cars online 08/09 - capgemini

Cars Online 08/09

10th Annual Global Automotive Study: TrackingConsumer Buying Behavior in Both Mature andEmerging Markets

Automotive the way we see it

Contents

Introduction 3

Executive Summary 4

10-Year Review: What a Difference a Decade Makes 6

Emerging Markets: The Key to Future Growth 8

Brazil: Vehicle Buyers Know Green 8Russia: Western Purchase Patterns Emerge 9India: Tech-Savvy Consumers Turn to Online Tools 10China: High-Growth Market, Demanding Consumers 11

Vehicle Research: Market Maturity Impacts Behavior Patterns 12

Going Green: Emerging Markets Focus on Fuel Efficiency 14

Web Usage: Interest in Online Vehicle Buying Jumps 17

Customer Interaction: A Holistic Approach to Building Loyalty 22

Customer Satisfaction: What Needs to Change? 25

The Next 10 Years: Conclusion and Recommendations 27

© 2008 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without priorwritten permission from Capgemini.


The research for this year’s studyinvolved more than 3,100 consumersin the United Sates, Western Europe(especially Germany, France and theUK), Brazil, Russia, India and China.The executive summary provides anoverview of key findings from theresearch, and the sections that followoffer more in-depth data and analysison each of the emerging markets aswell as key topics such as vehicleresearch, lead management andcustomer loyalty. We also look at thechanges consumers expect to see inthe way they buy a vehicle in thecoming 10 years. “The whole vehiclebuying process will be done with aclick of the mouse,” said a consumerfrom India, reflecting a sentimentexpressed by the majority ofrespondents in our study.

We hope the findings of Cars Online08/09 will provide automotivemanufacturers and dealers withinsights into changing consumerdynamics in both mature anddeveloping markets, and will help theindustry gain a better understandingof how to successfully anticipateevolving consumer needs anddemands.

Welcome to the 10th annualCapgemini global automotive study –Cars Online 08/09.

This year’s study expands our coverageof consumer buying behavior beyondtraditional mature markets such as theUnited States and Western Europe toinclude several emerging markets:Brazil, Russia and India, in addition toChina, which we have covered since2004. As these developing marketsbecome increasingly vital for theautomotive industry, companies mustunderstand how consumer purchasepatterns in these countries differ fromor mirror the behavior of car buyers inestablished markets.

This year we also take a deeper lookat top-of-mind issues like fuelefficiency and alternative-fuel vehicles,the use of new online tools such asblogs and discussion forums, andcustomer satisfaction with the vehiclebuying process, including consumersuggestions on what would improvethe buying experience. As this is the10th annual issue of Cars Online, wehave also reviewed results from thepast decade to see just how much haschanged and what clues that canprovide about the decade ahead.

During the past 10 years, Capgeminihas surveyed almost 42,000consumers across 15 countries, aswell as 300 automotive OriginalEquipment Manufacturers (OEMs)and 2,500 dealers, which adds up tosignificant insight into vehicle buyingbehavior. Some of the consumerknowledge gained over the course ofthis research has been highlighted infact boxes. Look for them throughoutthe report.

Cars Online 08/09 3

Introduction

consistently rated among the mostimportant decision criteria, there aresignificant differences beyond thesecommon factors. In particular,consumers in emerging markets putgreater emphasis on more short-termfactors such as 0% financing, cash-back incentives and additionalwarranty coverage.

All emerging automotive marketsare not alike. Understanding both thesimilarities and differences among thefour developing markets studied isessential to succeeding in these high-growth regions. Brazilian consumers,for example, are far more likely thanthose in China, India or Russia to ownor have interest in fuel-efficient andalternative-fuel vehicles. Russianconsumers demonstrate buyingbehavior that is closer to that ofrespondents in western markets. Forinstance, 21% of Russian respondentssaid they were likely to buy a usedvehicle, the highest of the emergingmarkets.

At the same time, the researchuncovered some consistent trendsamong the emerging markets.Respondents in all four developingeconomies indicated strong interest inbuying vehicles over the Internet,heavy use of new online tools such asblogs and web forums, and higherlevels of customer satisfaction with theoverall vehicle buying process. Insome respects consumers in emergingmarkets demonstrate less sophisticatedbuying behavior than those in westerncountries, but they are also extremelytechnology enabled, indicating thepotential to leapfrog establishedpractices in western markets in a shorttime.

“It will be as easy to buy a vehicle onlineas it is to buy a book or bottle of perfumeover the Internet.”

“Combustion engines will be just forclassic cars.”

“I hope we will be able to buy direct fromthe manufacturer at the cost the dealerpays so as to be able to get a bettermodel for a fair price.”

“Buying a car will be like putting togethera Lego kit. You will choose standardizedcomponents from different manufacturersthat will be assembled into your car.”

As these quotes from our Cars Online08/09 research make clear, consumershave some very definitive ideas aboutthe way they expect to buy cars in thefuture. These qualitative comments,together with the extensivequantitative data from the study, pointto the importance of understandingconsumer needs and behaviorpatterns, particularly as automotivecompanies turn to new growthmarkets to offset static sales intraditional western markets.

Key FindingsThe research uncovered a number ofkey findings:

Fuel economy is as important afactor in a consumer’s choice ofvehicle as are safety and reliability.The impact of volatile gasoline pricescan be seen in all markets, with nineout of 10 respondents pointing to fueleconomy as an important or veryimportant consideration in theirvehicle choice. In Brazil, it was thenumber one factor, cited by 97% ofrespondents. While reliability, safety,fuel economy and price are

4

Executive Summary

About the Study

Capgemini worked with SmartRevenue,a Ridgefield, Connecticut-basedresearch firm, to conduct the survey forCars Online 08/09. All analysis andinterpretation of the data has beenmade by Capgemini in collaborationwith the Car Internet Research Program(CIRP) of the University of Ottawa,Canada. In total more than 3,100consumers were surveyed in eightcountries: Brazil, China, France,Germany, India, Russia, the UnitedKingdom and the United States. Thecomposition of the consumer sample ineach country was based on projectablenational samples representative of thepopulation from the standpoint ofregion, age and gender. All consumerssurveyed were in-market (20% plan tobuy or lease a vehicle within threemonths; 25% in three to six months;40% in six to 12 months; and 15% in 12to 18 months).


said they were satisfied with theprocess of buying a car. It’s interestingto note that there appears to be aninverse relationship between marketmaturity and satisfaction levels: Themore sophisticated the market, thelower the degree of satisfaction. Forexample, in the U.S. only 40% saidthey were satisfied, compared with84% of consumers in India.

And even those respondents who aresatisfied see room for improvement. Atthe top of the list is the vehicle negotiationprocess at the dealership. Consumers saidless haggling and pressure by dealersalespeople would increase theirsatisfaction level. Other areas forimprovement include better customerservice and greater transparency inpricing.

While this topline review provides asummary of key findings from thisyear’s Cars Online study, the sectionsthat follow offer more in-depth dataand analysis, as well as a peek into thefuture as viewed through the eyes ofvehicle buyers.

This year saw a rise in green vehicleownership: 36% of all respondentssaid they own a fuel-efficient oralternative-fuel vehicle, up from 28%last year. And half said they plan tobuy or are thinking seriously aboutbuying such a vehicle. However, mostconsumers are not prepared to pay ahigh premium to go green: Theresearch found that 85% ofrespondents expect to pay less than10% extra for a fuel-efficient oralternative-fuel car.

Consumers are increasinglydemanding about the speed ofresponse they expect from dealersand manufacturers. Half ofconsumers said they expect a responseto a web or e-mail inquiry within fourhours, up from 39% last year. Thatnumber jumps to 60% for respondentswho are within three months of buyinga car. Respondents in developingcountries are particularly demanding:Two-thirds of Chinese consumersexpect a response within four hours, asdo 57% of Russians and 55% ofBrazilians. Failing to respond in atimely manner can lead vehicle buyersto vote with their feet: A full 75% ofrespondents said they would switchmanufacturer, dealer or both if theydon’t get the response they expect.

Most consumers are satisfied withthe vehicle buying process, but theysee plenty of room for improvement.The study uncovered both good newsand bad news for the automotiveindustry when it comes to customersatisfaction. Two-thirds of respondentsworldwide said they were satisfied orvery satisfied with the overall vehiclebuying process. While that’sencouraging, it’s a decline from 10years ago, when 80% of consumers

Cars Online 08/09 5

Consumers’ latent demand foronline vehicle buying continues togrow. This year 44% of consumerssaid they were likely or very likely topurchase a car entirely over theInternet if that capability wereavailable, up from 20% last year. Theinterest level was particularlypronounced in emerging markets likeBrazil (88%) and India (67%). Interestin online buying extended to partsand accessories, with 55% of allconsumers saying they were likely tobuy these items over the Internet.

