BUSINESS INTELLIGENCE - Zenith Media

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BUSINESS INTELLIGENCE - Zenith Media
BUSINESS INTELLIGENCE
    A U T O M O T I V E
Contents
Click to jump to a section:

1. Advertising Forecasts

2. Category Growth

3. Consumer Trends

Introduction
Welcome to the first edition of      The development of more
Zenith’s new Business Intelligence   advanced and environmentally
reports, each of which will focus    friendly vehicles, combined with
on a specific business category.     new demand for private transport
We will look at the main trends      among consumers wary of crowds,
in advertising in that category,     is forecast to spur sustained
and forecast their future, while     growth in new vehicle sales from
also examining the top-level         2021 onwards.
business environment, and how
consumer behaviour is shaping the    Auto brands will need to develop
development of the industry.         new ways of communicating with
                                     consumers, whose expectations
For this first edition we focus on   for how to research, choose and
the automotive industry. This has    buy cars are shifting online, a
suffered disproportionately from     trend that the pandemic has
the coronavirus pandemic, but        accelerated. Digital advertising
the prospects for growth are good    is already the biggest channel
once the recovery takes hold.        for automotive brands, and its
Consumers who need new cars          importance will only grow over
have postponed, not cancelled,       the next few years.
their plans to buy.
AUTOMOTIVE
ADVERTISING FORECASTS

 Automotive advertising            In most countries,
 will shrink 21% in 2020,      automotive advertising will
 compared to 9% for the       recover rapidly in 2021, with
    global ad market          the worst-hit markets seeing
                                  the biggest recovery

 Auto brands spend more       More than 70% of automotive
on television than average:    advertising in Australia and
   it’s still key for mass-     Canada is digital, proving
 audience brand-building        that the channel can take
                                  consumers through the
                                 whole customer journey

                                                              1
Automotive adspend will
shrink 21% in 2020
Automotive advertising               Faced with pressure on both
expenditure is expected to shrink    supply and demand, car brands
by 21.0% in 2020 across 10 key       cut their ad budgets sharply when
markets according to Zenith’s        the severity of the crisis became
Automotive Advertising Forecasts.    clear. The months of April and May
That’s two-and-a-half times faster   had the greatest decline in most
than the decline of the ad market    markets. Year-on-year declines have
as a whole in these markets.         since eased, and Zenith expects
                                     them to moderate progressively
The markets included in this         over the rest of the year.
survey are Australia, Canada,
Germany, India, Italy, Russia,       However, automotive adspend is
Spain, Switzerland, the UK and       poised to outperform the market
US, which collectively account for   in both 2021 and 2022. Initially the
57% of all global adspend.           large decline in 2020 will make
                                     the comparison easier in 2021, but
The spread of the novel              delayed purchase decisions, and
coronavirus and its effect on        persistent reluctance to use shared
the global economy have left         and public transport will lead to
consumers uncertain about their      the first growth in passenger car
financial futures. As a result,      sales since 2017.
many have delayed discretionary
purchases, especially big-ticket     Year-on-year growth in
items like cars: in a global         adspend (%) - ten key markets
consumer survey conducted by
GlobalWebIndex at the beginning                       10.5          11.4
of July, 80% of people said they                         4.4            4.2
planned to delay big purchases.         2020
Car manufacturers have also
suffered from disruption to their                      2021          2022
supply chains, as lockdowns shut
down manufacturing in different            -8.7
countries at different times.
                                      -21.0

                                           Automotive          Total market

                                     Source: Zenith

                                                                              2
Automotive adspend will
remain behind its 2019
level in 2022
Despite the speed of recovery           Automotive advertising is a highly
in 2021 and 2022, automotive            visible and substantial part of the
advertising is forecast to be 2.8%      advertising market, representing
lower in 2022 than it was in 2019.      9% of all advertising in 2019.
It will have recovered less lost
ground than the market as whole,        “Automotive
which is forecast to be just 0.6%
below its 2019 level in 2022.           advertising will
This suggests that automotive
advertising will outperform the
                                        outperform the
market beyond 2022.                     market beyond 2022”

Total automotive adspend (US$bn)

