Capgemini Automotive Study reveals significant differences between mature and emerging markets
Tenth Annual Cars Online Study tracks the evolution of consumer demand, behaviors and satisfaction
23 October 2008
Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, today released Cars Online 08/09, the in-depth study into the global automotive industry. The report highlights how consumer vehicle buying behavior across both mature and emerging markets is changing and how manufacturers and dealers must respond to these changing dynamics to maintain a competitive advantage. Involving over 3,000 consumers in eight countries (Brazil, China, France, Germany, India, Russia, UK and US), the study identifies a number of key findings:
- For the first time in the report’s ten year history, a vehicle’s fuel economy has been found to be as important to consumers as safety and reliability, a result of rising fuel prices and increased concern about the environment.
- There are significant differences between the mature and developing markets, and also within the emerging markets of Brazil, Russia, India and China (the BRIC nations).
- There are important implications for vehicle manufacturers that do not meet customer needs – three quarters of respondents surveyed said they would switch from a particular brand or dealer if their needs were not met, such as receiving a speedy response to enquiries.
- People are also increasingly relying on the web for presales information, and are looking more and more to complete their purchases online.
The report also reveals that customer satisfaction has dropped in recent years: two thirds of respondents worldwide said they were satisfied with the vehicle buying process, a decline from ten years ago when 80% of consumers said they were satisfied. The study found that the more sophisticated a market, the lower the levels of customer satisfaction. Adding this to the static sales in traditional western markets, there is a clear need for manufacturers to investigate new growth areas in order to remain competitive.
“Our Cars Online research over the last ten years makes it clear just how much the automotive industry has changed in the last decade,” said Capgemini Automotive Leader, Nick Gill. “We can expect equally significant changes to the industry in the next few years as consumer adoption of technology continues to rise rapidly. Manufacturers and dealers cannot afford to ignore the opportunities for growth presented by the internet as a direct sales channel which can inform customers on which vehicles meet their needs, such as greener vehicles. Manufacturers must also seek to address the needs of the individual emerging market countries in order to maximize growth in those areas, which is of particular importance as sales in more mature markets begin to stall.”
Increasing demand for more fuel-efficient vehicles
Rising fuel prices are having a significant effect on consumers’ vehicle purchasing decisions with 90% of those surveyed citing fuel economy as an important consideration in their vehicle choice, particularly in the developing markets. The survey also found a rise in green vehicle ownership: 36% of respondents say they own a fuel efficient or alternative fuel vehicle (up from 28% last year) and half say they plan to buy such a vehicle. Despite this, consumers surveyed are not prepared to pay a premium to go green, and the majority of respondents expect to pay no more than 10% extra for fuel efficiency in a vehicle.
Key differences between the mature and emerging markets
With vehicle manufacturers turning their attentions to the high growth emerging regions, it is essential to understand the key similarities and differences between these markets. Respondents from all four BRIC nations are highly technology aware, making heavy use of new online tools such as blogs and web forums in the vehicle buying process, indicating the potential to leapfrog more mature markets in terms of this behavior. However, in general, consumers in these markets tend to demonstrate less sophisticated buying habits than those in western countries, many of them in fact being first-time car buyers:
- Brazil: One of the top ten automotive markets and the largest in Latin America, Brazilian consumers are particularly focused on fuel efficient and alternative fuel vehicles. They are also interested in online vehicle buying, with 87% saying they were likely to buy a car over the Internet if possible, the highest among all countries.
- Russia: Russia is considered to be the fastest growing market for new car sales in Europe and is predicted to become Europe’s largest automotive market in the next few years. The research found that Russian consumers demonstrate buying behavior much closer to that of more mature markets, particularly the US. For example, the used car market in Russia is much larger than in the other emerging markets, and Russian consumers make greater use of dealer and manufacturer sites and search engines, relying less on TV advertising when researching vehicles, resembling western markets.
- India: The automotive market in India is evolving rapidly as consumer demand for vehicles increases, with sales expected to double by 2015. The Indian market is dominated by small cars with 39% of respondents owning a fuel-efficient vehicle. Consumers in India are also heavy users of online tools: 56% use blogs and 55% use web forums when researching vehicles, the highest among all the markets.
- China: China is the world’s second largest car market with sales predicted to grow by 14% this year. The popularity of luxury cars is increasing in China thanks to the growing economy and rising household incomes, with 17% of Chinese respondents expecting to own a luxury vehicle compared to just 3% in Europe. Chinese consumers are particularly demanding: two-thirds expect a dealer or manufacturer to reply to a web or e-mail inquiry within four hours, the highest among all the countries.
The increasing importance of online services
Increased use of the internet as a research tool during the vehicle buying process has had a profound impact on the industry with 88% of respondents indicating they use it as the primary source of information during the purchasing process, up from 11% ten years ago. Content related features such as product and price information continue to be the most popular options for consumers’ online searches. Communication-related options are also growing in importance, in particular the ability to obtain advice. More than half of those surveyed said they would be less likely to buy from a company without certain important online features available. Furthermore, almost half of respondents said they expect a dealer or manufacturer to respond to an email or web enquiry within four hours, with response times particularly critical as consumers get closer to the point of purchase.
The increase use of the web to purchase vehicles
Until fairly recently, the internet has been seen primarily an information source for purchasers but there is growing interest in buying vehicles online. Frustration with dealer negotiations and consumers’ increased web sophistication are driving this interest. In 2007, 20% of consumers were looking to the internet as a sales channel and this year, the number has jumped to 44%, driven by significant interest from the emerging markets. More than half of respondents also said they would be likely to purchase parts and accessories online. The levels of interest expressed mean that the online sales channel is a potentially lucrative, and as yet unexploited, avenue for vehicle manufacturers and dealers to explore.
To access the full report, please go to www.capgemini.com/carsonline
About the study
Capgemini worked with SmartRevenue, a Ridgefield, Connecticut-based research firm, to conduct the survey for Cars Online 08/09. All analysis and interpretation of the data has been made by Capgemini in collaboration with the Car Internet Research Program (CIRP) of the University of Ottawa, Canada. In total more than 3,100 consumers were surveyed in eight countries: Brazil, China, France, Germany, India, Russia, the United Kingdom and the United States. The composition of the consumer sample in each country was based on projectable national samples representative of the population from the standpoint of region, age and gender. All consumers surveyed were in-market (20% plan to buy or lease a vehicle within three months; 25% in three to six months; 40% in six to 12 months; and 15% in 12 to 18 months).
About Capgemini
Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working - the Collaborative Business Experience - and through a global delivery model called Rightshore®, which aims to offer the right resources in the right location at competitive cost. Present in 36 countries, Capgemini reported 2007 global revenues of EUR 8.7 billion and employs over 86,000 people worldwide.
More information is available at www.capgemini.com.
About Capgemini’s Global Automotive Practice
Capgemini’s Automotive practice serves 14 of the world’s 15 largest vehicle manufacturers and 12 of the 15 largest automotive suppliers. The sector generates value for companies through global delivery capabilities and automotive-specific service offerings such as Integrated Lead Management, B2C Web Strategy, Service and Parts Management, Supplier Transformation, Optimization of Dealer-Focused Operations and Global Emerging-Market Sourcing.
For more information: http://www.capgemini.com/industries/auto motive/
Press contacts:
Christel Lerouge
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E-mail: christel.lerouge@capgemini.com
Vanessa McDonald
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E-mail: vanessa.mcdonald@capgemini.com
