Which Type of Car Shopper Are You?
Australians love to buy cars. Even in 2019 when the car sales dipped by 7.8 per cent to their lowest level since 2011, we still bought 1,062,867 new cars. These sales add up to more than 8.0 million new cars in just seven years. In a country of 24 million people, more than 30% bought a brand-new vehicle. Amazing, right?
With people continuously buying new cars, our car shopping culture is evolving. For one, we have developed different car shopping habits as influenced by the changing car market.
On the list below, which type of car shoppers do you belong to?
These meticulous buyers do a lot of considerations before finally making the purchase. Aside from taking a long time to buy, they also use a wide variety of methods to find the ideal car. They ask for friends and relatives, visit car showrooms in several dealerships, and do a lot of online research about the vehicles they are considering to buy.
Their computer sessions are longer because they read car reviews on various car-focused websites, check out comments from other car enthusiasts, and even engage in car discussions on online forums and social media.
They also consider different types of vehicles, from luxury automobiles to utes to economy cars.
Around two weeks before their actual purchase, they start narrowing their vehicle selections and check out dealer websites, although they are still looking at secondary considerations. One week later, they finally have a vehicle choice, as well as where to purchase it.
Their car of choice? Cross/utility vehicles. According to a data tracking study by online marketplace AutoTrader.com, the most active cross-shoppers are about 62% of people who buy CUVs.
The Online Buyers
The online buyers are the forefathers of cross-shoppers. They embrace technology and prefer to shop and primarily make their deals online although they do not really spend a lot of time doing online research and comparing reviews. They simply love the convenience of online car shopping, especially the search for better deals without actually visiting dealerships.
Online shoppers visit several online marketplaces, locate the vehicle they want to buy, get quotes and compare prices. They may also call the dealerships or private vehicle sellers to ask for more information about the car they're eyeing to buy.
The No-Fuss Buyers
Either they have enough money to buy the car in full cash or they have a pre-approved car loan to finance the vehicle, they do not spend a long time on the negotiating table. Because they are not purchasing the car through a loan or are already pre-approved, they do not focus on the car’s trade-in value or loan repayments and interest rates but on the price of the vehicle.
Those who are particularly buying a car in full cash may not enjoy discounts on cars that can be purchased through vehicle financing, but they get a better price by making an offer within the ballpark of the vehicle's true market value.
The Test Drivers
These types of buyers are keen on taking the car on the road and testing out all the features before deciding to negotiate for the price or make an offer. They won't be fooled by the car's exterior styling or marketing tactics like promos and advertisements on social media. Their motto is “to see is to believe”.
They most likely won't also talk numbers before test-driving the vehicle. They need to have an actual experience with the car on the road before considering other factors, like the price, interest rate, or warranty and servicing.
Well-loved by car sellers and possibly hated by themselves, the impulse buyers are easily swayed by marketing tactics and smooth talks of sales executives. They are the people who pass by dealerships or have stumbled upon an enticing car ad, check out the car or offer that caught their attention, and fill out a purchase order or car loan application after a bit of negotiation with the salesperson.
They believe in grabbing opportunities as they come and may get overwhelmed by too many considerations. They do not bother doing comparison shopping, reading car reviews, or using car loan calculators. Of course, they are limiting themselves to one offer and usually miss out on the better deals. But, hey, if they have the money to pay for the car in full cash or make monthly repayments on a car loan, they’re enjoying the moment and living in the present. Who are we to judge?
Like soldiers that go to battle without any weapon, these shoppers are planning to buy a car but are still undecided on what type or brand of vehicle to get. Nevertheless, they visit dealerships and check out online marketplaces, hoping to stumble upon their ideal car one day.
When an experienced car seller approaches them with offers or a "limited" promotional deal flashes before their eyes, they are easily lured into finally buying a vehicle. This is not a problem until the salesperson makes decisions for them, and sometimes these decisions do not really work out for their lifestyle and for their budget.
The opposite of the clueless buyers are the grinders who relentlessly negotiate for a car’s price until an agreement that provides them with the greatest amount of savings is made. They are called grinders because their dedication to negotiating for the best car deals often leads them to grinding the profit out of the deal for the salesperson.
So zealous are the grinders in getting their marginal savings that they do not mind if the negotiation lasts for many hours or days. Driven by their desire to make the biggest savings on a car purchase, they may not also bother to research prices properly and insist on unrealistic discounts.
These shoppers are the hybrids of The No-Fuss Buyers and The Clueless. They have the money to buy a car in full cash or pre-approval for a car loan, but they do not have any solid idea of what car they’re buying or financing agreement they’re getting. As a result, they put their trust on the salesperson or private seller, not bothering to ask for better deals or negotiate for a better price.
While not all salespeople are inherently shrewd and some may present them with the best offer there is, most are after making larger sales and hitting their quotas for commissions. Sometimes, they do this by manipulating the truth for profit.
These car shoppers have an outstanding car loan and owe more than what the car is worth because their car has already depreciated in value. Nevertheless, they want to trade their old car for a new one, usually through the process of car refinancing.
Car refinancing can work for or against upside-down shoppers. If their old car loan has a high-interest rate and they're struggling to make the repayments, refinancing to a new car loan with a lower interest rate would make sense. However, if their new car loan has a long term of around seven years or so, it would also increase the interest paid over the life of the loan. This would only put them at a greater risk of being upside down on the loan again and the cycle of debt continues for God knows how long.
These shoppers are buying a car through a loan and are too focused on the monthly repayments. Most of the time, they are lured into taking out the loan because of the affordable monthly repayments, not taking into consideration the total cost of car ownership: the car's purchasing price, the loan term, and the interest rate.
Tricky dealerships and car lenders sell luxury cars and other expensive brand-new vehicles by highlighting the low monthly repayment. What's often played down in the offer is the length of the payment period. Expensive cars and car loans with high-interest rates typically have long repayment terms to distribute the repayment period over many, many months. Since cars depreciate in value over time, the monthly-payers often end up getting upside-down on their loan in a year or two.
Who is the savviest car shopper?
Based on the car shopping styles discussed above, who do you think would make the best deal?
It's the one who incorporates cross-shopping, test-driving, getting pre-approval for a car loan, and negotiates with the seller during the whole buying process.
Car shopping is not a complicated process, but if you want to get the best deal on your new vehicle purchase, you have to devote enough time to get more information about the car you're planning to buy and the car market trends in general. Do this before stepping inside a dealership or talking to a salesperson or car lender, and you'll likely be on the winning side of the negotiating table.