Why OEMs must educate consumers about TCO

November 28, 2016

A study of consumer buying habits has revealed they prioritise price over total cost of ownership (TCO).

The focus on price comes despite buyers being more informed than ever about vehicle costs through internet research.

According to the analysis in the Automotive Path to Purchase study, buyers feel so confident in the information they have gained from the internet that 21% purchase a car without a test drive.

Among those that do test a car, they tend to focus on a single model they are planning to buy, instead of driving a range of cars.

The increasing use of smartphones means that buyers are looking up independent sources of information about a car more than ever before, the research states.

It adds that there is not a clearly-defined buying path as purchasers can follow so many routes in their decision-making over a period typically lasting 2-3 months.

However, the dominant source of information is internet search engines, such as Google, with 87% saying these are likely to inform their final purchase of a car and two-thirds (68%) saying that online videos have influenced their purchase choice. By contrast, just 33% said manufacturer websites had an influence.

This will be a concern for carmakers, particularly as they try to influence a new generation of car drivers; 75% of first-time buyers said they were undecided on a make or model when they started looking.

The research shows that buyers tend to create a shortlist of vehicles before focusing on price, which they class as more important than issues such as fuel consumption, residual value, warranty or maintenance costs.

They build up their knowledge of their chosen model through website reviews, magazines, testing and recommendations before using that information to focus on getting the best deal, with ‘discounts and promotions’ and ‘official price’ three times more likely to be a priority than ‘resale price’.

The study emphasises that OEMs need to work to educate buyers about the additional elements they need to consider during the purchasing process, such as TCO, particularly if this reflects well on their own brand.

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