Interestingly, the barriers to onlinevehicle buying seem to beaddressable. We expected respondentsto voice concern about the inability tointeract face to face or negotiate atrade-in over the Internet, but instead,they cited the inability to test drive avehicle (43%) and the lack of fullprice and product information (36%)as more significant blockers.

Consumers are confident in theirknowledge about green vehicles andare increasingly likely to own fuel-efficient and alternative-fuel cars.More than three-quarters ofrespondents said they are confident orvery confident that they have a clearunderstanding of what “green vehicles”really means. The degree of confidenceis highest in Brazil, where 92% ofconsumers said they understood theenvironmental issues. This is notsurprising given that ethanol andgasoline/ethanol flex-fuel vehicles havebeen popular in Brazil for a number ofyears. Almost one-third of Braziliansindicated that they owned or plannedto buy an ethanol or flex-fuel car, thehighest among all the markets.

Fact Box

Italians see the Internet as a way toeliminate the hassles of the dealershipexperience and as a powerful tool forcomparing cars and services againstone another, and less for actuallygathering information about specificcars.

— Cars Online 2000

“The Internet, with its increasinghousehold penetration worldwide, isexpected to be the most powerfulcommunication channel to supportthe more demanding, better-informedand increasingly segmented[automotive] customers.”1 Thatprediction lay at the heart of the firstedition of Capgemini’s Cars Onlinestudy, published in 1999. Theresearch was launched that year tohelp the automotive industryunderstand the role that the Internetand electronic commerce overallmight play in the way consumersshopped for and bought vehicles.

Since that time, Capgemini hassurveyed almost 42,000 consumersacross 15 countries (Belgium, Brazil,Canada, China, France, Germany, India,Italy, Japan, Netherlands, Russia, Spain,Sweden, United Kingdom and UnitedStates). In addition, 2,500 dealers and300 automotive manufacturers andnational sales companies wereinterviewed over the decade.

While the inaugural research focusedexclusively on the Internet, the studyhas broadened over the years toincorporate additional topics such asbrand and dealer loyalty,environmental issues and customersatisfaction. The one constant,however, has been the examination ofthe growing impact of the web, andthis is the area where Capgeminifound the greatest changes over the10 years of conducting the research.

The first Cars Online report noted that11% of respondents used the Internetto research vehicles and predicted thatthe web was likely to influence 50%of vehicle purchases within five years.

In fact, by our 2005 report, more than60% of car buyers indicated that theyused the Internet as a primary sourceof information during the purchasingprocess. That number climbed to 80%in 2006 and 88% this year.

While consumer use of the web hasjumped dramatically, the key driversbehind this trend have remainedconsistent. Noted the 1999 study:“Customers state that a majoradvantage of the Internet is that itprovides comparable data on the carmarket and that pressure is never puton the consumer on whether or not tobuy.”2 The primary options vehiclebuyers look for on the web today(price and product information)haven’t changed over the past 10years, with those two featuresswapping position but always rankingamong the top three (with vehiclecomparison capability included aswell). At the same time, theentertainment-oriented elements of awebsite such as dynamic graphicshave been rated low on the list ofimportant web options in all years.

The Balance of Power Shifts tothe ConsumerViewed in a vacuum, the evolution ofthe Internet as a research tool is aninteresting phenomenon. However, itis the industry-changing impact ofthis technology that has truly made itworth chronicling over the past 10years.

A decade ago, the balance of power inthe vehicle buying process lay squarelywith dealers and manufacturers. Theyhad the knowledge and informationthat consumers lacked, giving them anupper-hand in negotiations. Today the

In 10 years I would expect to seevehicles that are less polluting anduse cheaper fuels. Cars shouldalso be more durable and havesimpler and cheaper technology.But at the same time, we shouldbe able to have intelligent speedsystems to prevent accidents.

Brazilian consumer

6

10-Year Review: What a Difference aDecade Makes

1 “Cars Online 1999: Empirical Study on the Potential for Automotive Sales and Distribution inElectronic Commerce,” Capgemini.

2 Ibid.

“

”

Fact Box

For the first time in the course of ourCars Online research, the Internet hasbecome the number one informationsource used by consumers whenresearching vehicles, surpassing familyand friends and manufacturer-specificdealers.”

— Cars Online 05/06

Consumer usage of the Internet as a research tool during the vehicle buying process has had a profound

impact on the power dynamics in the automotive industry.


The amount of information availableto consumers on the web continues toincrease with the emergence of onlineconsumer-to-consumer (C2C) toolssuch as blogs, web forums andInternet discussion groups. In thisyear’s study, 42% of respondentsindicated that they use automotiveblogs when researching informationduring the vehicle shopping process;45% use discussion groups or forums;and 37% use information/encyclopedia sites with user-generatedcontent such as Wikipedia.Consumers are relying on these newtools to obtain supporting informationand a more objective viewpoint, all ofwhich will accompany them whenthey visit the dealer showroom – or,increasingly, when they look to theweb – to make a vehicle purchase.

although it typically remains higherthan dealer loyalty. In 2005, forexample, 62% of U.S. consumers saidthey were likely to buy the same makeas their current vehicle, comparedwith 55% this year.

Continued evidence of the shift in thepower dynamic was recorded insubsequent years of our research.“The resulting pricing transparencyfrom Internet-driven information hasaccentuated the ‘buyer’s market’environment and shifted some of thenegotiation power to the consumer. Intoday’s environment, when a buyerarrives at the dealership he or sheoften knows what type of vehicle heor she wants, where he or she can getthe vehicle and how much the vehiclewill cost,” noted the 2002 edition ofCars Online.4

power balance has shifted dramatically,with many consumers one step aheadof dealerships and automotivecompanies.

Early signs of this changing dynamicwere noted in the 1999 edition of CarsOnline: “The consumer can enjoyunbiased online information gatheringand purchasing, which leads to a shiftin bargaining power that comes in stepwith a more transparent andcompetitive market. Empowered bythe web, the automotive customer isbetter informed, diversified, heavilyfocusing on independent informationand test reports and less brand loyal.”3

The truth of that prediction isapparent in customer loyalty data,which shows that in most matureautomotive markets, brand loyalty hasbeen slowly declining in recent years,

Cars Online 08/09 7

The Internet’s Rise as a Research Tool(% of consumers saying they use the Internet as an information source during thevehicle buying process)

80%

60%

40%

20%

0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

3 Ibid.. 4 “Cars Online 2002: The Adaptive Automotive Enterprise Study,” Capgemini.

Source: Capgemini

Fact Box

The Japanese stand out for theirenthusiasm for the Internet: 93% ofJapanese consumers had visited anOEM website.


Brazil: Vehicle Buyers KnowGreenIn many respects, Brazil is the mostsophisticated of the developingautomotive markets. Adoption rates ofthe Internet and mobile phones aregrowing rapidly, particularly in urbanareas, leading to increased interest inonline buying. This trend wasreflected in our research, with 87% ofrespondents from Brazil saying theywere likely or very likely to buy a carover the Internet if the capability wereavailable, the highest among allcountries. The same number indicatedthey would like to purchase parts andaccessories online.

The interest in buying cars over theInternet may stem from the fact that adecade ago Brazilians were offered taxbreaks when they bought a vehicleonline. And certain cars were onlyavailable over the Internet. Those taxbreaks no longer exist, but the priorexperience may make consumersmore comfortable with buying avehicle fully online.

Brazilians who use the Internet say itcan have a significant impact on theirbuying decisions. More than nine outof 10 said that having the right webfeatures would make them more likelyto purchase a car from that company.And, conversely, a similar numberindicated that not having the rightwebsite options would make themless likely to buy from that company.

Brazilian consumers are particularlyfocused on fuel-efficient and alternative-fuel vehicles, due primarily to the factthat ethanol has enjoyed widespreadusage in the country for many years.Today, flex-fuel vehicles, which can useany combination of ethanol andgasoline or each of these fuels alone,

8

Emerging Markets: The Key to FutureGrowth

There will be no car dealers in 10years. Sitting at my computer, I willdirectly order a vehicle from themaker, making design changes tomy future vehicle. It will be put onthe assembly line and I will have aunique vehicle. Funny, maybe …but we can buy furniture that waytoday so why not cars in 10 years?

Russian consumer

“

”

Despite some similarities, it’s clear that complex and diverse consumer purchase patterns existfrom one emerging market to another.

Since 2004 Capgemini has includedChina among the countries studied inour annual Cars Online report. Thatresearch has offered a glimpse of howthis dynamic and growing automotivemarket is evolving, identifieddifferences in buying behaviorcompared with mature markets, andoffered evidence of the convergencethat is beginning to take place asChinese consumers become morefamiliar with buying cars.

To provide a more complete picture ofthe markets that may hold the key tothe automotive industry’s futuregrowth, Brazil, Russia and India wereadded to this year’s research. Thefindings demonstrate that there aresimilarities among all four developingmarkets. For example, in somerespects consumers in these marketsdemonstrate less sophisticated buyingbehavior than those in westerncountries. They put much greateremphasis than do western consumerson all the decision criteria whenchoosing a vehicle, which is notsurprising given the fact that many arefirst-time car buyers.

