Welcome to Canadian Black Book’s – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:
Consumers are open to new ways of shopping for and buying vehicles
Research recently completed shows that 51 per cent of Canadian automotive consumers are likely to purchase a new vehicle over the next 24 months. Although this number is still strong, those surveyed last year were eleven per cent more likely to buy soon, a number highlighted by a record year for Canadian automotive sales. Perhaps this year’s numbers suggest that recent forecasts of diminishing auto sales are looming.
“Quite frankly, after such a dramatic ascent in sales over the past couple of years, this makes sense. It would be hard for us to continue breaking sales records throughout 2018 and beyond,” says Brad Rome, President, Canadian Black Book.
For the third year now, vehicle values specialists, Canadian Black Book, has designed a poll conducted nationally by Ipsos to gauge Canadian car buying habits, knowledge and trends. This year’s edition surveyed 1255 Canadians from coast to coast.
The poll implies that the younger a consumer is, the more likely they are to buy in this timeframe, with respondents aged 18-34 the most likely at 65 per cent, those 35-54 at 57 per cent and those 55 years or older are least likely at 34 per cent. Male respondents show more eagerness to buy in two years at 58 per cent versus females at 44 per cent.
(Click Here for High-Res version of the infographic)
Interestingly, over a quarter (27 per cent) of Canadians are likely to purchase a vehicle fully online, without stepping foot into a dealership. This is an area most OEMs and dealers are looking closely at, for good reason. Age and sex sway these results, where 36 per cent of those aged 18-34 would take buying fully online while only 11 per cent of those over 55 would do so. Males are much more likely at 32 per cent versus females at 21 per cent. “We are not surprised to see that millennials are over three times more likely to purchase a vehicle online compared to boomers,” says Brian Murphy, VP Research and Editorial, Canadian Black Book. “This would be a major shift in automotive retailing, and one that is similar to how millennials research, shop for and purchase so many of their goods today,” he adds.
57 per cent nationally intend to purchase a new vehicle instead of a used one. This statistic is also influenced by age, where older buyers are more likely to buy new. Those aged 18-34 intend to buy new at 46 per cent, while 59 per cent of respondents 35-54 and 64 per cent of those 55 plus, will likely buy a new vehicle.
Dealer websites are the first tool that consumers use when researching a vehicle, say 23 per cent of the respondents. The next method for initial research which was selected by 22 per cent of those surveyed is to ask friends and family.
After initial research is done, where there is more uncertainty, is in the understanding and research of trade-in values. Nationally, only half (49 per cent) of Canadian auto consumers had a good idea of their vehicle value heading into the dealership. However, 21 per cent had no idea of the value and a further 6 per cent had such poor trade-in experience that they switched dealers all together. 36 per cent feel that they got less than they expected on a trade-in.
“Consumers often struggle with knowing an accurate trade-in value for their vehicle, which can turn the car buying experience into a negative one for both the buyer and the seller,” says Murphy. “It’s crucial that consumers use tools to get accurate trade-in values. While they’re at it, they should research the future value for the ride they intend to purchase, so they properly understand its depreciation curve and when it will be in negative equity related to their loan.”
For this, 65 per cent of respondents chose online trade-in calculators (up 7 points from last year) as the number one method to research vehicle values. Across Canada seven in ten of those surveyed know that Canadian Black book allows the public free access to its online vehicle valuation tools. This survey showed that 33 per cent of respondents have actually used the tools on CanadianBlackBook.com, up 9 points from this time last year.
“Of extreme concern, is the seemingly perpetual misunderstanding about the single largest cost of vehicle ownership – depreciation,” says Murphy. Only one per cent correctly identified depreciation as the largest expense tied to owning a vehicle (down from two per cent last year). “Purchasing a vehicle that has poor value retention can cost you thousands of dollars, when you go to sell, trade-in or negotiate a loan,” he adds. Zero females and zero respondents from the 35-54 age group answered this question correctly.
Up from last year at 53 per cent, now 61 per cent of Canadians can properly define what negative equity is (when a vehicle is worth less than what is owed on a loan). This issue is currently growing along with the trend towards longer term auto loans. A resounding 97 per cent of respondents feel auto retailers should make customers fully aware of various loan payment options and schedules, so they are exactly aware of positive versus negative equity.
In terms of vehicle types, if gas were to rise $0.25 today, 46 per cent would consider any alternative energy vehicle, with hybrids being the most popular choice at 33 per cent. Males are more likely to consider an alternative energy vehicle at 52 per cent compared to females at a considerably lower 39 per cent.
Given a number of economic factors and the growth of vehicle sharing culture, Millennials are most likely to reduce the amount of vehicles in their household fleet in the next two years, at 32 per cent versus only 14 per cent of those over 55 years of age. However, in ten years 41 per cent of both the 18-34 and 55+ groups are likely to reduce the amount of vehicles they own.
About the Poll:
These are some of the findings of an Ipsos poll conducted between December 27, 2017 and Jan 2, 2018, on behalf of Canadian Black Book. For this survey, a sample of 1,061 Canadians (who own or lease a car/truck or who are looking to purchase in the next two years) from Ipsos’ online panel were interviewed online. Weighting was then employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/ – 3.4 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
For more information or interview requests, please contact:
Canadian Black Book