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Consumers still not quite ready to switch from internal combustion

Friday, January 22, 2021 6:07 PM | Anonymous
The long-term trend toward electric vehicles continues to solidify. But because of the pandemic, consumer anxiety might be shifting automotive priorities toward familiarity and affordability.
According to a new report from Deloitte, that could be a reason why 74% of U.S. consumers are looking for a traditional internal combustion engine in their next vehicle.
For the report, "2021 Global Automotive Consumer Study," Deloitte surveyed more than 24,000 consumers from 23 countries, seeking opinions regarding issues impacting the global automotive sector.
Those issues include implications of the pandemic on consumer perceptions, the development of advanced technologies and the impact of digital automotive retail platforms.
A major portion of the report covers vehicle electrification and connectivity, but the report also covers vehicle financing trends and future vehicle intentions, noting that in India and the Republic of Korea, about a third of consumers plan to delay the acquisition of their next vehicle. In the U.S., 34% of respondents said the pandemic made them either delay or accelerate the acquisition of their next vehicle.
But in the area of electrification, the report notes that before the transportation torch passes from internal combustion to electric powertrains, consumers want more assurance regarding mileage, charging infrastructure rollouts and electric segment affordability.
"While the pandemic continues to play a large role in exacerbating this apprehension, stricter carbon emission regulations on the horizon point to a ‘closing window’ for the traditional ICE segment experience," the report states.
According to the report, only 26% of U.S. consumers are considering alternative engines for their next vehicle.
That is a 15% decline year-over year.
In the U.S. and Germany, battery range is the top concern about EVs. In the Republic of Korea, Japan and India, the lack of charging infrastructure is at the top of consumers’ minds.
Most consumers in the United States, Japan, Germany and India expect to charge their vehicles at home.
But in China, 51% of respondents intended to use available charging stations at work or on the street instead.
Perception rises on connectivity
In Asia, consumer perception of connected vehicles appears to be edging up. As many as 83% of Chinese consumers say the technology is beneficial.
But only 44% of U.S. consumers feel that way.
Sixty-four percent of U.S. consumers feel that with increased connectivity, they are most concerned about the possibility of hacking, and approximately the same percentage of consumers in Germany, the Republic of Korea and India feel that way.
Seventy percent of U.S. consumers like advanced vehicle features that promote greater safety capabilities such as blind-spot detection. But 65% of Germany residents say built-in navigation systems are their most important future vehicle option, according to the report.
Cost continues as a factor against advanced vehicle technologies. Seventy-four percent of U.S. consumers are not willing to pay more than $500 for infotainment.
Harald Proff, Deloitte Global automotive leader and partner, Deloitte Germany, said the pandemic has had a major impact on the global automotive industry.
"That said, the momentum toward a more connected vehicle future remains bright and full of promise. Ever stricter vehicle emissions requirements in many markets around the world are also pushing the goal of electric mobility forward. Efforts to realize these technologies will open up a new world of possibility," Proff said in a news release.
Financial concerns affect future vehicle intentions
Across the globe, the COVID-19 pandemic is making consumers in many markets rethink when they will buy their next vehicle and the type of vehicle they will buy.
Many people are deferring vehicle loan/lease payments. Some intend to acquire a less-expensive vehicle than originally planned.
Ten percent of Americans deferred their automotive payment in 2020. But 23% of consumers aged 18-34 did the same.
Eighty-four percent of U.S. consumers plan to purchase a similar vehicle in the future. But in India, the pandemic has made 57% of consumers plan to enter a completely different vehicle segment.
Sixty-six percent of U.S. consumers remain on the same timelines they originally had for purchasing their next vehicle. But 38% of consumers in India and 32% in the Republic of Korea say they might delay their next vehicle purchase.
Another finding of the study is that the COVID-19 pandemic has resulted in more virtual transactions. But because some aspects of the buying process are still difficult to digitize, that reinforces consumers’ desire for an in-person experience.
U.S. consumers remain largely in favor of in-person sales experiences. But consumers in India seem the most open to a virtual automotive transaction. Twenty-seven percent of those consumers prefer a fully virtual buying experience.
Authorized dealers will remain a part of the virtual buying process. Fifty-nine percent of U.S. consumers prefer to interact with a franchised seller.
Karen Bowman, vice chairman of Deloitte and U.S. automotive sector leader, said that unlike many other retail sectors that have seen a shift to online buying, many consumers see purchasing a vehicle as a personal experience.
"However, some people will be looking for a virtual sales experience to maximize convenience, speed and ease of use. This will likely result in a more complicated, and potentially costly, set of consumer expectations for dealers to meet at a time when businesses are looking to recover and thrive in the wake of the pandemic," Bowman said.

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