   32.8                          31.9
                        28.7
                 25.9

   2019          2020   2021     2022

Source: Zenith

                                                                              3
Worst-hit markets to benefit from
biggest recovery in 2021
Year-on-year growth in total adspend by market

                               -18.8
       Australia                              2.6
                                                5.8
                                       -8.1
          Canada                              14.1
                                              10.0
                               -17.3
       Germany                                 2.6
                                              1.2
                            -22.6
            India                                             21.8
                                                     10.3
                        -25.5
            Italy                                          15.7
                                                          14.0
                                 -13.2
           Russia                                      15.8
                                                     11.4
                     -31.4
           Spain                                              22.6
                                               4.0
                    -38.8
    Switzerland                                                   29.7
                                              0.9
                    -32.1
United Kingdom                                                22.5
                                                    8.1
                             -21.9
              US                                     11.6
                                                        17.3

   2020          2021           2022

Source: Zenith

                                                                         4
The timing of the advertising        “Most markets will
downturn caused by the
coronavirus has been unlike any      see rapid growth next
other on record. Budgets were cut
heavily and quickly, but money
                                     year in proportion
started to return to most markets    to the decline they
after three or four months,
leading to more moderate year-       suffered in 2020”
on-year declines. This intense
shock to spending will flatten the
year-on-year comparisons in 2021.    Australia and Germany are
                                     forecast to experience weaker
Most markets will see rapid growth   recoveries in 2020 and 2021;
next year, generally in proportion   Australia’s ad market has suffered
to the decline they suffered in      decreased demand since 2017,
2020, even though spending will      while new vehicle demand in
still be substantially below 2019    Germany will be supressed by
levels. Switzerland, for example,    government restrictions and
is forecast to enjoy the strongest   incentives designed to promote
growth at 30% after the steepest     alternatives to car use.
decline in 2020 of 39%.

                                                                          5
Auto brands lag behind the
market in digital
Share of adspend by medium, 2019 (%)

                                                                                 49.1
                                                                             42.2
                               31.6
                                   27.0
  10.9 7.3                                8.3 6.4
                 3.0 5.1                                0.7 0.5    3.3 4.6

Newspapers Magazines              TV      Radio         Cinema      OOH      Digital

   Automotive              Total market

Source: Zenith

Digital advertising is the most                     advertisers also spend more in
important single channel for                        cinema, which is good at brand-
auto brands, but is less than the                   building among young, relatively
market as a whole. Automotive                       well-off audiences, and radio, a
brands spent 42% of their budgets                   particularly relevant medium given
in digital channels in 2019, while                  that a large proportion of radio
the average brand spent 49%                         listening takes place in the car.
digitally. Automotive brands are
also less prominent in magazines                    Interestingly, automotive brands
and out-of-home.                                    spend substantially more on
                                                    newspaper advertising than the
Television is the second-biggest                    average brand. That’s primarily
channel for auto advertisers,                       due to two markets, Germany
which spend significantly more of                   and India, where newspapers
their budgets in television than                    still have high reach among
the average brand. Television is                    well-educated, wealthy readers.
still a key platform for their mass-                Auto brands make use of their
audience brand-building, though                     ability to convey more detailed
premium digital environments                        information such as brand values,
are starting take over this                         specifications and accessories.
role for some audiences. Auto

                                                                                         6
But digital advertising is the only
channel forecast to grow
Zenith predicts that digital will       “Brands will focus
be the only channel in which
auto brands spend more in 2022          more on premium
than in 2019. Brands will focus
more on premium digital video
                                        digital video and
to compensate for declining             make better use of
prime-time TV ratings, and make
better use of their customer            their customer data”
data to target digital ads more
effectively. Even before the
pandemic, digital channels were         Newspapers and magazines have
becoming more important in              been losing market share for years
the path to purchase, and the           as their readers migrated online,
pandemic has only accelerated           and are forecast to recover barely
that trend. We expect this to           any of the ad revenues they lost
continue over the next few years.       in 2020 by 2022. Out-of-home and
                                        cinema, by contrast, are forecast
                                        to recover strongly in 2021 and
Total growth in automotive              2022 from even steeper losses in
                                        2020, which were caused by social
adspend 2019-2022 (%)
                                        distancing restrictions.

