The auto industry is undergoing extensive change, but it’s not just about the electrification and connectedness of vehicles. New customer demands and behaviors could also alter decades-long relationships between original equipment manufacturers (OEMs) and auto dealerships, as well as the ways in which each sells and relates to customers.
To learn more, PwC carried out a survey of US car buyers and owners/general managers of new car dealerships, focusing on online and in-dealership buying experiences, electric vehicle (EV) adoption attitudes and emerging business models.
About 80% of car buyers prefer to go to dealers in person – to experience brands and products, test drive and complete transactions.
Most car dealers predict significantly more online sales in the future and they believe this change will have a positive impact on their profitability.
About 50% of car buyers considered an EV for their last car purchase…while just 5% ultimately purchased one.
Mainstream adoption of complete online vehicle purchasing is approaching a tipping point. Nearly half (46%) of car dealers surveyed report that at least 9% of recent vehicle sales took place entirely over the internet. Looking to 2030, dealers expect online sales to trend upward significantly; 64% of dealers said they believe completely online sales will comprise between 20% to 40% of all sales.
Nearly two-thirds of dealers believe that the shift to more online sales will have a positive effect on dealer profitability – with 27% saying that more online sales will have an “extremely positive impact” and 38% agreeing it would have a “somewhat positive impact.”
According to dealers, areas they believe are the greatest source of customer dissatisfaction include price negotiation (with 49% citing it as a top-three reason), negotiating financing (46%) and document signing (41%).
While just 5% of consumers said the car they ended up choosing for their last purchase was an EV (and for 19%, it was a hybrid), 52% of all car buyers reported that they considered buying an EV.
By far, the greatest sticking point that consumers have with owning an EV is battery range, with 40% naming it as their number-one concern. Other major concerns include cost or no at-home charging and a lack of public charging infrastructure. Additionally, charging time was an issue for non-EV adopters, of which just 25% said they were willing to wait more than 45 minutes to charge up.
EV buyers expect to do the lion’s share of their charging at a single-family home (53%), while they expect to do just 13% at an apartment garage or parking lot.
As the auto industry races into the EV era, it also finds itself on the cusp of another ground-breaking era of change – how it sells. 71% of dealers say subscriptions are a viable business model for their franchises. Yet, two-thirds of dealers (67%) believe such a change in the OEM model would threaten their franchises. Our survey finds that dealers are upbeat about the model, with nearly three in four (71%) agreeing that they are a viable business model for their franchises. Consumers, too, seem to be warming to the idea, with 38% saying that they are “extremely” or “somewhat” likely to consider purchasing a subscription for their next vehicle.
Battery range is the most important reason consumers didn’t buy EVs, while performance was stated as the most important reason for one.
About 70% of car dealers say subscriptions are a viable franchise business model, while about 40% of consumers say they’ll consider a subscription for their next car.
While mainstreamed direct OEM-to-consumers could benefit consumers and carmakers, 67% of dealers say such a model would “threaten” their franchises.
Partner, PwC US
Principal, Strategy& US
Director, PwC US