How COVID-19 Benefits The Auto Industry

Welcome to the Dove Direct Print and Marketing Blog. Today's post, "How COVID-19 Benefits The Auto Industry," examines recent data put forth by CarGurus that suggests automotive shoppers and dealerships exhibit new COVID-19 behaviors. It's no secret that every industry has made adjustments to marketing and consumer communication strategies, to grapple with consumer sentiment during the pandemic.

Overall, consumers have demonstrated that they are more likely to purchase from brands taking steps to protect their employees and their customers. Again, consumers are suggesting that brands who care will be the ones that get their business. That said, while YTY sales numbers may be down overall, there are always opportunities that lie just below the surface if you scratch.

Our Quote of the Day: "There will be interruptions, and I don't know when they will occur, and I don't how deep they will occur, I do know they will occur from time to time, and I also know that we'll come out better on the other end" – Warren Buffet, CEO of Berkshire Hathaway

Car Shoppers and Automotive Brands

Top automotive brands are typically rated for, among other things, vehicle sales. The rating number of a particular automotive brand that hits the highest percentage of sales in its category is generally considered a leading or top automotive brand.

That said, we are now, in some aspects, engulfed in the "Care Economy." The care economy thus far is inexplicably strapped to the emotional side of purchasing consumers. These emotionally-charged consumers are looking at brands a bit differently, and that also applies to the automotive industry. In June, CarGurus surveyed some 799 car shoppers to assess their sentiments towards car purchasing during the COVID-19 pandemic.

All 779 respondents alluded to having intentions of purchasing a vehicle in 2020, either before or after the health crisis. That's good news for the automotive industry as a whole, and it doesn't end there.

CarGurus' report also highlighted the automotive brands that had the best overall response to the pandemic. According to the respondents, the brands that best responded to the pandemic crisis were Ford, Honda, and Toyota. The respondents were quick to note that open and honest communications were top of mind during a pandemic. Topping the consumer response list of best automotive health care crisis were Ford (19%), Honda (18%), and Toyota (18%). For the record, and to be fair, 27% of car shoppers in this report stated that no automotive brand rose to a good response to this health crisis. The fact that no brand received high marks may imply that there is room for competitive brands to fill gaps where the iconic brands failed.

Quick Personal Communication

Madison Gross, director of customer insights at CarGurus, stated, "While most automotive brands have produced COVID-related creative work during the pandemic, there are two factors that really made a brand stand out in the study — moving quickly and personal communication."

Mr. Gross continues, "It is no surprise that Ford earned the top spot since they announced COVID-related assistance as early as mid-March, with delayed payments and its philanthropic arm donating to nonprofit groups in Michigan. Our study also showed that most shoppers expect brands to be transparent about the additional precautions they are taking during this time, so brands with thoughtful, personal communication through channels like email or direct mail were likely to fare well with vehicle owners."

Additionally, research has shown that direct mail is a top response and engagement tool among car drivers, with 78% of car owner purchases made via direct mail. (DMA)

Auto Shoppers Perceptions

The CarGurus study uncovered a strong linkage between car shoppers' perceptions of a brand's response to the pandemic and the likelihood to consider purchasing from that brand.

For example, respondents who alluded to Audi responding favorably to the pandemic were 6x more likely to consider Audi: 46% vs. 8%. Likewise, responders were 4x more likely to consider Ford, 57% vs. 14%, and BMW, 39% vs. 9%.

Among those respondents that said Chevrolet, Honda, or Toyota responded well, those three brands registered a 3x more likely consideration for Chevrolet; 56% vs. 18%, and Honda; 69% vs. 22%, and Toyota; 72% vs. 27%. These high numbers are a reflection of the respondents' car purchase perceptions. Automotive brands and marketers should leverage this sentiment through email and direct mail marketing. Previous research has shown that email and direct mail are the most effective mediums during this pandemic, given that the targets are at home and easy to reach.

Appetite for Car Purchasing

If this were any other year, I'd say that we are approaching the car-buying season. However, this is not your average year. According to the CarGurus report, automotive consumers have maintained a high, sustained interest in vehicle purchases during this health crisis.

Madison Gross states, "While 2020 auto sales may be lagging, they are certainly not lost due to the pandemic. The study also shows us that COVID-19 has caused vehicle ownership to become more vital to consumers' everyday lives, often replacing other transportation methods such as ride-sharing or public transit." 

Therefore, COVID-19 has stimulated increased demand for vehicles, which means that automotive dealers could be creating advertising campaigns that help alternative transit folks get into a car. For most, it's a safety issue and one that drives decisions as to the best way for a family to travel during a shutdown. After all, without a vaccine or effective treatment, safety is all any of us may have.

22% of respondents plan to purchase a vehicle in 2020. Some have already made the purchase, while others have not taken the leap but plan to. The kicker? None of the 22% had planned to buy a vehicle before the pandemic!

Brand Equity Building & Direct Mail

Most savvy CMOs, marketers, and brands understand that building brand equity, while a long term proposition, is always on the table. Email marketing is a quick turnaround, and those emails once read, are dated, and may even be deleted. Therefore, one could argue that car dealers should follow up emails with a direct mail piece. While it might be tempting and certainly less expensive to deliver more emails, you risk annoying the recipient with email overkill. A well-positioned direct mail piece is a more effective tactic to move the prospect along the sales funnel.

The Net-Net

The automotive industry sales are down in general; however, the increase in COVID-19 cases may drive new car sales as the need to self-isolate reaches new heights. We all need to abide by our state and federal guidelines, we should wear masks when we are in public settings, and we must do what we can to drive down the infection rate. In the meantime, it makes sense to have a vehicle for safety reasons, if nothing else.

Automotive manufacturers and dealerships should give these numbers serious consideration and adjust their communications and marketing strategies to take advantage of the opportunities mentioned herein. A heartfelt thanks go out to all the pandemic responders, and we pray that you remain safe during your time of service. Thanks for reading "How COVID-19 Benefits The Auto Industry!"

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