     Digital                      9.0   Television and radio will remain
                                        important media for automotive
         TV                -5.8
                                        advertising, with relatively
      Radio              -6.9           restrained decline between 2019
                                        and 2022.
       OOH             -10.1

    Cinema         -15.8

Newspapers     -26.6

 Magazines -27.9

Source: Zenith

                                                                             7
Australia and Canada are
     pioneering digital-led auto
     marketing
     Australia and Canada are the most                         75% in 2019 to 79% in 2022, and in
     advanced markets for automotive                           Canada from 72% to 75%.
     digital advertising, each devoting
     more than 70% of total spend                              In other markets the potential for
     to digital channels. These                                growth is even higher, especially
     markets demonstrate that digital                          in the markets that are currently
     advertising can take consumers                            lagging behind. Zenith forecasts
     through the whole customer                                the digital market share of auto
     journey, from awareness to                                advertising to rise in India from
     consideration to purchase. Even                           15% in 2019 to 23% in 2022, in
     here there is potential for more                          Switzerland from 27% to 33% and
     growth – digital’s share of spend is                      in the US from 31% to 38%.
     forecast to rise in Australia from

     Digital share of automotive adspend (2019, %)

     75.3 72.0
                                                                     62.7
                       51.6                         53.0
                                             47.8

                                     32.2                                   31.0
                                                              26.9
                              15.2
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     Source: Zenith

                                                                                                    8
AUTOMOTIVE
      CATEGORY GROWTH

Demand for new cars will         China was the main
  start growing again in        source of sales growth
 2021, after three years         in the past decade,
of decline – including the      but India will be more
    steep drop in 2020        important in the new one

                                      12%
Investors are rewarding      High-performing brands can
 brands with advanced         expect 12% annual growth
 drivetrain technology          once the crisis is over,
                               six times faster than the
                                   market as a whole

                                                           9
Global car sales growth to
resume in 2021, with long-
term growth of 2% a year
The coronavirus crisis will lead to            “Car sales are
a steep drop in car sales in 2020
– Euromonitor is forecasting a                 forecast to fall 13% in
13% global decline. The European
Automobile Manufacturers’
                                               2020 after consumers
Association forecasts a 25%                    put discretionary
decline in Europe. Sales fell
sharply as countries entered                   purchases on hold in
lockdown and consumers put most                lockdown”
discretionary purchases on hold.

But consumers have generally                   followed by 5% growth in 2022,
not given up the idea of buying                when sales will return to 2019
new cars, just postponing it.                  levels. The global market is then
Euromonitor forecasts a 10%                    expected to resume a slow but
recovery in unit sales in 2021,                steady growth of 2% a year.

Global passenger car sales (million)

                              80.2 81.3 80.3 76.0
               70.5 74.2 76.5                                            72.4 76.2
          67.1                                                    66.1
59.7 63.0

 '10   '11   '12      '13   '14   '15   '16   '17   '18   '19      '20   '21   '22

Source: Euromonitor

                                                                                     10
China has been the main source
of sales growth
Annual growth in passenger car sales 2010-2019 (%)

       Australia   -0.4
         Canada                            2.0
          China                                               6.2
         France          0.0
       Germany                              2.2
           India                                  3.1
           Italy      -0.3
          Russia -0.5
          Spain                                         3.8
     Switzerland               0.6
 United Kingdom                      1.4
            USA                                         3.7

Source: Euromonitor

China stood out as the fastest-            “Car sales in China
growing market by some distance,
with an average growth rate                have been boosted by
of 6.2% a year. A combination
of rising wealth, a reserve of
                                           rising wealth, first-
consumers who have never                   time car buyers and a
previously owned cars, and a
burgeoning domestic car industry           burgeoning domestic
have all boosted car sales here.           car industry”
India, Spain and the US have been
strong contributors, each with
annual growth between 3% and
4%. Australia, France, Italy and
Russia have all been negative.

