The events of the past 18 months have thrown the need to eliminate friction in the car buying process into sharp relief, stressing the need to help consumers bridge the gap between the digital activities like research and in-person experiences like test driving and closing the deal. Consumers have grown accustomed to seamless shopping experiences in other areas of their lives — why shouldn’t they have the same expectations when buying a car? The Capital One 2021 Car Buying Outlook, a first-ever study that examines the behaviors, preferences, and attitudes of car buyers and dealers around auto financing, illuminated some of these trends.
Now that we’re past the halfway mark of 2021, it’s no surprise that frictionless car buying and selling is the future, mirroring trends in digital retailing more broadly. Even prior to the pandemic, dealers anticipated this trend by digitizing their operations to varying degrees. This helped them adapt to the new normal, when car buyers’ typical path to purchase was disrupted, with in-person dealership visits often not an option.
Digital tools are crucial to the car buying experience, but they alone are not the full story and can’t fully capture the emotional elements of buying a car. Indeed, the Car Buying Outlook revealed that visiting dealerships in person remains the preference of most car buyers. The new car buying and selling landscape requires a combination of online and in-person interactions, facts and feelings, progress and tradition. We believe that the way to win for both car buyers and dealers involves bringing the power of digital tools to the in-person experience, empowering customers to have the car buying experience they seek.
“We are excited to share our insights in an effort to bridge the gap between car buyers and dealers, eliminate friction in the process and infuse joy within car buying. At Capital One, we feel privileged to play a role in this momentous event, by bringing humanity, simplicity and ingenuity to the lifecycle of car ownership,” said Sanjiv Yajnik, president of financial services for Capital One.
The financing aspect of car buying has remained one of the biggest friction points for consumers and dealers. Even though more consumers are researching vehicles and searching for cars online, many don’t include financing options as part of that research and instead wait until they are on site at the dealership. Dealers notice the effects of this: Nearly all state that less than half of their consumers have their financing figured out when they come into the dealership. This is often the turning point in the car-buying process, with two-thirds (68%) of deals falling through when finances enter the conversation.
“Capital One is committed to making car-buying easy through simple and innovative design, and we have long believed in the importance of empowering customers with their real rate and payment on a vehicle, so they’re better placed to make the right decision for them,” Yajnik continued.
When the customer has already crunched the numbers, it helps the car buyer and dealer focus on what the dealer does best — forge a personal connection. Digital tools can help consumers understand their options and find the right deal for them. And with the right digital tool, car buyers can see their real rates on a dealer’s inventory — without impacting their credit score — before visiting the dealership, test driving the vehicle, and closing their deal with confidence.
But even with top-notch digital tools at the disposal of car buyers, and with dealers at different stages of digitization, it’s important to understand that each consumer sets foot on a dealership lot at a different phase of their car buying journey. Having this mindset leaves room for dealers to provide more consultative and productive discussions with their customers. Transparency is key within these discussions.
Bill Dickason, a dealer advisor to Capital One, described the opportunity for dealers to serve as trusted partners for customers in the financing conversations.
“Financing needs to be addressed at the very beginning of the experience,” he said. “If we, as dealers, can equip our customers with the financing information they need before they narrow down on the perfect car, and take time to understand their unique situations, car buying can be as pleasant an experience as both parties hoped it would be.”
As dealers are in the thick of a busy car buying season, complementing high-quality customer service with digital solutions can be a promising force in their customers’ journey to make one of the biggest purchases of their lives.
Tim Mullins is National Sales Vice President at Capital One.