The chip shortage headline has been the dominant one in the automotive industry all year — and even though the year is coming to a close, the inventory challenges caused by this supply chain disruption are far from over.
Cox Automotive conducted research* in August to understand how the chip shortage is impacting car buyer behavior, now that awareness of the issue is more widespread. We compared this recent research to the research done back in April, as chip shortage impacts were first realized. What the latest consumer research reveals about chip shortage buying behavior might surprise you.
People are still willing to pay above MSRP.
Only slightly fewer shoppers now than in April are willing to pay above MSRP to get their vehicle of choice and would pay a 13% premium. In April, our research found that 42% of in-market shoppers were willing to pay above MSRP, and in August that number dropped down to 35%. Demand drives pricing today, not suggested retail prices.
More car buyers are delaying their vehicle purchases due to the chip shortage.
48% of in-market shoppers are likely to postpone, compared to 37% in April. Among those who are likely to postpone their purchase, about half would delay their purchase by six months or less.
More of those who are not postponing (aka they’re ready to purchase now!) are likely to switch brands, categories or from a new to a used vehicle. It’s safe to say these consumers want a car sooner than later and are willing to compromise on what they originally planned. The reality is it’s not going back to what we’re familiar with or what we knew as “normal” any time soon. It’s going to be years, not months.
Those delaying may realize that this isn’t short-term, and will have to swallow the hard pill and pay the increased rate.
Car buyers are willing to drive outside of their local area for a vehicle.
Three-quarters of shoppers are willing to drive 50-200 miles for the right vehicle, but less likely to drive more than 200 miles away from home.
Dealers can take advantage of this insight by leveraging Autotrader’s Market Extension; select markets outside your own to show your listings and capitalize on this shift in car buyer behavior. As consumers are willing to travel more, DMA lines become blurred.
It’s less about geography and more about the shoppers. We can help match your VIN to the shopper shopping for it, regardless of the dealers’ location. Learn more about Market Extension.
Most car buyers still anticipate negative impacts as a result of the chip shortage.
From increased prices to inventory shortages and longer delivery times, most consumers recognize the effects of the chip shortage on the car buying process — and expect that the trends will continue.
Seventy-six percent believe that all vehicle brands will be impacted, and 61% expect less favorable deals or incentives from dealers. We’ve seen an increased number of consumers ordering direct from manufacturers.
Rather than find their car, they order it new, waiting a few months for delivery. As a result, progressive dealers have started merchandising that option. It’s an option that allows them to serve a customer, rather than losing them to a competitor.
Now that we understand how the chip shortage is impacting car buyer behavior, we can help you shift your strategy to reach the right customers to drive quality traffic and revenue. Whether you’re exploring how to enhance your digital curb appeal, rethink Certified Pre-Owned (CPO) or lean into service and repair as a long-term revenue stream, we’re here to help.
*Cox Automotive Research & Market Intelligence – Automotive Chip Shortage Consumer Perspective Wave 2