At the same time, they are alsoextremely technology enabled,indicating the potential to leapfrogestablished practices in westernmarkets in a short time. For instance,respondents in all four developingeconomies show strong interest inbuying vehicles over the Internet andheavy use of blogs and web forums.

Despite these similarities, it’s clear thatcomplex and diverse consumerpurchase patterns exist from oneemerging market to another. Thefollowing are snapshots of the vehiclebuying trends in each of these fourmarkets.


sport utility vehicles (SUVs). In thisyear’s research, 21% of respondents inRussia said they expect to purchase anSUV, compared with the overallaverage of just 8%. In addition,Russian respondents, like those inwestern countries, are less interestedin factors such as low financing and

emerging markets. The used carmarket is expected to remain strong inRussia due to the continued influx ofused Japanese and German cars.

Similar to U.S. vehicle buyers, Russianconsumers are more likely than thosein other emerging markets to buy

Cars Online 08/09 9

account for nearly 90% of all new carssold in Brazil.5 Sales of flex-fuel cars inBrazil are predicted to grow at anannual rate of 15.67% from 2007 to2010.6

The focus on green vehicles isreflected in our Cars Online research,with 59% of Brazilian consumersindicating that they currently own afuel-efficient or alternative-fuelvehicle, the highest among all themarkets studied. Almost one-third ofthe respondents from Brazil said thosevehicles were fueled by ethanol or agasoline/ethanol combination, againthe highest among the countries. Inother markets, gas/electric hybrids ornatural gas vehicles and naturalgas/gas hybrids were more popular.

In addition, 95% of Brazilianrespondents identified alternative-fuelvehicles as an important or veryimportant factor in their choice ofvehicle, compared with the overallaverage of 63%. Brazilian consumersalso demonstrate great confidence intheir understanding of what greenreally means and are more willingthan others to pay extra for a fuel-efficient or alternative-fuel vehicle:One-quarter said they would pay apremium of more than 10%.

Russia: Western PurchasePatterns EmergeOur Cars Online research found thatin many respects Russian vehiclebuying patterns resemble those inwestern markets. For instance, despitethe growth of new car sales in Russia,the country still has a significant usedcar market, similar to the U.S. andWestern Europe: 21% of Russianrespondents said they were likely tobuy a used vehicle, the highest of the

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TOTAL U.S. Western BrazilEurope

Thinking seriously about buying analternative-fuel vehicle

Thinking seriously about buying a fuel-efficient vehicle

Planning to buy an alternative-fuel vehicle

Planning to buy a fuel-efficient vehicle

Currently own an alternative-fuel vehicle

Currently own a fuel-efficient vehicle

100%

80%

60%

40%

20%

0%

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TOTAL U.S. WesternEurope

Russia Brazil India China

Undecided

Used

New

100%

80%

60%

40%

20%

0%

5 “Brazil Flex-Fuel Cars Help Tame Gasoline Prices,” Planet Ark, www.planetark.org, March 17, 2008.6 “Brazil Automobile Industry Till 2010,” RNCOS, January 2008.

Source: Capgemini

Russia: Intention to Acquire New vs. Used Vehicle(% of consumers saying)

Source: Capgemini

Brazil: High Ownership of ‘Green’ Vehicles (% of consumers saying)

for customer interaction and buying.This is evident in the fact that morethan two-thirds of Indian respondentssaid they were likely to buy a caronline, second only to Brazil amongthe countries studied in our CarsOnline research. A similar number alsosaid they would like to buy parts andaccessories online.

Indian consumers are heavy users ofnew online tools: 56% use blogs whenresearching vehicles, 55% use webforums and 52% use video-sharingsites, the highest rates among all themarkets. They are also more likelythan their counterparts to useWikipedia-type sites and RSS feeds.

Despite the growing importance of theInternet in India, consumers also relyon other types of information sourceswhen researching vehicles: 44% ofIndian respondents said they use TVadvertising, compared with the overallaverage of 23%; and 39% use autoshows against the average of 22%.

cash-back incentives when it comes totheir vehicle purchase decisions. Andthey also tend to be less satisfied withthe overall vehicle buying process,focusing in particular on thecomplexity involved in buying a car inRussia.

Growing Internet penetration inRussia has led to above-average usageof information sources such asmanufacturer websites, search engines,information sites and online news sites.Our research also found extensive useof C2C web tools: 45% of Russianrespondents use automotive blogswhen researching a vehicle purchase,49% use Wikipedia-type sites, and64% use web forums, the highestamong all the countries studied.

India: Tech-Savvy ConsumersTurn to Online ToolsThe growing number of affluent andeducated Indians is driving increasedutilization of the Internet and mobiledevices, which is expected to lead toexpanded use of electronic channels

10

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Automotive weblog

Automotive dis cus s iongroup/forum

Online video s ite/video-s haring s ervice

Informational/encyclopedias ite with user-generated

content

RSS feeds

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0% 20% 40% 60%

India

Total��

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Source: CapgeminiNote: multiple responses allowed

Fact Box

The Dutch see the Internet primarily asan educational tool that they can use toenhance their bargaining power withinthe showroom. Though the Dutch havea strong preference for dealershipbuying, this trend is driven primarily bytheir desire to see cars first-hand andconfirm quality, not by the value theyplace upon personalized service.


India: Above-Average Use of New Online Tools(% consumers saying)


A similar shift is apparent in dealerloyalty. Half of Chinese consumerssaid they were likely to buy a vehiclefrom the same dealer where theymade their previous purchase, upfrom 18% in 2004 and closer to thedealer loyalty levels found in the U.S.and Western Europe.

Chinese consumers are particularlydemanding when it comes to the speedat which they expect to receive aresponse from a dealer or manufacturer.Two-thirds expect a reply to a web ore-mail inquiry within four hours, thehighest among the countries. Incontrast, consumers in the U.S. andWestern Europe were more willing towait 24 hours for a response.

While China is still a developingautomotive market, there is growingevidence of a gradual shift in somebuying patterns toward those morelikely to be found in mature markets.Take brand loyalty, for example. In2004, just 9% of Chinese respondentssaid they were likely to buy the samemake as their current vehicle, notsurprising given their lack ofexperience in owning a car. This yearthat number stands at 48%, muchcloser to the brand loyalty levelsfound in western markets.

Cars Online 08/09 11

The Indian automotive market isdominated by small cars, so it’s notsurprising that 39% of Indianrespondents said they own a fuel-efficient vehicle, which is 10percentage points higher than theaverage for all consumers. Another35% are planning to buy or thinkingseriously about buying such a car.They also indicate a willingness to payextra for a fuel-efficient vehicle,although most won’t pay more than a10% premium.

China: High-Growth Market,Demanding ConsumersChinese consumers are increasinglytechnology savvy, as they begin to relymore on the Internet as a keyinformation source, including C2Ctools. In fact, 70% of Chineserespondents said they use automotiveblogs during the vehicle researchprocess, the highest among all thecountries studied. Chinese consumersare also showing increasing interest inonline vehicle buying. This year, 37% ofrespondents from China said they werelikely to buy a car over the Internet, upfrom just 5% the prior year.

Despite the growth of the Internet inChina, consumers favor the telephonefor many types of communicationwith dealers and manufacturers,particularly surveys and servicereminders. About half of Chineserespondents said they want to receivepost-sale, post-test drive and post-service surveys by phone, comparedwith the average for all consumers ofabout 25%. The phone was preferredfor service reminders by more thanhalf of Chinese consumers, comparedwith the average of 26%. Chineserespondents were far less likely thantheir counterparts in other markets towant to receive these forms ofcommunication via e-mail.

China: Consumers Demand a Quick Response(% consumers saying)

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ChinaWesternEurope

U.S.TOTAL

Don't know

More than 48 hours

24-48 hours

<24 hours

1 - 4 hours

<1 hour

Immediately

100%

80%

60%

40%

20%

0%

Source: Capgemini

Fact Box

In Spain (70% of respondents), Sweden(55%) and France (49%) car buyers aremore attracted by the possibility of non-stop 24-hour information over theInternet than those in other countries.


Most consumers today do a significantamount of research, using a wide rangeof information sources, prior to buyinga car. While the Internet is the mainsource relied on by respondents in allcountries studied, diverse patternsemerge by country. Distinctions areparticularly pronounced whencomparing mature and emergingmarkets. Understanding thesedifferences is essential in order todetermine the most effectiveadvertising/marketing mix for eachmarket.

Consumers in the U.S. and WesternEurope are heavier users ofmanufacturer and dealer sites, searchengines and information websites.Dealers sites, for example, are used by44% of respondents in the developedmarkets and by 23% in the emerging

12

Vehicle Research: Market MaturityImpacts Behavior Patterns

I anticipate a more ‘virtual’experience when buying a car;computer simulations, projectionsof the car in our living rooms, etc.

