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Top 14 Reasons People Buy New Cars

Top 14 Reasons People Buy New Cars

By Marty Bernstein, Contributing Editor AIADA

Let's rename CRM to a more appropriate phrase. CRM is not customer relations management, to be truly effective (not to mention efficient and economical), it really should be called customer relations marketing. This subtle shift implies that understanding the needs, wants and desires of your customers and potential customers is of paramount importance. And that's marketing, not management.

Consumers resent being considered faceless numbers in a data base somewhere. It's almost as poorly perceived as the ubiquitous telephone answering trees — "if you want service dial 1" — is not good service. Establishing a rapport with a new car buyer begins the minute they enter the front door. What is the motivation that has brought them to your dealership?

Why do they want to buy, at least look at a new car, truck, mini-van or SUV? Until now this has been at best, a SWAG on the part of the salesperson. Now there is accurate, projectable, demographically reliable data.

The information provided by BIGresearch of Columbus, Ohio, a market intelligence firm that provides analysis of consumer behavior through a syndicated consumer intentions monthly survey of 7,000 respondents that identifies opportunities in a changing marketplace. Called the consumer intentions and actions (CIA) survey it has a 1% +/- margin of error.

Even though David Letterman has made the top 10 lists famous, there are more quantifiable reasons why people buy a new car, truck, min-van or SUV. Here are the results of the most recent consumer survey.

Reason
What motivated you to consider
buying a new car?
%

14

Lease on old car is up
4.8%
13
Wanted a vehicle with new "techy toys" (Nav, DVD, etc.)
6.2%
12
Needed a vehicle with more room
9.0%
11
My significant other wanted a new car
11.9%
10
Needed another car for my family
14.0%
9
Financing deals/incentives too good to pass up
14.3%
8
Wanted a vehicle with better safety features
14.6%
7
Like the styling of the new models
15.0%
6
Not really sure, other
17.0%
5
Old car just died
17.6%
4
Wanted a car with better gas mileage
19.2%
3
Old car was always in for repairs
20.4%
2
Tired of the old car, I wanted something new
22.0%
And the top reason why is...
1
Old car had high mileage
35.2%

Source: BIGresearch The sum of % totals may be greater than 100% because respondents could select more than one answer.

Every automotive sales training program I've seen has guides to helping establish the rapport or relationship with the shopper, but there is little similarity between brands, product knowledge notwithstanding. Knowing the reasons why helps direct the person to product more effectively.

A winner of a 'salesman of the year' award from a major dealer told me, "After introducing myself, I like to sit with a shopper to get basic information (name, address, etc.) because it helps me better understand their needs and helps qualify them for what they can afford. Then I show them a specific vehicle. And my customers like this, they're not being pushed to the spiff of the day vehicle."

What type vehicles are under consideration by consumers?

Only a finite number of consumers are in the market to buy a new vehicle at any time — the number is about 10 percent. Comparing data from February (10 percent) with March (9.4 percent) 2005 showed a decease of 0.6 percent in purchase intent. Shifts were also noted in the type of vehicle under consideration.

Rank
Type Vehicle
% Shoppers
1
Car
57.9%
2
SUV
26.4%
3
Truck
17.8%
4
Minivan
11.8%
5
Crossover
9.3%

Source: BIGresearch The sum of % totals may be greater than 100% because respondents could select more than one answer.

What Brands Are Being Considered For Purchase Intentions

Here's a quick snapshot look at the top five nameplates for those planning to buy new in the next six months:

Car SUV Truck Minivan
1. Toyota 1. Ford 1. Ford

1. Dodge

2. Volkswagen 2. Chevrolet 2. Dodge 2. Ford
3. Ford 3. Jeep 3. Chevrolet 3. Honda
4. Buick & Lexus (tie) 4. GMC 4. Toyota 4. Toyota
  5. Honda 5. Nissan 5. Chevrolet

Source: BIGresearch

What Are Consumers Prepared to Pay?

Obviously the cost of vehicle enters into purchase equation. This will enable sales personnel to direct the shopper to either a new vehicle or one previously owned.

Price Range
% of Shoppers
Under $10,00
0%
$10,001 to $15,000
7.4%
$15,001 to $20,000
22.2%
$20,001 to $25,000
23.7%
$25,001 to $30,000
18.7%
$30,001 to $40,000
18.9%
$ 40,001 and up
9.1%

Source: BIGresearch

The Bottom Line?

There's a lot of valuable information in this article, some if not all of it is not or seldom provided by manufacturers on a regular basis. Develop and compare your data with the national numbers to make this more pertinent to your store and market. It will help generate more business. As shifts occur in consumer reactions and perceptions, the AIADA will update our members.

(Source: AIADA)

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