                                                                    11
All markets are facing steep
declines in 2020
Year-on-year change in passenger car sales 2020 (%)

                              -10.7                             Australia
                          -10.9                                 Canada
-20.2                                                           China
                      -12.4                                     France
                                      -8.6                      Germany
                              -10.7                             India
              -15.2                                             Italy
              -14.9                                             Russia
              -15.0                                             Spain
                         -11.2                                  Switzerland
                                      -8.8                      United Kingdom
                      -12.3                                     USA

Source: Euromonitor

With the global car market                   “The pain will be
forecast to shrink 13% in 2020
in reaction to the spread of the             shared across all
novel coronavirus, the pain will be
shared across all major markets.
                                             major markets”
China, where the virus emerged
and has some of the toughest
restrictions on movement to                  markets are facing 9%-12%
prevent its spread, faces the                declines. Clearly there is a great
steepest decline of 20%. Italy,              range of uncertainty here, but we
Russia and Spain are facing 15%              can be sure that all these markets
declines this year, while other              face a very tough year ahead.

                                                                                  12
India to lead long-term
growth after recovery
Average annual growth in passenger car sales
2021-2025 (%)

       Australia                                      2.9
         Canada                      1.4
          China                                                      4.5
         France                1.0
       Germany           0.5
           India                                                                  5.9
           Italy               0.9
          Russia                           1.8
          Spain                1.0
     Switzerland               1.0
 United Kingdom                  1.2
            USA                            1.9

Source: Euromonitor

In the longer term prospects for                 All of the 12 markets we surveyed
car sales are rosier. Lingering                  are forecast to grow in the
concerns about the safety of                     long-term, and that’s after
public transport and ride sharing                the expected big jump in 2020
will create new demand for                       as markets recover from the
personal vehicles, and some                      coronavirus shock. Asia Pacific will
consumers will find they prefer                  enjoy the fastest growth, with 3%-
holidaying in their own country                  6% annual increases for Australia,
and travelling by car to flying                  China and India. Canada, Russia
abroad.                                          and the US will grow by 1.4%-
                                                 1.9%, while the Western European
                                                 markets will lag behind at 0.5%-
                                                 1.2%.

                                                                                        13
Toyota is the biggest-selling car
 brand, while Volkswagen added
 the most sales
 Top ten global car brands – sales in millions of units
 (and average annual growth rates)

  +2.8%                                                                                            2010
                +3.8%                                                                              2019
                         +4.4%
                                  +3.5%        +3.0%
                                                       -2.1%
                                                                +1.9%         -1.6%
                                                                                       +4.4%     +7.9%

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 Source: Euromonitor

 Toyota sold 7.1 million units                          “Mercedes-Benz
 globally, more than any other
 brand, up from 5.5 million in                          was the fastest-
 2010. Over this time, its sales
 grew 3.8% a year on average.
                                                        growing of the top
 Mercedes-Benz was the fastest-                         ten brands, enjoying
 growing of the top ten brands,
 enjoying an average of 7.9% a                          average growth of
 year, while Chevrolet and Ford                         7.9% a year”
 suffered declines of 1.6% and 2.1%
 respectively. Volkswagen added
 the most unit sales in this period,
 rising from 4.4 million to 6.1
 million sales a year.

                                                                                                          14
Tesla is by far the fastest-
growing global brand
Looking at the fastest-growing         brand in the world. It’s still
global car brands, one stands out      growing rapidly, though, despite
far above all the others: Tesla,       this increased scale, with 46%
which grew by an average of            growth in 2019.
110% a year from 2010 to 2019.
That’s partly because sales were       Jeep, Jaguar, Porsche and Land
extremely low in its early years,      Rover have all done well over the
totalling just 423 vehicles in 2010.   decade, beating the growth rate
By 2019 sales rose to 335,000,         of the market – 2.7% a year – by
making it the 44th-largest car         between 3.5 and 5.8 times.