U.S. consumer

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Financial services brokerRadio news

Website banner adsRadio advertising

Non-specialist motoring/automotive pressTV news

Web forums, blogs or Internet discussion groupsIndependent e-tailer sites

TV advertisingAuto shows

Print advertisingInternet news sites

Used car dealerSpecialist motoring/automotive press

Manufacturer-specific franchise dealer Independent car valuation services

Information websitesFamily and friends

Search engineManufacturer Internet sites

Dealer websites

Mature markets

Emerging markets

0% 20% 40% 60%

Source: Capgemini

Expected Use of Information Sources – Mature vs. Emerging Markets(% consumers saying)

“

”

Fact Box

Only 18% of consumers said TVadvertising was likely to be influentialwhen choosing a vehicle. In contrast,76% of dealers and 57% of OEMsbelieved that TV advertising wouldinfluence consumers’ buying decisions.


The vehicle research process varies considerably between mature markets and developing markets andeven from one emerging country to another. The bottom line: Know your markets as not all car shoppersare created equal.

countries. Search engines are used by39% of consumers in the U.S. andWestern Europe, but by just 24% ofthose in the developing markets.

In contrast, consumers in the lessmature markets are likely to rely moreheavily on sources such as family andfriends, the automotive press, autoshows and TV advertising. Forexample, 27% of consumers from thedeveloping nations said they woulduse TV advertising during the researchprocess, compared with just 13% ofrespondents from the U.S. andWestern Europe.

Interestingly, while the use of mosttypes of websites is lower in emergingmarkets than in mature markets,respondents from the developingcountries showed a higher usage ratefor web forums, blogs and discussiongroups.


markets, which is not surprising givenconsumers’ lack of experience inbuying cars. This trend has beenapparent in China since we beganincluding that country in ourresearch, and is also evident in Indiaand is particularly pronounced inBrazil.

Again Russia looks more like thewestern markets, particularly the U.S.,where there is less emphasis placed onshort-term factors such as lowfinancing and additional warranty. InRussia, 61% of consumers said 0% orlow financing was an importantdecision criterion, the same numberas in the U.S., but lower than theaverage of 73% for the emergingmarkets as a whole.

In general, consumers in developingmarkets placed much moreimportance on aftersales service,additional warranty coverage,hybrid/alternative-fuel cars and lowemissions than did those in maturemarkets.

Consumers in China rely more heavilyon family and friends andmanufacturer-specific dealers than dothose in the other emerging markets.Almost two-thirds of Chineserespondents turn to family andfriends, compared with the averagefor all emerging markets of 42%.

Key Factors in Vehicle ChoiceThe volatile state of gasoline pricestoday was reflected in the fact that fueleconomy jumped in importance as adecision criterion for consumers whenchoosing a car. In this year’s study90% of respondents said it was animportant or very important factor intheir choice of vehicle, up from 83%last year. That puts it on par withsafety and reliability, the perennialleaders among decision criteria. In pastyears, fuel economy tended to lagbehind these factors in importance.

Interestingly, the four most importantconsiderations – reliability, safety, fueleconomy and price – are consistent inboth developing and mature markets.Beyond that, however, there are somesignificant differences. For example,all factors matter more in emerging


But that doesn’t tell the whole story.The patterns vary significantly fromone emerging country to another. Forexample, Russia again more closelyresembles the western countries, withhigher usage of dealer andmanufacturer sites and search enginesand less reliance on TV advertising.More than half of Russian respondentssaid they would use OEM websites asan information source, compared withan average among the emergingmarkets of 24%. By comparison,Brazilians were much less likely torely on manufacturer and dealer sites.In fact, the use of all types ofinformation sources among Brazilianconsumers tended to be belowaverage.

Usage of dealer and OEM sites byIndian consumers was somewhatabove the average for all emergingmarkets. Respondents in India werealso more likely to rely on family andfriends, TV advertising and autoshows: 44% of Indian respondentssaid they would turn to TVadvertising as an information source,compared with the average of 27% forall the emerging countries.

Coupons/options for third-party providers

Cash-back incentive

Hybrid or other alternative-fuel cars

Additional warranty coverage or service credit

0% or low financing

Product features/options

Ability to research information on the Internet

Low emissions

Aftersales service

Vehicle availabil ity

Extra options at no cost

Brand name of vehicle

Quality of interior styling

Price of vehicle

Fuel economy

Safety

Reliabil ity of brand

63

67

70

79

73

81

74

81

86

80

73

82

84

89

90

93

92

41

43

48

51

58

64

65

67

67

68

70

70

70

90

90

91

94

0% 100%80%60%40%20%

Mature markets

Emerging markets

Source: Capgemini

Importance of Factors in Consumers’ Choice of Vehicle — Mature vs. Emerging Markets(% consumers saying “important/very important”)

Volatile fuel prices and shifting vehiclepreferences have pushed green issuesinto the spotlight. Increasingly, fuelefficiency and environmentalconsiderations are impacting consumerbuying decisions and are alsobecoming important elements inautomotive companies’ growthstrategies.

The focus on green issues led us todelve more deeply into consumerbehavior regarding fuel-efficient andalternative-fuel vehicles. Early interestin hybrid cars was apparent in our2003 edition of Cars Online, whennearly one-third of consumers said itwas an important factor in their choiceof vehicle.7 In this year’s report,almost half of respondents in westernmarkets said hybrid/alternative-fuelcars was an important consideration intheir choice of vehicle. The numberjumped to 70% among consumers inemerging markets, driven by Brazil,where it was the number three factornamed by respondents, and India,where 80% of consumers considered ita key decision criterion.

Once again, Russia stood out as moreclosely resembling the westernmarkets. Only 36% of Russianrespondents named hybrid/alternative-fuel vehicles as an important factor intheir choice of vehicle. In WesternEurope the number was 46% and inthe U.S. it was 50%.

Do Consumers UnderstandWhat Green Means?Given the current emphasis on fuelefficiency and alternative-fuel vehicles,we wanted to gauge the confidencelevel consumers had in theirunderstanding of what green reallymeans. More than three-quarters ofconsumers said they were confidentor very confident that they had a clearunderstanding about green vehicles.

The overall number was heavilyinfluenced by the higher degree ofconfidence exhibited by consumers inIndia, China and especially Brazil. It’snot surprising that Brazilians are morecomfortable with green issues giventhe country’s history with ethanol-powered cars. The confidence levelsdrop in Russia and the westerncountries. In the U.S., for example,60% of consumers said they wereconfident in their green vehicleknowledge, compared with 92% inBrazil.

For most consumers, the web is theprimary source for information aboutgreen vehicles: 44% said they useinformation websites (such as third-party reviews of vehicles), 40% usemanufacturer sites, 30% use dealerwebsites and 22% turn to blogs andweb forums. Other key sources forthis kind of information includedealers, family and friends and theautomotive press.

Many consumers questioned howmuch they should trust green-focusedadvertising and marketing. Otherssuggested that consumers need to takea more holistic view of what trulymakes a vehicle green. One consumerfrom the UK summed up the

14

Going Green: Emerging Markets Focuson Fuel Efficiency

I would like to buy a car that runson a rechargeable battery (likemobile phones) and can berecharged by solar energy. Suchan eco-friendly car may cost morebut it will be economical in thelong run.

Indian consumer

7 “Cars Online 2003: Unlocking Hidden Value,” Capgemini.

“

”

Consumers are increasingly focused on fuel-efficient and alternative-fuel vehicles when making carbuying decisions, especially in developing markets.


sentiment expressed by many othersthroughout the eight markets: “Theassessment of a car company’s greencredentials must be based on thewhole life of the car, includingmanufacture and disposal, not justemissions and miles per gallon.”

We also asked consumers to tell ushow they define fuel efficiency.Overall, more than half said thevehicle must get more than 15 km perliter (more than 35 miles per gallon)to be considered fuel efficient.However, the responses varied bycountry. For example, U.S. consumershad lower expectations regarding fuelefficiency, while those in WesternEurope and Russia had the highestexpectations.

Ownership of Green VehiclesGrowsThis year 36% of consumers said theycurrently own either a fuel-efficient oralternative-fuel vehicle, up from 28%last year. Most of that increase is dueto the inclusion of Brazil in this year’sstudy: 59% of Brazilians own a fuel-efficient or alternative-fuel vehicle.The numbers were also higher thanaverage in India and China, comparedwith Russia and the westerncountries. About half of consumersoverall said they were planning to buyor thinking seriously about buyingeither a fuel-efficient or alternative-fuel car.

Fuel economy is the primary reasondriving these buying decisions: 66%of consumers identified fuel economyas the main reason they own, plan tobuy or are thinking seriously aboutbuying a fuel-efficient or alternative-fuel car. That’s up from 57% last year,


Consumers Show Confidence in Green Vehicle Knowledge(% consumers saying)

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Russia Brazil India China

5 (Very confident)4321 (Not at all confident)

100%

80%

60%

40%

20%

0%

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Other

CostTax credit

Impact on the environment

Fuel economy

100%

80%

60%

40%

20%

0%Russia Brazil India China

Europe

Source: Capgemini

Source: Capgemini

Primary Reason Behind Green Vehicle Decisions(% consumers saying)

Base: Those who own/are interested in/thinking seriously about buying a fuel-efficient or alternative-fuel vehicle

no doubt due to the volatility in gasprices. Concern about the impact onthe environment ran a distant second.

