Why online car buyers are getting savvy about finance

The process of buying a car has changed dramatically in recent years as Australians have developed a preference for researching and transacting via their personal devices, and the entire car industry must take heed if it is to retain its place in the buyers’ journey.

Australians have grown incredibly comfortable making big decisions based on the information they receive through their screens and are likely now to use of digital channels extensively when researching and making purchases. This trend that was hastened by the pandemic, which both shut down showrooms while also driving Australians on to their screens for work, leisure, and learning. Not surprisingly, many found that the answers to the questions they would ask of a dealer could also be found online.

The result for the car industry is that people are much more willing to conduct some – or even all – of the car buying process online, and this change even extends to how they finance and purchase vehicles.  

These changes were highlighted in a recent report from Deloitte, Disruption in the automotive industry. This report found that while the automotive sales and distribution model has remained relatively unchanged since the 1980s, it is now failing consumers, who find it to be a low-trust, high stress, and low transparency exercise. And it is also failing manufacturers by disconnecting them from their customers.

The digital car buyer’s journey

In this digital era, the old method of buying a car, which meant travelling between multiple car yards stocked with hundreds of cars and negotiating with dealers over the fine details of sale price and finance, is on the way out.

A digital car buyer’s journey most often starts on their couch, using a mobile device to research and compare makes, models, and features. Once they have created a shortlist, they compare prices and begin to look for available vehicles. The next stage is to ensure they have the funds at hand to purchase their vehicle, often by directly engaging with an online finance provider, which leads them into the final stage of making a purchase.

For companies who had positioned themselves as online providers of finance prior the onset of the pandemic, this provided an opportunity. Savvy, a national Australian online finance broker, noticed an uptick in all kinds of online automotive lending from, secured, unsecured, and chattel loans for businesses, to those making use of personal loans to finance a new vehicle.

The fact that many consumers are now willing to undertake this entire process online has been recognised by one of the industry’s biggest disruptors – Tesla - which has adopted a direct-to consumer sales model based primarily on digital channels.

Despite resistance from some segments of the automotive industry, other car makers are set to follow. Volkswagen recently launched an online sales program for its own electric vehicles, and the global car manufacturers representative body the Federal Chamber of Automotive Industries is supporting online sales, which it argues better suits the needs of younger buyers who have grown up in the era of Uber and Airbnb.

While the pandemic is one of the factors that boosted people’s use of digital channels, it also forced many to rethink the role that cars played in their lives. Vehicles are an expensive asset, and one that provides no value when left sitting in a garage, as many were during the long periods of pandemic-driven lockdowns. But even as Australians emerge into a post-pandemic world, the preference for many to continue working from home is leading to a rethink of the number and type of cars they need – a decision that is also coupled to their growing appreciation of the impact that cars have on the natural environment.

Indeed, the entire push towards electric vehicles is representative of another significant trend within the automotive industry, being the growth in sales of lower-emission vehicles. In Australia, research from the Electric Vehicle Council shows the number of electric vehicles sold jumped from just 6900 in 2020 to 20,655 in 2021. Globally the percent of electric vehicles sold is expected to grow from 3% in 2019 to reach 7.2% in 2021.

Financing Cars in a Digital World

What all these trends point to is significant change in the way consumers are researching and purchasing vehicles. The preference for using digital channels also extends to how they are researching and purchasing insurance – a behaviour is reflected by the growth of online providers and comparison sites.

And evidence also suggests consumers are also increasingly willing to research and secure auto finance online, as evidenced by an influx of big businesses investing heavily in the online car comparison space.  

All of this suggests that buyers are much better informed about their finance options and are much more likely to take control of the process rather than waiting to hear what their dealer has to offer. This is creating great opportunities for companies such as the online automotive finance provider Savvy, which had noted these changes and positioned itself accordingly prior to the onset of the pandemic.

These changes in car buying behaviour are just the beginning of what could be the biggest shakeup to the automotive sales industry, and all players in the ecosystem need to adjust accordingly.

These changes will see different players forging new partnerships with companies that understand the nature of these changes are set to build their advantage.

Savvy is one such company, having readily adapted to the new digital sales journey by providing a complete online finance solution.

Visit Savvy to learn more about the best automotive finance options.