Average annual change in unit sales (%)

     Tesla                              110.0

     Jeep              15.7

    Jaguar            13.0

   Porsche            12.5

Land Rover            9.5

     Opel    -3.4

   Citroën -4.9

    Lancia -5.6

  Chrysler -5.7

      Fiat -5.9

Source: Euromonitor

                                                                           15
Investors have mixed feelings
about the manufacturers’
prospects
The share prices of most car          rising 141%. Toyota, Hyundai and
manufacturers have fallen during      Volkswagen shrank by 7%-9%, not
2020 as the markets have tried        much more than the Dow Jones
to price in the impact of the         Index’s 5% decline, while General
pandemic. That means assessing        Motors and Ford fell by more
both the immediate drop in sales,     than 20%. This was a collective
as consumers deferred large           assessment not just of the impact
purchases, and manufacturers’         of the coronavirus on immediate
capacity to adapt to changing         sales, but also of how prepared
market conditions as sales start to   manufacturers are to meet
pick up.                              consumers’ demands for cleaner
                                      and more efficient vehicles. Those
The variance in share price           with a clear plan for transitioning
performance has been very             to advanced drivetrain technology
wide. Honda’s rose by 2%, while       will be best positioned for the
Tesla’s more than doubled,            recovery.

Change in share price, 1 January – 1 July 2020 (%)

          Tesla                                     141.1

        Honda     2.2

         -5.0     Dow Jones Index

        -7.4      Toyota

        -7.9      Hyundai

        -8.8      Volkswagen

-20.7             General Motors

-23.0             Ford

Source: Euromonitor

                                                                            16
The best-performing brands can
expect six times more growth
than average
Excluding Tesla the fastest-             “We can expect the
growing brands grew by 13% a
year in 2010-2019, ten percentage        best-performing
points faster than the market as
a whole, which grew by 3%. The
                                         brands to grow by
fastest-shrinking brands declined        12% a year, compared
by 5% a year, underperformed by
8 points.                                to 2% for the market
                                         as a whole”
Euromonitor predicts growth in
car sales to be slightly slower
once the main coronavirus-related        the best-performing brands to
fluctuations are over, forecasting       grow roughly 12% a year in the
2% annual growth between 2022            medium term, compared to 2% for
and 2025. Taking this forecast           the market as a whole, while the
as a base and assuming similar           worst-performing brands shrink by
levels of performance, we expect         6% a year.

Average annual growth in sales, 2022-2025 (%)

                      12.1
                              Worst-performing brands

            2.1               Market average

                              Best-performing brands

-5.6
        2022-2025

Source: Euromonitor, Zenith

                                                                             17
AUTOMOTIVE
        CONSUMER TRENDS

 The pandemic will lead to          Consumers are looking
   a resurged interest in           to delay purchase, but
  personal car ownership                  not cancel

  Growing environmental            Brand messaging should be
concern will drive interest in   tailored for new entrants, and
      electric vehicles           for changing attitudes post-
                                            COVID-19

                                                                  18
A return to private
ownership at the expense
of public transport and
shared mobility
Over the past three years,           Before the pandemic, the
passenger car sales decreased        commute was the most common
globally. There are a number of      journey made by consumers.
potential reasons for this – new     According to the Euromonitor
innovations and new players in       Mobility survey, on average 74%
the car-hailing, car-sharing and     of consumers travelled to work
micro-mobility (small, personal,     or school either most days or
lightweight devices with lower       at least one-to-two days each
speeds) categories, and changing     week. Of those commuting, 34-
attitudes toward mobility and to     63% typically use their personal
the environment. As a result, even   car, and 15-54% use public
traditional automotive brands        transportation. This percentage is
have invested in alternatives to     mostly dependent on population
the ownership model in order to      density, and public transportation
compete.                             infrastructure in the individual
                                     countries. However, particularly
However, the emergence of            amongst the younger and urban
COVID-19 may well change it all      populations, ride-sharing / hailing
again, with new rules around         and micro-mobility also gained
social distancing and restrictions   traction as affordable and flexible
on human movement.                   alternatives to driving.

                                                                           19
During lockdown, a huge decrease
in the number of trips and a                                                         “total cycling
reduction in available services
facilitated the adoption of                                                          sales in April
walking and cycling as transport
alternatives. In London, Transport                                                   were up by over
for London operated 60% of tube
services and close to 80% of bus                                                     50% versus last
services during the crisis. But
in May, as lockdown eased, the                                                       year”
requirement to social distance
meant that they could only                                                           Association of Great Britain
take 15% of the normal number                                                        announced that total cycling
of passengers on the tube and                                                        sales in April were up by over 50%
bus networks, even as services                                                       versus last year, and Santander
increased. As a result, the Bicycle                                                  bike hires increased greatly.