Gas/electric hybrids are the primarytype of alternative-fuel vehicle thatconsumers currently own or plan tobuy, particularly in the U.S. andWestern Europe. The emergingmarkets are more focused on naturalgas or natural gas/gas hybrids, exceptin Brazil, where ethanol or flex-fuelvehicles top the list.

The Cost of Going GreenConsumers show some willingness toput their money where their mouth iswhen it comes to fuel efficiency.Nearly three-quarters of respondentssaid they were willing to pay a higherprice for a fuel-efficient vehicle and80% said they would pay extra for an

alternative-fuel car. However, mostwere unwilling to pay a premium ofmore than 10%, and the majority ofChinese were only willing to pay 5%extra. This is consistent with similarresearch Capgemini has conducted inthe retail and consumer goodsindustry where consumers werewilling to pay only a small premiumfor products that offered sustainabilityaspects.8

Whether consumers’ behaviormatches their stated intentionsremains to be seen as an increasingnumber of small fuel-efficient andalternative-fuel cars make their way tothe market.

16

3339 35

2819

26

52

3 3 3 3 82

47 5556

5654

54

12 8 1322 12

4 3

114

42

More than 15% extra

11%-15% extra

6%-10% extra

1%-5% extra

RussiaWesternEurope

U.S. anihCaidnIlizarBLATOT

100%

80%

60%

40%

20%

0%

8 “Future Consumer: How Shopper Needs and Behaviour Will Impact Tomorrow’s Value Chain,” Capgemini, 2007.

Source: CapgeminiBase: Consumers who are willing to pay a higher price for a fuel-efficient vehicle

Fact Box

Two topics that the industry shouldkeep on its radar screen are on-boardnavigation and hybrid cars, which werenamed as important factors by roughlyone-third of consumers. Yet, bothdealers and OEMs significantlyunderestimated their importance.


How Much Extra Will Consumers Pay for Fuel Efficiency?(% consumers saying)


India were more interested than thosein other markets in findinginformation online about the latestpromotion from a dealer ormanufacturer. And emerging markets,except Russia, were also more likely towant to communicate online with thedealer or manufacturer, especially tohelp solve problems and buyaccessories. In contrast, consumers inwestern markets were much moreinterested in cost calculators andvehicle comparators than respondentsin emerging markets, except Russia.For instance, 20% of those in the U.S.and 19% in Western Europe placeimportance on cost calculators,compared with just 7% in Brazil and12% in China.

Across all countries, content-relatedfeatures such as product and priceinformation continue to be the mostimportant options consumers look foron the web, followed by customerservice-related features like the ability tocompare and configure vehicles.Communication-related options aregrowing in importance, including theability to get guidance and advice overthe web and to communicate with thedealer online. Least important arepresentation-related features such aszippy graphics. The exception is easy sitenavigation, which ranks around themiddle of the list of website features thatconsumers said are most important.

Differences emerge, however,depending on the country. Forexample, consumers in Brazil and


Web Usage: Interest in Online VehicleBuying Jumps

Most Important Website Options(% online consumers saying)

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* Price includes transaction price, retail list price and dealer invoice price

5%0% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55%

Price information*Full range of product informationTransaction price available online

Ability to compare vehiclesRetail list price available online

Full vehicle configuratorCost calculator

Ability to get guidance and adviceAbility to communicate with dealer/manufacturer online

Dealer invoice price available onlineEasy site navigation

Ability to contact dealer sales staffAbility to have open dialogue with other consumers/owners

Online information on latest promotion3-D product presentation

Website in native languageAbility to get a quoteTrade-in information

Ability to locate a car anywhereAbility to schedule test drive

One-step or partial configuratorZippy graphics

Owners’ club or bonus programAbility to check dealer inventory or central stock in Europe

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I think the whole car buyingprocess – everything – will bedone on the Internet from start tofinish.

French consumer

Source: CapgeminiBase: All consumers who use the InternetNote: Multiple responses allowed

“

”

Frustration with the dealer negotiation process and consumers’ increasing web sophistication are drivingthe growing interest in buying cars over the Internet.

The presence or lack of importantweb options can impact consumerbuying decisions. More than three-quarters of respondents said thathaving the features that matter tothem would make them more likely topurchase a vehicle from that company.Conversely, more than half said that ifthe features they care about are notavailable they would be less likely tobuy from that company. This patternis consistent across all markets,although it is particularly pronouncedin Brazil.

Growing Interest in OnlineVehicle BuyingIn the early years of the Cars Onlinestudy, the number of consumersinterested in buying a vehicle over theInternet was low: just 1% in 2000 and

2% in 2001. The 2000 report notedthat: “The Internet remains, primarily,an information/research medium [forcar buyers] and is not an importantpurchasing point.”9

These low numbers led us to stopasking the question until last year,when we reintroduced it to the surveyto gauge whether consumer sentimenthad changed. In fact, it had. In 2007,20% of consumers were looking to theweb as a channel to purchase vehicles,and this year the number jumped to44%, driven by significant interestfrom consumers in Brazil, India andChina. In Brazil, for example, 87% ofrespondents said they were likely orvery likely to buy a car over theInternet if the capability were available.In India, the number was 68%.

18

Likelihood to Purchase Vehicle Over the Internet(% online consumers saying)

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4

3

2

1 (Not at all likely)

RussiaWesternEurope

U.S.TOTAL Brazil India China

100%

80%

60%

40%

20%

0%

9 “Cars Online 2000: Global Consumer Survey,” Capgemini.

Source: Capgemini

Fact Box

The main motivator to use the Internetis price transparency: general priceinformation (named by 61% ofrespondents), finding the dealer with thebest price (57%), access toindependent used-car price lists (55%)and information about the trade-in pricefor the used car.



addressed: by bringing a vehicle to aconsumer for a test drive and byincreasing the product and priceinformation available online.

A few differences between mature anddeveloping markets were apparent.For example, consumers in maturemarkets were more concerned aboutthe inability to test drive a vehicle,while those in emerging countrieswere more focused on the inability toget full product and price information.

New Online Tools Popular inEmerging MarketsThis year’s research showed a noticeablejump in consumer use of new onlineconsumer-to-consumer tools such asautomotive blogs, web forums andinformational/encyclopedia sites withuser-generated content. For example,45% of consumers said they use webforums, up from 37% last year.

The increase was fueled largely byconsumers in Russia, China and, inparticular, India, who are turning tothese new tools in a big way. Abouthalf of respondents from the emergingmarkets said they use blogs,compared with 25% of consumers in

Conclusion and Recommendations.”)Some consumers in this year’s studyestimated that 80% to 90% of all vehiclepurchases will be conducted over theInternet 10 years from now.

It’s too early to tell whether consumers’expressed desire to buy cars over theInternet translates into their actualbehavior. Nevertheless, this trendrepresents potentially hundreds ofthousands of vehicles and points tothe importance of implementing afully integrated multichannel strategythat ensures a consistent consumerexperience across all channels.

Barriers to Online BuyingWhat would stop consumers frombuying a car over the Internet?Interestingly, the barriers seem to beaddressable. We expected respondentsto voice concern about the inability tointeract face to face or negotiate atrade-in over the Internet, but thatwas not the case. Instead, they saidthe inability to test drive a vehicle(named by 43% of consumers) andthe lack of full price and productinformation (cited by 36% ofconsumers) were more significantblockers. Clearly, both can be

Consumers were equally interested inpurchasing vehicle parts andaccessories online. More than half saidthey would be likely to buy theseitems over the Internet. The researchindicates a particularly strong latentdemand for this service amongconsumers in Russia, Brazil and India.

The growing interest in online vehiclebuying stems from frustration withthe dealer negotiation process,consumers’ increasing websophistication and their greatercomfort level with making onlinepurchases. Said one U.S. consumer:“I’ve purchased my last two newvehicles online using an independentsite, having the vehicle prepared anddelivered to me at a local dealership. Ienjoyed the process much morewithout the participation of the pushysalesman. I always feel screwed by thedealer, but I feel great after purchasinga new car online at a specifiedpercentage over invoice.”

