Luxury vs. Mass Market: Steering the Global Automotive Industry
Luxury vs. Mass Market: Steering the Global Automotive Industry

Luxury vs. Mass Market: Steering the Global Automotive Industry

Luxury vs. Mass Market: Steering the Global Automotive Industry

In 2019, global car sales hit a staggering 90 million. The top five best-selling companies were led by Toyota, Volkswagen, Ford, Honda, and Nissan. Elon Musk, take note!

What drives us, as consumers, to select a specific car brand? 

Primarily, its quality, design, and value Following these factors are considerations of fashion trends and personal style. Brand loyalty also plays a significant role, reducing uncertainty when it comes to making a choice. However, the most influential factor in the purchasing decision is often the experience at the luxury car dealership. After all, this is the final step before deciding on a specific car brand.

Drawing on customer feedback and publicly available data, we’ve examined the automotive trends of 2022 and what we can anticipate for the current year.

When buying a car, customers prioritize:

  • Personalized insurance.
  • Comprehensive additional service packages.
  • Technology integration: connectivity with electronic devices.
  • Cabin comfort.
  • Safety systems for drivers and pedestrians.
  • Mobile applications for B2B and travelers: parking, hotel, restaurant search.
  • Enhanced vehicle system diagnostics.
  • Simplicity and ease of use.

Given the price tag of luxury cars, success or failure in attracting a buyer is quite significant. We’ve analyzed the behavior of buyers and consultants in several dealer networks in both the mass and premium segments and discovered some intriguing facts.

Omnichannel? Not So Much

In our high-tech era, customers expect car dealerships to provide feedback through the main communication channels — phone, email, and contact form on the website.

Our research of 433 car dealerships in 12 countries of one of the largest brands, which ranks among the top 15 leaders in global sales, revealed that only in 12 cases (2.7%) was the contact email not provided on the website! At the same time, in 68% of cases, a buyer did not receive any response to his email.

The Monday Blues

When researching the number of responses to the emails of another automobile brand, which is in the list of top 5 largest companies in the market, it turned out that the situation was not much better there. The study even managed to identify the relation between the day of the week when the letter was sent, and the probability of an answer to it. Thus, if you send a letter on Wednesday, then the probability that you will receive an answer is only 6%! Moreover, if you send an email at the wrong time (according to our data, from 9 to 11 am), then the probability of an answer is even less.

Your Call is Important to… You?

Well, we’ve sent an email. They did not get back to us. But we are still determined to visit the car dealership. We called to make an appointment. In 11% of cases, during the conversation, a consultant does not take the initiative to make an appointment at the car dealership, and in 15% of cases, he doesn’t even ask about the chosen car model.

In total, with a probability of 60% you will be invited to a test drive after a call to a car dealership, and with a probability of 75% — if you are lucky to receive an email reply.

The Little Things Matter

Finally, no matter what, we came to a luxury car dealership for consultation and a test drive for a pre-selected car.

The first thing a clientpays attention to is the staff’s professionalism and courtesy. But seemingly insignificant details are not less important.

According to the results of our study, in 75% of cases in the luxury salon visitors were offered drinks. And in mass-market class salons, this index was only 33%. Such a trifle as tea or coffee, which hardly cost a lot of money to the companies, was most often mentioned by customers as pleasant surprises.

Among other small details that also made the visit more pleasant, apart from drinks and cookies, the respondents mentioned friendliness and attentiveness of the consultant, as well as highlighting the functionality that meets the buyer’s needs, and zero waitlist.

A Leap of Faith

How important is it for us, as clients, to sit in a car and to try how it feels? In the dealerships of the premium car segment, 80% of customers were offered to sit in a car, while in the dealerships of the mass car segment this figure was higher and equal to 88%. This may be due to the fact that the consultants in the mass segment car dealerships are more persistent in their desire to sell as many cars as possible. And dealerships of the premium segment cars expect to sell fewer, but more expensive vehicles.

How likely is it that a person interested in a purchase would decide to buy a luxury car without a test drive? According to our study, 25% of buyers in the premium segment were not offered a test drive at all. In the mass segment, 28% of customers were unable to ride the desired car. The probability of purchase in these cases is close to zero.

What’s in Store for 2023?

  1. Interest in electric vehicles continues to grow worldwide. It is likely that the electrification of the automotive industry is going to accelerate significantly in the next few years. Electric cars will become more popular among shared mobility options.
  1. Interest in ICE vehicles has been lowered in most markets. The solution for small companies in the development and improvement of their gasoline and diesel engines. One of the most striking examples of the companies that continue to develop ICE technology while everyone refuses them, is Mazda, Kia, Hyundai, Renault, and others.
  1. Consumers remain unadapted to multimodal mobility. According to the Deloitte research agency, consumers in Japan, Germany, and the United States only like changes as much as others, since fewer than one in five people use several transport modes per trip.
  1. Privacy and data security concerns remain. The protection of personal data is the highest quality indicator of any company. The automotive industry is not an exception.
  1. Many processes in sales are changing, including the customer service process. According to Gartner’s consulting company forecast, by 2023 the income of brands that have implemented personalization should increase by 15%.

However, none of the trends will change the gold standards — a persistently high-quality level of service, polite friendly communication, identification, and compliance with consumer needs.

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