1,400,000

1,200,000

1,000,000

 800,000

 600,000

 400,000

 200,000

        0
             Feb-19

                               Apr-19
                      Mar-19

                                        May-19
                                                 Jun-19
                                                          Jul-19
                                                                   Aug-19

                                                                                               Nov-19
                                                                            Sep-19
                                                                                      Oct-19

                                                                                                        Dec-19
                                                                                                                 Jan-20
                                                                                                                          Feb-20

                                                                                                                                            Apr-20
                                                                                                                                   Mar-20

                                                                                                                                                     May-20
                                                                                                                                                              Jun-20

Source: Transport for London; Number of Bicycle Hires

                                                                                                                                                                       20
Personal safety will continue to
drive consumers’ desire to avoid                                               “Personal safety
public and shared transportation
for the immediate future. Global                                               will continue to
Web Index data shows that
people have an increased desire                                                drive consumers’
for flexibility when it comes to
working from home and using                                                    desire to avoid
alternatives to public transport
post-pandemic; as lockdown eases                                               public and shared
and people return to work, we
will likely see a resurgence in                                                transportation for
private car ownership.
                                                                               the immediate
                                                                               future.”
Levels of interest in post-pandemic behaviours (%)

                                                                                                                               Australia
                             69.0

                                                                                            77.2

                                                                                                                               China
                                    58.3
                                           56.3

                                                                                                   60.3
                                                                                                          56.9
                                                         50.3

                                                                                                                               France
                                                                       52.6
                                                  44.4
        43.6

                                                                                                                 47.4
               41.6
                      40.6

                                                                45.3
 40.4

                                                                              44.1

                                                                                                                               Germany
                                                                                                                        41.4
                                                                                     39.5

                                                                                                                               India
                                                                                                                               Italy
                                                                                                                               Spain
                                                                                                                               UK
                                                                                                                               USA
           Working from home                                             Using alternatings to
              permanently                                                  public transport

Source: Global Web Index

                                                                                                                                           21
Those consumers that were
planning to purchase a car before                              “a promising
the pandemic will extend the
timeframe for purchasing, but will                             increase in
still buy. Global Web Index data
shows that 41-60% of consumers                                 searches for
who delayed the purchase of a car
will prioritise it post COVID-19.                              automotive
This is validated by Google                                    brands as
Trends data that shows a
promising increase in searches for                             restrictions have
automotive brands as restrictions
have eased. The length of this                                 eased.”
extended period will depend on
the control of the virus in each
market.

                                                                                                           60%
                                                                                  58%

                                                                                              58%
                                                                      46%
                                                         44%
                                             42%
        41%

                     41%

                                 41%
               32%

                                                                25%
                                       20%
                           19%
  18%

                                                   16%

                                                                            16%

                                                                                        16%

                                                                                                     16%

 Australia India           Spain       Italy        UK          China       France       USA        Germany

    Delayed
    Priority

Source: Global Web Index

                                                                                                                 22
Electric vehicles appeal to
consumers’ sustainable attitudes,
but they will require financial
incentives to buy
As the Global Web Index data                                                                 more concerned about climate
shows, the importance of                                                                     change and the environment. The
“companies behaving sustainably”                                                             pandemic has given consumers a
and in “reducing my carbon                                                                   brief view into life without cars
footprint” have increased                                                                    and emissions, and this positive
because of Coronavirus. The                                                                  experience will create increased
biggest claimed increase in the                                                              pressure on governments and
importance is seen in China                                                                  automotive brands to switch to
and India while the lowest is in                                                             electric or hybrid. Already in 2020
Germany. This aligns with the                                                                we can see an increased volume of
Global Web Index analysis that                                                               conversation regarding “electric
middle-income countries (as                                                                  cars” on social media platforms -
defined by The World Bank) are                                                               by both brands and consumers.