In fact, online buying is viewed as theleading change consumers expect to see inthe vehicle buying process over the comingdecade. (For more on respondents’ view ofthe future, see “The Next 10 Years:


��0% 10% 20% 30% 40% 50%

Inability to test drive vehicle before making final decisionInability to receive full product/price information

Inability to see photos/video of the vehicle inside and out

Inability to negotiate pricing onlineInability to receive a report detailing the vehicle's history

Inability to match a vehicle to my exact specifications

Inability to conduct final negotation online

Inability to negotiate trade-in of old vehicle online

Inability to contact and interact with a representative online or by phone

Inability to apply for financing and conduct financing approval process online

Inability to have vehicle delivered to your home

Source: CapgeminiNote: Multiple responses allowed

Barriers to Online Vehicle Buying(% consumers saying)

20

Use of New Online Tools for Researching Vehicles Grows(% online consumers saying)

10

17

23

30

37

15

32

37

42

45

2008

2007

Automotive discussiongroup/forum

Automotive weblog

Informational/encyclopediasite with user-generated content

Online video site/video-sharing service

RSS feeds

0% 20% 40% 60%

Reasons For Using New Online Tools(% consumers saying)

Opinions/reviews about specific car brands/makes

Discussions with automotive experts

Discussions with other consumers

News about new vehicles

Information about vehicle recalls

Helpful hints

Opinions/reviews about specific car dealers

Discussions about a specific automotive topic

Personal stories

Information about automotive events/auto shows

Other car images/videos

Spy photos/videos

��0% 20% 40% 60%

Source: CapgeminiBase: Those who use new online tools to research vehiclesNote: Multiple responses allowed

Source: CapgeminiBase: Those who use the Internet to research vehiclesNote: Multiple responses allowed

Fact Box

Twenty percent of consumers said theywere likely or very likely to buy a vehicleover the Internet. In 2001, only 2% ofconsumers were looking to the web asa channel to purchase vehicles.



Keeping a close watch on these newtools is critical, as these sites have thepotential to impact buying decisions.Almost three-quarters of consumerssaid they would be more likely topurchase a vehicle from a particularmanufacturer or dealer if they foundpositive comments on blogs andforums. This was consistent across allcountries, although particularlypronounced in the emerging markets.Sixty percent of respondents said theywould be less likely to buy if theyfound negative comments on blogsand forums.

the western countries. And half ofthose in the developing markets usediscussion groups/forums, comparedwith one-third in the mature markets.Overall usage of these tools in theU.S. remained fairly constant thisyear, while small increases wereapparent in Western Europe.

The use of C2C tools is driven largelyby a desire on the part of consumersfor more objective opinions andreviews about specific car brands.Additionally, users are looking toengage in a two-way dialogue withautomotive experts and otherconsumers rather than just listening toothers offer their opinions. Other keyfactors include news about newvehicles and information aboutvehicle recalls.

As consumers search for sources ofobjective information about vehiclemakes and dealers, new types of sitesare emerging that focus on aggregatingand streamlining the information-gathering process. Take vLane.com,for example. The U.S.-based siteaggregates automotive informationfrom many sources, particularlyconsumers, in one place. The siteallows users to select parameters suchas the type of vehicle they areinterested in, the amount they want tospend and fuel economy and makecomparisons among different vehicles.Other consumers and owners providereviews and user ratings.

“The site should help consumers makemore informed decisions by helpingthem leverage the information andpeople in their own network andbeyond,” says Herman Paek, founderof vLane. “Every discussion contributesto the total body of automotiveknowledge contained on the site.”


In recent years automotive companieshave focused significant attention andresources on achieving cost reductionand operational efficiency. But torealize real growth those efforts mustbe matched by an emphasis oncustomer intimacy and customer care.Companies must interact intelligentlyand consistently with the vehiclebuyer at all possible touchpoints – onthe web, through call centers, in thedealer showroom.

This requires a greater focus onintegrated lead management,improved consumer segmentation andtargeted customer communicationwith a goal of building loyalty. Thistype of approach extends beyond thepurview of traditional CustomerRelationship Management (CRM) andrequires customer relevancy, processexcellence and a more holistic viewacross the entire vehicle lifecycle.

Lead Management: Speed Is ofthe EssenceIncreasingly, the initial – and oftenmost important – point of interactionwith customers occurs on the webduring the research process. Over theyears, our Cars Online research hashighlighted the importance of reactingquickly to online requests fromvehicle shoppers – and this year is noexception.

Almost half of respondents said theyexpect a dealer or manufacturer torespond to an e-mail or web inquirywithin four hours, up from 39% lastyear. Consumers in emerging marketsare the most demanding: 30% ofChinese respondents expect aresponse immediately and two-thirdssaid within four hours. More than halfof respondents from Russia and Brazilexpect a reply within four hours.

I would like to be able to puttogether my new car online andsend this configuration to a largenetwork of dealerships, who wouldthen make offers from their end.

German consumer

22

Customer Interaction: A HolisticApproach to Building Loyalty

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RussiaWesternEurope


100%

80%

60%

40%

20%

0%

1 1 1 1

Required Speed of Response From Dealer/Manufacturer to Consumer Query(% consumers saying)

Source: Capgemini

“

”

If automotive companies hope to reverse the trend in declining loyalty they need to increase their speedof response, improve their segmentation approach and target communications using consumers’preferred channels.


The challenge for automotivecompanies is implementing asegmentation program that identifies aconsumer’s position in the buyingprocess. It’s a challenge worthaddressing, however, as the price ofnot responding fast enough is high:75% of all consumers said they wouldswitch dealer, manufacturer or both ifa company took too long to respondto their query. Again, the closer avehicle buyer is to the sale the morelikely they are to switch.

Brazilians were the most fickle. Thismay be due to the fact that dealersthere are more apt to be single-brandfranchisees so consumers may viewthe dealer and OEM as one and thesame. Respondents in the westernmarkets and Russia were also highlylikely to walk away if they weredissatisfied with the response time.Consumers in India were the mostforgiving.

Communication Channels: TheImportance of Staying in TouchConsumers in all countriesemphasized the importance of post-sale communication. “I would like tosee friendly service after the sale of thevehicle, instead of salespeople justgetting the commission, and thenforgetting the customer,” said a U.S.respondent.

A key to successful consumerinteraction is understanding howconsumers want to be communicatedwith at different points throughout thevehicle lifecycle. R. L. Polk’s studyfound that 70% of respondents whopurchased from the responding dealerwere contacted in their preferredcommunication method.11

Understanding what constitutes anacceptable response time for anindividual consumer is a key elementof effective lead segmentation, notesR. L. Polk. In a recent study onInternet lead marketing, the companyfound that “Identifying the responsetime expectations when the lead issubmitted may help to prioritizewhich leads to follow up on first.”10

Response time is particularly criticalas consumers get closer to the point ofpurchase. Among consumers planningto buy a car within three months,60% expected a response within fourhours, compared with 44% of thosenot planning to purchase until 13 to18 months. This pattern was repeatedin all the countries studied, with themost pronounced jump occurring inBrazil, where 82% of respondentswho planned to purchase within threemonths said they expect a reply infour hours.


Behavior if Dealer/Manufacturer Took too Long to Respond (% consumers saying)

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Don't know/Other

Call the manufacturer

Call the dealer

Look for neither

Look for both

Look for another manufacturer

Look for another dealer

RussiaWesternEurope


100%

80%

60%

40%

20%

0%

Source: Capgemini

10 “Consumer Expectations for Internet Lead Marketing,” R. L. Polk & Co., 2008.11 Ibid.

Fact Box

Sixty-one percent of Chineserespondents expect to receive aresponse immediately or within onehour when they submit an inquiry to amanufacturer or dealer via e-mail or thecompany’s website.


It’s clear from our Cars Online researchthat preferred channels vary dependingon the type of communication and onthe country. Overall, consumers prefere-mail for many forms of communication,especially newsletters, surveys andinvitations. However, many like toreceive materials such as brochures andwelcome packs by postal mail, butwant to be contacted by phone afterlodging a complaint. A growingnumber prefer to receive servicereminders via SMS/text messages.

Country differences were quitewidespread. For example, consumersin the western markets and Chinaprefer the post for brochures, but asubstantial number of respondents inRussia, Brazil and India want toreceive these materials by e-mail.Consumers in all markets exceptChina strongly prefer e-mail fornewsletters; in China, respondentsprefer to receive newsletters via postalmail. For a number of other materials,such as surveys, invitations andpersonalized repurchase offers,Chinese consumers said they prefercommunication by phone.

Brand Loyalty Slowly DeclinesEffective lead management, segmentationand channel communication can beweapons in the battle to halt erodingcustomer loyalty. Brand loyalty has been

24

27

24

31

15

15

15

46

15

26

45

41

46

28

51

43

51

32

52

55

38

9

10

8

9

16

7

7

7

5

5

23

20

33

25

26

27

15

26

14

12

0% 20% 40% 60% 80%

Personalized repurchase offer/promotion two yearsafter purchase

Invitations to special events, clubs, open-house days

Personalized communication/gift after a complaint

Customer satisfaction survey after service

Service reminders

Customer satisfaction survey after purchase

Welcome pack after purchase/lease

Post-test drive survey

Newsletters

Brochures about the vehicle that you bought/leased

Postal mail E-mail SMS/text message Phone call

100%

Preferred Consumer Communication Channels(% consumers saying)

Source: Capgemini

slowly declining over the past few yearsin many markets. In Western Europe,for example, 50% of respondents saidthey were likely or very likely topurchase the same make as theircurrent vehicle, down from 57% twoyears ago. A similar drop was seen inthe U.S. and China. (No comparisondata is available for Brazil, Russia andIndia as this is the first year thesecountries have been included in theCars Online study.)

