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News release

Car retailers predict rapid growth in online transactions

Car manufacturers and dealers are accelerating their investment in e-commerce, according to research conducted for the latest Cox Automotive Insight Report, produced in partnership with Grant Thornton UK LLP. 

The research found that only one in five car dealerships currently have full online sales transaction options, whilst 60% of dealers taking part in the research expect to have online transaction capability within the next two years.

The report uses previously unpublished data and analysis to identify emerging retail, wholesale and consumer trends in the automotive industry*.

Other key findings include:

The number of physical car dealer outlets is likely to reduce in the next five years - 60% of dealers said that they expect the number of outlets to reduce by 10% or more in the next five years.

There will be a small decline in used car sales in 2019 - Used car transactions are forecast to reach 7.795 million in 2019, a decline of 2% year on year.  Issues within the new car market due to extended fleet cycles are one of the causes of reduced supply in the used car market, whilst a drop-off in diesel sales is also a factor, with ¾ million fewer diesel cars registered in 2017/18 than in 2015/16.

The way consumers fund car ownership is changing - 90% of dealers believe that personal contract hire (PCH) penetration will grow by 10% in the next year, growth which would see PCH account for a fifth of all funding methods.   This high level of growth is not confined to the new car market, 69% of dealers believe PCH will see growth in the next 12 months in the used car sector.

Philip Nothard, Customer Insight and Strategy Director at Cox Automotive, said:

“The role of the physical dealer is still crucial, but we know that consumers want to interact with the automotive retailer in a variety of ways – notably via a range of digital platforms. Our analysis clearly shows it’s not just a case of replicating the retail experience via the internet. Those dealers that are leading the retail evolution are embracing technology to improve the customer experience and bring more flexibility into the car buying process.

“This evolution is further fuelled by changing consumer habits, both in terms of the way people are choosing to pay for their cars, both new and used, and the way that cars are used.  Figures from the Department of Transport show that since 2002, UK drivers’ average annual mileage has fallen by around 1,400 miles every year.   The high cost and impracticality of car ownership along with advances in mobile platforms have facilitated an increasing consumer appetite for shorter term options, such as subscribe and drive, rental and car sharing, which have implications for the way we use and pay for cars.   Going forward we expect more car dealers to take these changing models in to account and look for new ways to meet customer needs.”

Owen Edwards, Associate Director, Business Consulting at Grant Thornton UK LLP, said:

“The automotive industry in a period of flux against a backdrop of growth in electric cars, autonomous vehicles and mobility as a service (MaaS).  Automotive manufacturers are adapting to this rapid change with significant investment in new technologies.

“Consumer behaviours are also evolving in terms of how they purchase vehicles and how they travel around.  There is a greater demand for mobility which and a changed perception of convenience, driven by improved technology and connectivity. 

“Current times are exciting, and change is coming from several different areas of the market. This disruption is positive as a catalyst for the industry to evolve.  We remain confident that the automotive industry will show resilience; adapting, changing and continuing to innovate.”