                                                                                                                                                 Australia
                                 86.9%

                                                                                                         84.6%
                                                                                 79.4%
         77.7%

                                                                                                                                                 China
                                                                                                                 68.3%
                                                 63.9%
                                         63.0%

                                                                                                                         61.5%

                                                                                                                                                 France
                 54.8%

                                                                                         52.9%
                                                         52.2%
 51.3%

                                                                 48.5%

                                                                         47.4%
                         47.1%

                                                                                                                                 46.5%

                                                                                                                                                 Germany
                                                                                                                                         43.1%
                                                                                                 42.7%

                                                                                                                                                 India
                                                                                                                                                 Italy
                                                                                                                                                 Spain
                                                                                                                                                 UK
                                                                                                                                                 USA
 Companies behaving sustainably                                           Reducing my carbon footprint

Source: Global Web Index

                                                                                                                                                             23
300

250

200

150

100

 50

  0
                   01/01/2019 - 27/12/2019                   14/01/2020 - 30/07/2020

      Source: Publicis Media Social Tools (content search: “electric car”)

The post-pandemic desire to avoid
public transportion will likely                 “Brands have an
motivate younger and first-time
buyers into the market. These                   opportunity with
consumers previously relied on
alternative mobility methods, not               their electric
only for lower cost and flexibility,
but for environmental reasons.                  models to
Brands have an opportunity with
their electric models to appear                 appear relevant
relevant and responsible to these
new and young buyers.                           and responsible
                                                to new buyers”

                                                                                       24
However, to truly become a viable
alternative to petrol and diesel,     “More than
brands and/or governments will
need to address two of the biggest    pre-COVID-19,
consumer barriers: finances and
“range anxiety.” The cost of          the prices and
electric vehicles is still much
higher than that of regular diesel    payment options
or petrol cars. In markets such as
China, the government provides        of electric
incentives that ultimately lower
the price for consumers. Whereas      cars will need
in Russia, there are no tax
reductions, subsidies or support,     to appeal to
and consumer interest and sales
are low. More than pre-COVID-19,      financially
the prices and payment options
of electric cars will need to         cautious
appeal to the financially cautious
consumers.                            consumers”
The other main barrier is “range      from home will become more
anxiety,” which is the worry that     important. Tools like Google Map’s
the electric car battery will run     charging point function, which
out of power before arriving to its   shows the location and availability
destination or a charging point.      of charging points in the US and
Currently this worry is justified,    UK, and Volvo’s Polestar 2 in-car
as the number of charging stations    tech that calculates in advance
is inadequate or imbalanced           if charging will be required and
across most markets. But as sales     where it can be done, will help to
grow, the need for charging away      ease consumer concern.

                                                                            25
Brands need to develop exisiting
digital solutions, be flexible and
be seen as helping consumers in
uncertain times
According to Global Web Index              This suggests that there will be
data, 56% of people aged 16-24             new, younger entrants in to the
are either occasional drivers or           market. In the UK, the AA Driving
don’t drive at all, compared to            School saw lessons increase more
only 30% of those aged 55-64. But          than 500% after the government
61% of people who are extremely            announced lessons could resume
or very interested in using                in early July.
alternatives to public transport
post-pandemic are under 35.

How often drive a car on average

                 16.7       15.4       17.1        18.5
    30.8
                            14.5        13         10.7
                 18.4
                                                                 Regulars
                             23        19.6        18.2
    25.2                                                         Semi-regulars
                 23.9
                                                                 Occasionals
    21.6                                                         Non-engagers
                            47.1       50.3        52.6
                  41
    22.4

  16 to 24     25 to 34    35 to 44   45 to 54   55 to 64

Source: Global Web Index

                                                                                 26
Global norms                             Global automotive norms
  2017-2019, 243 projects                        2017-2019, 15 projects

                                                                         25%
                            40%

        72%                                              85%
                           27%                                           10%