Dealer loyalty has remained fairlysteady in recent years but is typicallysomewhat lower than brand loyalty.For instance, 38% of WesternEuropeans said they are likely to buytheir next car from the same dealerthey bought from previously,compared with 37% two years ago.

Fact Box

Belgians like the fact that they can getinformation via the Internet without anycommitment or need to providepersonal data. There are large numbersof Belgian automotive portals on theInternet. The growth of these services,as well as more sophisticated distributorwebsites, means the Belgian consumeris becoming one of the best equippedin terms of information.



India. Once again, the exception isRussia, where 53% of consumers saidthey were satisfied with the buyingprocess, similar to Western Europe,where 55% of respondents indicated agood degree of satisfaction.

Of particular concern, one in five U.S.respondents said they were notsatisfied with the car buying process.Said a consumer from the U.S. “I’mjust glad that car shopping isn’tsomething I have to do often.”

Consumer concerns fell into threemain areas, which were consistentacross markets and focused largely onthe dealer experience: the negotiationprocess, dealer honesty/customerservice and pricing.

How satisfied are consumers with thevehicle buying process? That dependson the country.

Overall two-thirds of respondentsworldwide said they were satisfied orvery satisfied with the overall processof purchasing a car. While that’sencouraging, it’s a decline from 10years ago, when 80% of consumerssaid they were satisfied with thebuying process.

This year’s Cars Online researchuncovered what appears to be aninverse relationship between marketmaturity and satisfaction levels: Themore sophisticated the market, thelower the degree of satisfaction. Forexample, in the U.S. only 40% ofconsumers said they were satisfied,compared with 84% of consumers in


Customer Satisfaction: What Needs toChange?

I sometimes feel that the dealersees me as a victim rather than acustomer. I’ve heard customersbeing referred to by salesmen aspunters and that about sums it up.A punter is a gambler and buyinga new car should not be aboutgambling.

UK consumer

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20%

40%

60%

80%

100%

TOTA L U.S. WesternEurope

Russia Brazil

5 (Very satisfied)

4

3

2

1 (Not at all satisfied)

ChinaIndia

How Satisfied Are Consumers With the Vehicle Buying Process?(% consumers saying)

Source: Capgemini

“

”

Consumers are fairly satisfied with the overall vehicle buying process, but there’s plenty of room forimprovement – starting with the dealer negotiation process.

Respondents across countries felt thatdealers should focus more oncustomer appreciation and customerattention, and that they should takethe time to understand a consumer’sneeds. “Even though you may not buyat the moment, a customer should feellike they would come back topurchase at that dealer due to thegreat customer service,” said a U.S.consumer.

Pricing: Fairness, Clarity andTransparencyPricing was a common topic raised byconsumers when asked about changesthey would like to see. In somemarkets, notably the UK, Brazil,Russia and Germany, the focus tendedto be on lower or fair prices anddiscounts. However, in the U.S.,France, China and India consumerswere more likely to emphasize thelack of price transparency.

Consumers said they want dealers tobe more upfront about costs, taxesand extras that are already “installed”before purchase. A respondent fromFrance noted: “There should be moreclarity, transparency and informationabout vehicle prices and options. Andthere should be more opportunity tocompare the vehicles and the brandswith each other.”

Some consumers focused on price-related issues such as rebates,warranty coverage and special offers.In many cases, they wanted to seenormal “wear-and-tear” items such asbrakes and tires covered underextended warranties. Others suggestedspecial offers for loyal customers.

Dealer Negotiation Process:Less Haggling, Less PressureWithout question, the dealernegotiation process was the primaryarea where consumers want to seechanges made. In all countries,respondents complained about thepressure from salespeople and theamount of haggling necessary to reachwhat they viewed as a fair price. Saida U.S. consumer, echoing similarcomments made by otherrespondents: “Give me the best priceup front. Don’t waste an hour of mytime talking about the car; I alreadyresearched it. I won’t pay stickerprice. Many salespeople insist that isthe only price; they won’t come down.I may be a woman, but I’ll walk out.”

Other consumers complained aboutthe way they were treated by dealersalespeople during the negotiationprocess. “I sometimes feel that thedealer sees me as a victim rather thana customer,” said a respondent fromthe UK. “I’ve heard customers beingreferred to by salesmen as punters andthat about sums it up. A punter is agambler and buying a new car shouldnot be about gambling.”

26

Concerns about the negotiationprocess were also apparent inemerging markets, especially Russia.According to a Russian respondent:“First, I want to see the real price ofthe vehicle so I can avoid payingextra; and second, I’d like salespeoplewho know about the models they areselling.”

In Russia and China significantemphasis was placed on speeding upand simplifying the transaction andvehicle registration process. Said arespondent from China: “The processof purchasing a vehicle is verycomplex and takes much too long.”

A U.S. consumer went so far as tosuggest that the industry “eliminatedealers in their current form. I wouldmuch rather buy from amanufacturer.”

While consumer comments tended tofocus on the dealer, it’s important tokeep in mind that a customer’sexperience at a car dealership canimpact their loyalty to a brand ormanufacturer. In an earlier studypublished by Capgemini and the CarInternet Research Program (CIRP),12

consumers indicated that theirexperience with dealer salespeoplehad a direct influence on theirsatisfaction with the OEM.

Dealer Honesty/CustomerService: ‘Don’t Rip Me Off’Consumers in a number of marketssaid they would like to see improvedhonesty and customer service on thepart of dealerships. “I want to dobusiness with dealers who are honestand don’t rip me off. The experiencewith the dealer should give me thefeeling that both sides got a good deal,”said a respondent from Germany.

12 “Am I Being Taken? Inside the Dealership: The Impact of Consumer Negotiation Preferences and Strategy,” Car InternetResearch Program (CIRP) and Capgemini, 2008.

Fact Box

In terms of car prices, OEMs are morecautious than dealers, believing theimpact of the Internet on margins anddiscounts to be less than dealers. Only23% of OEMs believe there has been adecrease in margins, while 42% ofdealers, who are better placed to know,claim a decrease.



Online Vehicle Buying: ‘With theClick of a Mouse’The number one change consumers inall markets anticipate is thewidespread adoption of online vehiclebuying. “The whole vehicle buyingprocess will be done with a click ofthe mouse,” said a respondent fromIndia.

Consumers predict that online buyingwould help eliminate the arduousdealer negotiation process andsimplify the purchase of a vehicle.“Most likely, it will be as easy to buy avehicle online as it is to buy a book orbottle of perfume over the Internet,”said a Russian consumer. “That’s howit will be in 10 years. A vehicle willstop being a symbol of prestige andluxury, and replacing a vehicle will beno harder than buying pantyhose.”

Respondents expect to see newtechnology that will enhance theonline buying process. Said arespondent from the U.S.: “I anticipatea more ‘virtual’ experience whenbuying a car; computer simulations,projections of the car in our livingrooms, etc.” A Russian consumeragreed, saying: “In the future therewill be a single information space, anda person will be able to take a virtualtour of the showroom, select and payfor a vehicle without leaving home.”

Some consumers expressed skepticismabout making a large purchase like acar over the Internet. A U.S.respondent summed up the concern:“I think the balance that will need tobe met – as the Internet becomesmore pervasive with durable-goodspurchases – is for dealers andmanufacturers to maintain therelationship with the consumer, whiledelivering on their promises online. A

If the rise of the Internet as a researchtool has been the most significantchange in the automotive buyingprocess over the past decade, whatcan be expected in the next 10 years?We posed this question to our CarsOnline respondents and got someinteresting feedback.

The majority of consumers expectchanges to come in several areas:online buying, fuel economy/alternative-fuel vehicles, the role ofthe dealer and OEM, and new buyingmodels.


The Next 10 Years: Conclusion andRecommendations

I would like to buy a vehicleglobally, such as a German engine,a Japanese vehicle carriage,American windows and doors, etc.The manufacturer would contactall the suppliers to produce thevehicle.

Chinese consumer

“

”

Consumers expect significant changes to the vehicle buying process in the coming decade. Willautomotive dealers and manufacturers be ready?

serious level of distrust remains withpotential online shoppers who are stillleery of making any type of purchasesvia the Internet.”

Fuel Economy/Alternative-FuelVehicles: ‘No Emissions, NoPetrol’Consumers across all markets expectto see greater emphasis on fuelefficiency and a significant shift toalternative-fuel vehicles in the comingdecade. Electric/battery, water,hydrogen and solar were among theanticipated fuel sources for cars of thefuture. A consumer from Indiasuggested another, perhaps lessrealistic, option: “I will purchase avehicle that will make no pollution atall as it will run using air.”

