Detroit, MI - Detroit Trading Automotive Research & Insights
The beginning of May has brought good news in the battle against COVID-19. COVID-19 infection and death rates are decreasing in many of the hardest hit states as “shelter-in-place” orders limit movement and gatherings where COVID-19 can spread. In light of these positive results and flattening COVID-19 infection curves, states are beginning to take the careful steps necessary to re-open their economies and consumers are beginning to respond.
To better understand the relationship between flattening COVID-19 infection counts and online car shopping and purchasing activity at a state level, our data scientists performed a state-by-state analysis of these trends using the Detroit Trading ClearPath™ Enterprise Platform. This article will bring attention to a few highlights shared by our data team, specifically:
When defining which states are “hardest hit”, we rely on data from the Center for Systems Science and Engineering at Johns Hopkins University. As depicted in the map below, areas with larger clusters of red dots have higher COVID-19 infection counts than areas with fewer red dots. Using this map, we identified the following as “hardest hit” states: California, Florida, Illinois, Louisiana, Maryland, Michigan, New York, New Jersey, North Carolina and Pennsylvania, and have focused the majority of our analysis on shopping and purchasing activity in those states.
Map Source: COVID-19 Dashboard by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)
For the purposes of this analysis, we measured current new car online shopping activity (May 1, 2020 through May 13, 2020) against pre-COVID-19 shopping activity (March 1, 2020 through March 13, 2020). We see the largest increase in online shopping in the states that have perennially had the highest COVID-19 infection counts. For example, in our home state of Michigan (shaded light blue in the map below), where COVID-19 case counts are approaching 50,000, online car shopping activity is 1.25 times or 25% above pre-COVID-19 levels. In Pennsylvania (shaded blue in the map below), where COVID-19 case counts are approaching 60,000, online car shopping activity is 1.45 times or 45% higher than pre-COVID-19 levels. And in New Jersey (shaded deep blue in the map below), where COVID-19 case counts have exceeded 140,000, online car shopping activity is 1.5 times or 50% above pre-COVID levels.
It is important to note that daily COVID-19 infection counts continue to decrease substantially in each of these hardest hit states, down by between 50% and 75% from peak daily infection counts in early April. This decrease in new infection counts is one of the factors having a noticeable impact on consumer car shopping behavior in these states. We have reviewed consumer research and had discussions with industry experts which tell us that between 5-10% of the population intends to use stimulus money for their next car purchase.
This decrease in new infection counts along with other factors are having a noticeable impact on consumer new car shopping behavior in these states
For the purposes of this analysis, we measured current new car purchasing activity (May 1, 2020 through May 13, 2020) against pre-COVID-19 shopping activity (March 1, 2020 through March 13, 2020). While online car shopping activity is rebounding in the Upper Midwest, Mid-Atlantic and Northeast, car buying activity remains below pre-COVID-19 levels. Nonetheless, online car shoppers in hard hit states in America’s Southeast continue to buy, with rebounds in buying activity underway in Florida, Louisiana and North Carolina. Fourteen day close rates for online car shoppers in Florida (shaded light blue in the map below) are now .26% above pre-COVID-19 averages. In Louisiana (shaded light blue), these fourteen day close rates are .27% above pre-COVID-19 averages. And In North Carolina (shaded blue in the map below), these fourteen day close rates are .84% above pre-COVID-19 averages.
It is important to note the correlation between strict shelter-in-place orders and decreased consumer car buying activity. For example, in Florida’s “Stay at Home” Order issued on April 3, 2020, car dealers were deemed essential businesses who could remain open for sales and services. Subsequently, car sales and close rates in Florida remained somewhat constant for the period evaluated, with a pre-COVID-19 to post-COVID-19 sales ratio indicating a 3% increase. Similar correlations exist in Louisiana and North Carolina, where car dealers were deemed as essential businesses who could remain open for sales and service.
In New Jersey, on the other hand, a March 21, 2020 “Stay at Home” Order failed to exempt car dealerships as essential businesses. Car sales and close rates expectedly plummeted. A subsequent clarification of the order on March 30, 2020 allowed for remote or online sales, and car sales and close rates began a slow rebound as dealers adapted their sales and fulfillment processes to the new restrictions. The pre-COVID-19 to post-COVID-19 sales ratio in New Jersey indicates a 25% decrease. Similar correlations exist in Michigan and New York, where car dealers were not designated as essential businesses in initial “Stay at Home” orders, with subsequent orders loosening restrictions and permitting online and remote transactions.
Online car shoppers remain ready to buy: close rates are approaching near-normal rates in states where dealers are permitted to fully function. Consumers are finding ways to buy, albeit not as quickly, in states where dealers are required to function in a more limited, remote manner.
Even in the hardest hit states, we’re seeing people shopping for cars online at near normal levels. This shopping activity is resulting in near normal close rates in states where few limitations on dealership operations have been placed. Close rates are improving in states where “Stay at Home” orders require online or remote transactions. We have seen dealers rapidly adopt digital marketing, online retailing and doing whatever it takes to help a consumer purchase a vehicle, and their work and flexibility is paying off in the form of increased online car shopping activity and stabilized close rates.
About the Author - Jack Lintol is the President of Detroit Trading, a Detroit-based firm that is amongst the world’s foremost data and technology providers of “in-market” automotive shoppers and shopper intelligence. The firm provides data and leverages data science for original equipment manufacturers and dealers that is responsible for more than 30,000 and $1 billion in monthly car sales. Contact Jack at firstname.lastname@example.org.
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