What Car? Insight weekly update – week eight

Incentives, discounts – and the need to act fast to win customers

This is the eighth in a series of weekly updates for industry colleagues from Rachael Prasher, managing director of What Car? and Haymarket Automotive.

As showrooms prepare to physically open on Monday to the public for the first time since 23 March, all eyes will be on how buyers will behave as a result of coronavirus.

Will they be comfortable with the salesperson sitting in the car during a test drive or will they insist on being unaccompanied? Will they be patient and wait for a factory order or will their attention be turned by availability and a better deal from another brand?

One trend everyone will be watching with interest is how strong consumer demand will be – and how this will affect special offers and discounts in the market. As always, this will be reflected in changes to our Target Price – a fair market price that we determine by mystery shopping around the country every single day.

Given there was no meaningful activity during April and May, the ‘normal’ levers of the market were not seen. No one was really chasing the sale. As a result, the cash discounts offered across the market fluctuated between 8.1 and 8.4%.

Notably, though, there are signs that the previous hardening of discounts for the last few months were easing. In fact, April recorded a modest increase of around 1.4% in relative terms.

What is unknown is what happens next. From my conversations with retailers and OEMs, I know opinion is divided. Will those with large numbers of in-stock vehicles dominate by continuing the upward trend in discounts or will every brand look to close deals quickly from the start with attractive finance offers and discounts?

I believe it’s going to be the ultimate battle of nerves, with fine margins between success and failure – and I say that because our data points very much to a strong-willed in-market car buyer, not a desperate one.

This week, the results of our polling of visitors to whatcar.com show a firming up of those only willing to wait four weeks for a ‘factory order’ – rising from 33% to 37%. In fact, the data suggests that the longest most people will wait is going to be eight weeks – a further 26% state that as their maximum – unless the vehicle is highly desirable and a must-have purchase.

It’s the headline behind the headline that’s even more important here, though. If you can’t satisfy a customer’s first-choice, what will they do? Increasingly, our poll respondents are saying that if there are no in-stock options available they will flip to another brand. In fact, the number expecting to make that decision leapt from 25% to 35% in the last week.

And to drum home the point even more, those who are not interested in getting the exact spec, colour, trim, engine and more that they want, will switch their order to another brand. That’s up to 14.5% from 12.7% two weeks ago.

One thing is for sure, there are buyers. Anyone following social media will know that Vertu’s Robert Forrester has been very open in sharing daily the up tick in enquiries and orders as talk of easing the lockdown takes hold. He’s on the front foot, but not alone among retailers. What Car? is now recording a huge increase in the number of in-market consumers researching and searching for the best deal – our figures are 47% higher than during the first week of lockdown. In fact, we’re now generating the same level of enquiries to our dealer partners as we did in early March, when lockdown was a possibility, not a certainty.

However, alongside the positivity of potential buyers being out there now, there continues to be early warning signs of the handbrake being applied towards the end of the year.

We’ve been talking to nearly 4000 different consumers weekly at different stages of the sales funnel since the start of the crisis. Most trends we’ve identified have evolved consistently. However, the fall of people indicating they are looking to buy beyond six month’s time is stark – down from 55% at the start to 21% now.

It’s arguably why the Government needs to put in place an incentive scheme sooner rather than later. As the SMMT pointed out last week, the ‘closure’ of the automotive retail industry is costing the treasury £71m a day.

In my view, the only debate there should be is the format that a stimulus package should take. An EV-focused programme would be limited by supply and the relatively high-cost of such vehicles. A broader hybrid-focused initiative has more appeal but will not help all car makers.

That’s why I would prefer to see a broader still approach, aimed at getting older cars off the road, but recognising the giant environmental strides taken by the latest generations of petrol, diesel and electrified vehicles.

Whatever tomorrow brings, though, we at least know there are consumers looking for a good deal, from a good dealer. Now.

The most searched-for cars on whatcar.com this week

A hugely encouraging result for VW as dealers prepare to open and start selling the latest version of the Golf, which has sprung from outside our top 10 into the top slot, thanks to our review of the car being updated and then promoted across our email and social channels.

Other notable entrants to the top 10 include the Dacia Duster – at times the most read review on our site in 2019, but having faded this year, and the Mazda CX-5, which is always popular but which has enjoyed a particularly strong past week.

Interest in all electric cars has been strong during lockdown; this week, though, the most popular three – the Tesla Model 3, Hyundai Kona Electric and Kia e-Niro – are pushed to the fringes of the top 10.

New Car Buying: now free to use until the end of September

If you haven’t heard, we’ve extended our free offer to use our New Car Buying platform and lead management service until the end of September – with no tie-ins for new users, meaning there is no risk.

We recognise that our business can only thrive when retail is thriving again, and that is why we are offering leads from our in-market audience for free. Current users include Ford Retail, JCT 600, Hendy Group, Marshall Motor Group, Snows, Vertu Motors, Vindis and Waylands Automotive. If you’re interested in taking advantage, you can contact our support team on 0208 267 4138 or email us at support@whatcar.com.

Rachael Prasher
Managing director, What Car? and Haymarket Automotive