent years, 3 Ibid.. 4 Cars Online 2002: The Adaptive Automotive Enterprise Study, Capgemini. Cars Online 08/09 7
  • Emerging Markets: The Key to Future Growth Despite some similarities, its clear that complex and diverse consumer purchase patterns exist from one emerging market to another. Since 2004 Capgemini has included Brazil: Vehicle Buyers Know China among the countries studied in Green our annual Cars Online report. That In many respects, Brazil is the most There will be no my computer, I10 years. Sitting at car dealers in will research has offered a glimpse of how this dynamic and growing automotive sophisticated of the developing automotive markets. Adoption rates of directly order a vehicle from the market is evolving, identified the Internet and mobile phones are differences in buying behavior growing rapidly, particularly in urban maker, making design changes to compared with mature markets, and areas, leading to increased interest in my future vehicle. It will be put on offered evidence of the convergence online buying. This trend was the assembly line and I will have a that is beginning to take place as reflected in our research, with 87% of unique vehicle. Funny, maybe Chinese consumers become more respondents from Brazil saying they but we can buy furniture that way familiar with buying cars. were likely or very likely to buy a car today so why not cars in 10 years? over the Internet if the capability were Russian consumer To provide a more complete picture of the markets that may hold the key to available, the highest among all countries. The same number indicated the automotive industrys future they would like to purchase parts and growth, Brazil, Russia and India were accessories online. added to this years research. The findings demonstrate that there are The interest in buying cars over the similarities among all four developing Internet may stem from the fact that a markets. For example, in some decade ago Brazilians were offered tax respects consumers in these markets breaks when they bought a vehicle demonstrate less sophisticated buying online. And certain cars were only behavior than those in western available over the Internet. Those tax countries. They put much greater breaks no longer exist, but the prior emphasis than do western consumers experience may make consumers on all the decision criteria when more comfortable with buying a choosing a vehicle, which is not vehicle fully online. surprising given the fact that many are first-time car buyers. Brazilians who use the Internet say it can have a significant impact on their At the same time, they are also buying decisions. More than nine out extremely technology enabled, of 10 said that having the right web indicating the potential to leapfrog features would make them more likely established practices in western to purchase a car from that company. markets in a short time. For instance, And, conversely, a similar number respondents in all four developing indicated that not having the right economies show strong interest in website options would make them buying vehicles over the Internet and less likely to buy from that company. heavy use of blogs and web forums. Brazilian consumers are particularly Despite these similarities, its clear that focused on fuel-efficient and alternative- complex and diverse consumer fuel vehicles, due primarily to the fact purchase patterns exist from one that ethanol has enjoyed widespread emerging market to another. The usage in the country for many years. following are snapshots of the vehicle Today, flex-fuel vehicles, which can use buying trends in each of these four any combination of ethanol and markets. gasoline or each of these fuels alone, 8
  • Automotive the way we see it account for nearly 90% of all new cars Brazil: High Ownership of Green Vehicles sold in Brazil.5 Sales of flex-fuel cars in (% of consumers saying) Brazil are predicted to grow at an annual rate of 15.67% from 2007 to 100% 5 2010.6 6 5 8 80% Thinking seriously about buying an The focus on green vehicles is 41 8 alternative-fuel vehicle reflected in our Cars Online research, 8 22 Thinking seriously about buying a fuel- 6 efficient vehicle with 59% of Brazilian consumers 60% 81 02 Planning to buy an alternative-fuel vehicle indicating that they currently own a 42 4 3 42 Planning to buy a fuel-efficient vehicle fuel-efficient or alternative-fuel 40% vehicle, the highest among all the 8 42 92 Currently own an alternative-fuel vehicle markets studied. Almost one-third of Currently own a fuel-efficient vehicle 20% the respondents from Brazil said those 2 2 53 82 vehicles were fueled by ethanol or a 91 61 gasoline/ethanol combination, again 0% the highest among the countries. In TOTAL U.S. Western Brazil other markets, gas/electric hybrids or Europe natural gas vehicles and natural Source: Capgemini gas/gas hybrids were more popular. Russia: Intention to Acquire New vs. Used Vehicle In addition, 95% of Brazilian (% of consumers saying) respondents identified alternative-fuel vehicles as an important or very 100% 4 6 8 1 1 11 6 9 important factor in their choice of 41 91 vehicle, compared with the overall 80% 12 average of 63%. Brazilian consumers 62 93 also demonstrate great confidence in 60% their understanding of what green Undecided really means and are more willing 98 39 09 Used than others to pay extra for a fuel- 40% 77 17 New efficient or alternative-fuel vehicle: 06 55 One-quarter said they would pay a 20% premium of more than 10%. 0% Russia: Western Purchase TOTAL U.S. Western Russia Brazil India China Patterns Emerge Europe Our Cars Online research found that Source: Capgemini in many respects Russian vehicle buying patterns resemble those in emerging markets. The used car sport utility vehicles (SUVs). In this western markets. For instance, despite market is expected to remain strong in years research, 21% of respondents in the growth of new car sales in Russia, Russia due to the continued influx of Russia said they expect to purchase an the country still has a significant used used Japanese and German cars. SUV, compared with the overall car market, similar to the U.S. and average of just 8%. In addition, Western Europe: 21% of Russian Similar to U.S. vehicle buyers, Russian Russian respondents, like those in respondents said they were likely to consumers are more likely than those western countries, are less interested buy a used vehicle, the highest of the in other emerging markets to buy in factors such as low financing and 5 Brazil Flex-Fuel Cars Help Tame Gasoline Prices, Planet Ark,, March 17, 2008. 6 Brazil Automobile Industry Till 2010, RNCOS, January 2008. Cars Online 08/09 9
