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Car Purchasing Process - US - April 2016

Car Purchasing Process - US - April 2016

Over 55 million new and used vehicles were sold in 2015 and many consumers are still eager to buy in the coming year. Yet the landscape is shifting, and the consumer attitudes that led to strong sales over the past five years are unlikely to be repeated. Two main market drivers, pent-up demand/vehicle replacement and desire for fuel efficiency, are less important to consumers in the current market. New vehicles with features based on innovative technology are most likely to attract the next generation of buyers.

This report examines the following issues:

Car sales continue strength and reach prerecession levels
Replacement of old vehicle drives demand but trend is waning
Falling gas prices alter car buying demands


OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
The issues
Figure 1: Total US sales and fan chart forecast of market, at current prices, 2010-20
Figure 2: Average age of passenger cars and light trucks, 2002-15
Figure 3: All grades all formulations retail gasoline prices, dollars per gallon, 2000-16
The opportunities
Figure 4: Future purchasing plans, all, December 2015
Figure 5: Purchase reasons, all, December 2014 versus 2015
Figure 6: Dodge Ram online ad, 2015
Figure 7: Type of vehicle for next purchase, by age, December 2014 versus December 2015
What it means
THE MARKET
What you need to know
Car sales remain strong and reaching prerecession levels
Used cars command higher share of market
Vehicle age remains at record high, with possible signs of reversing
Ongoing economic strength bodes well for car sales
Falling gas prices shifts landscape
Technology playing key role in the car buying process
Vehicle financing rates incredibly low, for now
Market size and forecast
Car sales remain strong and reaching prerecession levels
Figure 8: Total US unit sales of new and used light vehicles, 2010-15
New cars drive growth while used car sales are flat
Figure 9: Total US unit sales of new and used light vehicles, by segment, 2010 and 2015
Used cars command higher share of market despite new car expansion
Figure 10: Total US unit sales of new and used light vehicles, by segment, 2010 (inner ring) versus 2015 (outer ring)
Market will conservatively grow in the upcoming years
Figure 11: Total US sales and fan chart forecast of market, at current prices, 2010-20
Market factors
Vehicle age remains at record high with possible signs of reversing
Figure 12: Average age of passenger cars and light trucks, 2002-14
Figure 13: Personal income, 2002-15
Ongoing economic strength bodes well for car sales
Falling gas prices alter car buying demands
Figure 14: All grades all formulations retail gasoline prices, dollars per gallon, 2000-16
Technology playing key role in research and soon will in purchasing process
Vehicle financing rates incredibly low, for now
Figure 15: Effective federal funds rate, 1990-2015
KEY PLAYERS
What you need to know
Technology shaping demand and buying process
Hybrids face challenge as gas prices plummet
Online services will streamline process
What’s working?
Technology shaping demand and buying process
Figure 16: Purchase reasons, all, December 2014 versus 2015
Technology raises consumer confidence during buying process
Figure 17: TrueCar online ad, 2015
What’s struggling?
Hybrids face challenge as gas prices plummet
Figure 18: US unit sales and forecast of hybrid and plug-in vehicles, 2010-20
Figure 19: Tesla email ad, 2015
What’s next?
Online services could streamline car buying process
THE CONSUMER
What you need to know
Over one third plan to purchase very soon
Many seek a vehicle with new and better technology
Consumers waiting until vehicles break down
In-person element remains crucial in car purchasing process
Women now more involved in car buying process
Large vehicles making a strong comeback
Future purchasing plans
Over one third plan to purchase very soon
Figure 20: Future purchasing plans, all, December 2015
Men more likely to be planning near-term purchase
Younger, more affluent consumers are near-term buyers
Figure 21: Future purchasing plans, by gender, December 2015
Figure 22: Future purchasing plans, by age and household income, December 2015
Parents are in the market for a car
Figure 23: Future purchasing plans, by presence of children, December 2015
Hispanics most likely to purchase in next year
Figure 24: Future purchasing plans, by race/Hispanic origin, December 2015
Purchase reasons
Many seek a vehicle with new and better technology
Figure 25: Purchase reasons, all, December 2014 versus 2015
Near-term buyers want additional car, new financing
Figure 26: Purchase reasons, plan on buying a car in next three years, December 2015
Technology critical for younger male consumers
Figure 27: Purchase reasons, by gender and age, December 2015
Desire for technology increases with income
Figure 28: Purchase reasons, by household income, December 2015
Hispanics buying because they need additional vehicle and financing
Figure 29: Purchase reasons, by race/Hispanic origin, December 2015
Reasons for not purchasing
Consumers waiting until vehicles break down
Figure 30: Reasons for not purchasing, all, December 2014 versus December 2015
Those aged 45-54 driving older cars, waiting to buy
Figure 31: Reasons for not purchasing, by age, December 2015
Opportunity for leasing to Black consumers
Figure 32: Reasons for not purchasing, by race/Hispanic origin, December 2015
Car purchase research
In-person element remains crucial in car purchasing process
Figure 33: Car purchase research, all, December 2015
Figure 34: Car purchase research, all, December 2015
Opportunity to make test-driving more friendly for joint buyers
Opportunity to make young women feel more comfortable in-person
Figure 35: Car purchase research, by gender and age, December 2015
Figure 36: Car purchase research, by household income, December 2015
Professional car reviews attractive to affluent buyers
Opportunity for more test-driving among multiculturals
Figure 37: Car purchase research, by race/Hispanic origin, December 2015
Purchase responsibility
Many consumers buy independently
Figure 38: Purchase responsibility, all, December 2015
Women now more involved in car buying process
Figure 39: Purchase responsibility, by gender, December 2015
Car buying can represent independence for Millennials
Figure 40: Purchase responsibility, by generation, December 2015
Parents, surprisingly, buy independently
Figure 41: Purchase responsibility, by generation, December 2015
Blacks more likely to be buying independently
Figure 42: Purchase responsibility, by race/Hispanic origin, December 2015
Type of vehicle for next purchase
SUV/Crossover most popular vehicle
Figure 43: Dodge online ad, 2016
Figure 44: Toyota print ad, 2016
Figure 45: Chevrolet online ad, 2016
Large vehicles making a strong comeback
Figure 46: Type of vehicle for next purchase, all, December 2015
Figure 47: Type of vehicle for next purchase, by age, December 2014 versus December 2015
Income plays a significant role in choice of vehicle type
Figure 48: Type of vehicle for next purchase, by household income, December 2015
Majority of Blacks purchase midsize/large cars
Figure 49: Type of vehicle for next purchase, by race Hispanic/origin, December 2015
APPENDIX
Data sources and abbreviations
Data sources
Abbreviations and terms
RESEARCH METHODOLOGY
US Research Methodology
Consumer research
Social Media Research
Trade research
Statistical Forecasting

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