While most respondents anticipatethat the majority of cars will besmaller than those on the road today,some are looking for a way to improvefuel efficiency and reduce emissionswithout giving up their largervehicles. “I hope that vehicles will bebetter for the environment and thatthere will be a way to have a full-sizeSUV that is electric or runs onalternative fuel,” said a U.S. consumer.

Although our quantitative researchfound that most consumers areconfident in their knowledge of greenvehicles, the open-ended commentsrevealed some concerns. “I think westill need to improve our understandingabout the real differences and benefitsof the different fuel types,” said a UKrespondent.

Consistent with the quantitative data,consumers in emerging markets werevery focused on the role ofalternative-fuel cars in the future. “In

the next 10 years we need a true ‘noemission, no petrol’ vehicle in view ofthe rising cost of petrol. The bestoption is a battery-operated electricvehicle,” suggested a consumer inIndia.

A number of Russian respondentshope that the process of buying analternative-fuel vehicle will be simplerin the coming years. “I would like tobuy a hybrid or hydrogen vehiclewithout foot-dragging at the StateTraffic Inspectorate,” said a Russianconsumer.

And what will happen to thetraditional gasoline-powered vehicle?A German consumer offered thefollowing suggestion: “Combustionengines will be just for classic cars.”

The Role of Dealers and OEMsWill Change Given the frustration with thedealership experience expressed bymany consumers across all countries,it’s not surprising that respondentshad some definitive ideas about howthe role of dealers may change in thecoming decade. Many expect to seefewer, larger multi-brand dealersfocused more on servicing rather thansales, as the industry shifts to onlinebuying.

“The Web will be used to comparevehicles, select the model to buy,configure it and get a quote, select thefinancing (credit or lease quote onsite), and make an appointment withthe dealer for a test drive,” said aFrench consumer. “The role of thedealer will be to allow test drives,wrap up the sale and the financing,and maintain the vehicle.”

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Fact Box

OEMs agree with the dealers’ view thatthe Internet will lead to further growth inthe number of multi-franchise dealers,customer experience centers andalternative retail channels in the future.



which are then assembled at onelocation, maybe a dealer’s workshop,”suggested a consumer from India.

A similar idea was expressed by aChinese consumer: “I would like tobuy a vehicle globally, such as aGerman engine, a Japanese vehiclecarriage, American windows anddoors, etc. The manufacturer wouldcontact all the suppliers to producethe vehicle.”

And a respondent from the U.S.offered an interesting comparison:“Buying a car will be like puttingtogether a Lego kit. You will choosestandardized components fromdifferent manufacturers that will beassembled into your car.”

Recommendations: Meeting theNeeds of Today’s – andTomorrow’s – Vehicle BuyersThis year’s Cars Online research offersboth a quantitative and qualitativeview of changing consumers needsand buying patterns. Following arerecommendations to help companiesbetter meet consumer demand andanticipate the changes that will comein the next decade.

Understand that all emergingmarkets are not created equal.When it comes to developingautomotive markets, it’s clear that thedevil is in the details. While the fourdeveloping countries studied in ourCars Online research share somecharacteristics such as significantinterest in online vehicle buying andheavy usage of online C2C tools, theyalso exhibit complex and diversebuying patterns. Consumers respondto different types of media, preferdifferent communication channels,

A consumer from India expected amore extreme change: “In 10 yearsthere will be no role for dealers. Therewill only be service centers.”

Others felt dealers could succeed inthe coming decade, but only bymaking changes to their businessmodel. “To avoid becoming acommodity, auto dealers will have toprovide customer service that treatspeople like individuals rather than ase-mail addresses,” said a U.S.consumer. “I would anticipate suchthings as bringing the car to you for atest drive, finding out what extraservices (free service for the first year,for example) they could offer to standout from the crowd.”

Consumers also expect changes to themanufacturer’s role. Said a U.S.respondent: “I think we’ll see centralmanufacturer hubs where newvehicles are staged until sold.”

Many respondents anticipate dealingdirectly with OEMs: “I hope we willbe able to buy direct from themanufacturer at the cost the dealerpays so as to be able to get a bettermodel for a fair price,” said aconsumer from the UK.

New Buying Models: ‘LikePutting Together a Lego Kit’Consumers proposed some interestingnew approaches for the vehicle buyingprocess, such as vehicle-sharingschemes. Interestingly, manysuggested a model where consumerscould configure a vehicle using partsfrom a variety of manufacturers, asthough from a menu. “In the future, Iwould like to be able to design myown car with different components ofmy choice from different vendors,


Fact Box

Half of respondents say that having theweb features they consider importantwill make them more likely to buy fromthat car manufacturer. This isparticularly true in North America, wherethe number jumps to more than 60%.


a two-way dialogue, not a one-waysales monologue. Monitoring thesetypes of sites and understanding howthey’re being used by consumers isessential to improving communicationwith car buyers. It’s still too early totell how these new tools willultimately affect consumer buyingdecisions, but it’s clear thatautomotive companies must embracethese developments and constantly re-evaluate their marketing mix.

Implement a holistic customerinteraction strategy focused onimproving loyalty. Decliningcustomer loyalty is particularlyapparent in mature markets.Reversing this trend requires astrategy that includes integrated leadmanagement, improved consumersegmentation and targeted customercommunication. Companies mustinteract intelligently and consistentlywith the vehicle buyer at all possibletouchpoints – on the web, throughcall centers, in the dealer showroom.The keys to success: customerrelevance, process excellence and aholistic view across the entire vehiclelifecycle.

Focus on the future. Our Cars Onlineresearch over the past decade makes itclear how much has changed in theautomotive industry in 10 years. Thecoming decade will see equallysignificant changes to the vehiclebuying process. Be conscious of thekinds of improvements consumersexpect and want in the future. Somemay seem unrealistic, but they offer aglimpse inside the minds of vehiclebuyers. Ignore them at your ownperil.

30

have different views on green vehiclesand so on. Understanding andaddressing the differences and not justthe similarities will be the key tosuccess in these growing markets.

Implement online vehicle buyingcapabilities. It’s easy to point toobstacles to Internet selling of cars:regulatory roadblocks, financingchallenges, technology hurdles. All ofwhich are legitimate concerns. Butconsumers simply don’t care.Increasingly, they want to be able tobuy a car – from start to finish – overthe Internet. In fact, they envision afuture in which most cars are sold thisway. It is incumbent upon bothdealers and manufacturers to addressthe obstacles and challenges and takereal steps to implement online vehiclebuying capabilities.

Take green seriously. The CarsOnline research provides plenty ofevidence of the growing consumerfocus on fuel efficiency and alternative-fuel vehicles. Fuel economy is a leadingfactor in consumer vehicle choices andthat’s not likely to change given theconcerns about fuel prices and globalwarming. Consumers are searching forinformation about green vehicles andare finding it on the web – andincreasingly this knowledge is informingtheir buying decisions. As they lookahead at the coming decade, consumersacross all markets anticipate a growingrole for alternative-fuel cars.

Be vigilant in allocating yourmarketing mix. Information sourcesused by vehicle buyers change rapidlyand vary by market. And theincreased reliance on C2C tools suchas blogs and discussion forums makesit clear that consumers are looking for


GermanyChristian Hummel+49 (0) 69 9515 [email protected]

IndiaFloyd D’Costa+91 22 6755 [email protected]

RussiaLyudmila Mashkova+7 495 980 97 [email protected]

United StatesMohit Takyar+1 313 887 [email protected]

Global/United KingdomNick Gill+44 870 904 [email protected]

Brazil/Latin AmericaFelix Massun+54 911 4422 [email protected]

ChinaWill Zhang+8621 6182 [email protected]

FranceEric D’Arche+33 01 49 67 98 [email protected]

Capgemini’s Cars Online 08/09 study presents many of the findings of ourextensive automotive consumer research. Yet there is much more that can beexplored and applied to your own organization. For additional information aboutour Cars Online research or how we can help your company better understand thedynamics of consumer behavior in both mature and emerging markets, pleasecontact:


About Capgemini’s Global Automotive PracticeCapgemini’s Automotive practice serves 14 of the world’s 15 largest vehiclemanufacturers and 12 of the 15 largest automotive suppliers. The sector generatesvalue for companies through global delivery capabilities and automotive-specificservice offerings such as Integrated Lead Management, B2C Web Strategy, Serviceand Parts Management, Supplier Transformation, Optimization of Dealer-FocusedOperations and Global Emerging-Market Sourcing. For more information:www.capgemini.com/industries/automotive/

ArgentinaColectora Panamericana Este 1925 B1609ECM - San Isidro, Buenos Aires +54 1147358000

BrazilRua Samuel Morse, 120 Conjunto 7104576-060, Sao Paulo +55 1135250100

ChinaNo. 11, Boxia RoadZhang Jiang Hi-tech ParkCapgemini Center Shanghai, PRC 201203+8621 6182 2688

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