  • cash-back incentives when it comes to for customer interaction and buying. Fact Box This is evident in the fact that more their vehicle purchase decisions. And they also tend to be less satisfied with than two-thirds of Indian respondents The Dutch see the Internet primarily as the overall vehicle buying process, said they were likely to buy a car an educational tool that they can use to focusing in particular on the online, second only to Brazil among enhance their bargaining power within complexity involved in buying a car in the countries studied in our Cars the showroom. Though the Dutch have Russia. Online research. A similar number also a strong preference for dealership said they would like to buy parts and buying, this trend is driven primarily by Growing Internet penetration in accessories online. their desire to see cars first-hand and Russia has led to above-average usage confirm quality, not by the value they of information sources such as Indian consumers are heavy users of place upon personalized service. manufacturer websites, search engines, new online tools: 56% use blogs when Cars Online 2000 information sites and online news sites. researching vehicles, 55% use web Our research also found extensive use forums and 52% use video-sharing of C2C web tools: 45% of Russian sites, the highest rates among all the respondents use automotive blogs markets. They are also more likely when researching a vehicle purchase, than their counterparts to use 49% use Wikipedia-type sites, and Wikipedia-type sites and RSS feeds. 64% use web forums, the highest among all the countries studied. Despite the growing importance of the Internet in India, consumers also rely India: Tech-Savvy Consumers on other types of information sources Turn to Online Tools when researching vehicles: 44% of The growing number of affluent and Indian respondents said they use TV educated Indians is driving increased advertising, compared with the overall utilization of the Internet and mobile average of 23%; and 39% use auto devices, which is expected to lead to shows against the average of 22%. expanded use of electronic channels India: Above-Average Use of New Online Tools (% consumers saying) 65 Automotive weblog 24 Automotive dis cus s ion 55 group/forum 54 25 Online video s ite/video- s haring s ervice 23 Informational/encyclopedia 15 s ite with user-generated content 73 India 03 Total RSS feeds 51 0% 20% 40% 60% Source: Capgemini Note: multiple responses allowed 10
  • Automotive the way we see it The Indian automotive market is Chinese consumers are particularly A similar shift is apparent in dealer dominated by small cars, so its not demanding when it comes to the speed loyalty. Half of Chinese consumers surprising that 39% of Indian at which they expect to receive a said they were likely to buy a vehicle respondents said they own a fuel- response from a dealer or manufacturer. from the same dealer where they efficient vehicle, which is 10 Two-thirds expect a reply to a web or made their previous purchase, up percentage points higher than the e-mail inquiry within four hours, the from 18% in 2004 and closer to the average for all consumers. Another highest among the countries. In dealer loyalty levels found in the U.S. 35% are planning to buy or thinking contrast, consumers in the U.S. and and Western Europe. seriously about buying such a car. Western Europe were more willing to They also indicate a willingness to pay wait 24 hours for a response. extra for a fuel-efficient vehicle, although most wont pay more than a While China is still a developing 10% premium. automotive market, there is growing Fact Box evidence of a gradual shift in some China: High-Growth Market, buying patterns toward those more In Spain (70% of respondents), Sweden Demanding Consumers likely to be found in mature markets. (55%) and France (49%) car buyers are Chinese consumers are increasingly Take brand loyalty, for example. In more attracted by the possibility of non- technology savvy, as they begin to rely 2004, just 9% of Chinese respondents stop 24-hour information over the more on the Internet as a key said they were likely to buy the same Internet than those in other countries. information source, including C2C make as their current vehicle, not tools. In fact, 70% of Chinese surprising given their lack of Cars Online 1999 respondents said they use automotive experience in owning a car. This year blogs during the vehicle research that number stands at 48%, much process, the highest among all the closer to the brand loyalty levels countries studied. Chinese consumers found in western markets. are also showing increasing interest in online vehicle buying. This year, 37% of respondents from China said they were China: Consumers Demand a Quick Response likely to buy a car over the Internet, up (% consumers saying) from just 5% the prior year. 100% 11 2 1 1 Despite the growth of the Internet in 5 01 11 21 China, consumers favor the telephone for many types of communication 80% 72 with dealers and manufacturers, particularly surveys and service 93 Don't know reminders. About half of Chinese 60% 15 45 More than 48 hours respondents said they want to receive 02 24-48 hours post-sale, post-test drive and post-