     Awareness          Consideration         Purchase

Source: Touchpoints ROI Tracker – Norms, 2017-2019

Touchpoints is Publicis Media’s              For example, entirely remote
proprietary contact measurement              buying is likely to appeal to a set
and planning tool that evaluates             of consumers who use platforms
and helps to optimise all forms              such as Uber, Deliveroo, etc.
of contact that brands have at               rather than visiting a dealership.
each point on the consumer                   According to Touchpoints data,
journey. This data tells us that             even pre-pandemic dealerships
whilst brands in the automotive              were less influential for younger
category have high awareness,                consumers. The influence metric
consideration and purchase are               - a score from 0-100 that gives
much lower than we see across                us the relative influence per
all categories combined. Given               exposure of each contact point on
that new entrants will have                  category purchasing - for visiting
limited knowledge or associations            a dealership is 83.61 for under
with different brands, this is an            25s compared to 94.99 for age
opportunity to consider whether              55-64. Some brands, like Renault,
the drivers of consumer choice               have already accelerated remote
in a post COVID-19 world have                buying capabilities and launched
changed as well.                             a new end-to-end online car retail
                                             platform.

                                                                                   27
Touchpoints influence for visiting a dealership

                                                                           94.99
                                                           89.61
                                        87.61
                        84.84
       83.61

    Under 25          25-34            35-44              45-54          55-64

Source: Touchpoints ROI Tracker - Automotive Norms, 2017-2019

Brands will also need to                        affected by COVID-19 in the
communicate differently with                    US, Hyundai reinstated their
consumers as a result of the                    Assurance Job Loss Protection
pandemic. The Global Web Index                  program, a program to protect
coronavirus study shows that 53-                shoppers in the event that they
85% of consumers want brands                    lose their job as a result of the
to run advertising showing their                pandemic.
response to coronavirus and
helping customers. This would                   Consumers will also likely be
include easing the customer                     looking at different features as
journey, providing flexibility                  they reassess their needs. In
in purchasing and options for                   China, some brands are marketing
financial help. The same study                  their vehicle’s “anti-virus
shows than 80% of people expect                 features.” For example, Geely
some financial impact from the                  adapted its “Healthy Car Project”
pandemic. Since a car is one of                 from appealing to consumers’
the largest purchases a consumer                concern about air pollution to
makes, incentives can help ease                 easing their worry over the spread
hesitations; 64%+ of consumers                  of the virus. Meanwhile, Ford is
want brands to offer flexible                   testing a software enhancement
payment terms and 69%+ expect                   that can heat the inside of
promotions, offers and loyalty                  a vehicle until viruses are
perks. To help support customers                deactivated.

                                                                                     28
Above all, recent changes in
consumer behaviours and media                       “Recent changes
consumption will drive all
purchases online to a greater                       in consumer
extent than pre-COVID-19, even
of big-ticket items. Touchpoints                    behaviours will
data shows that the automotive
category already has greater                        drive more big-
brand experience share from
digital (+10%) and earned (+5%)                     ticket item
touchpoints than the global
category norms.                                     purchases online”

Global norms -                       Global automotive norms -
2017-2019                            2017-2019
243 projects                         15 Projects

  47.6                                46.2
                36.1                                                     Paid
                                                    31.9
                                                                  21.9   Owned
                              16.4
                                                                         Earned

         69.6
                                             59.6
                                                           40.4          Offline
                       30.4
                                                                         Online

         37.3                                38.4                        Spons/events
                       27.7                         26.9                 Mass media
                19.5                                       16.5          Advice/reco
                              9.3      8.5                        9.7
  6.2                                                                    POS
                                                                         One-to-one

Source: Touchpoints ROI Tracker – Norms, 2017-2019

                                                                                        29
Pre-COVID-19 digital channels
were a key source of information   “As purchase
and research for consumers. But
post pandemic, this will now       moves online
extend to the entire consumer
journey, and the driving           there will be
experience itself. Brands should
enhance their existing digital     new start-ups
solutions as a priority.
                                   ready to take
In the US, Lexus recently used
augmented reality (AR) to launch   advantage”
the 2021 IS model. This method
not only allowed customers         Just as pre-COVID-19, ride
to see and walk around the         sharing and micro mobility
vehicle from their own home,       were disrupting the category,
but also showcased different       as purchase moves online
personalisation options. Other     there will likely be new start-
brands have also made use of       ups or platforms ready to take
virtual showrooms, AR “test        advantage. Traditional brands will
driving” and guided tours.         need to adapt quickly.

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