The car industry was already under pressure entering 2020 — and COVID-19 only added to the stress.
Despite the added burden, automakers seem surprisingly hopeful about online sales and a rebound that’s on its way. More than other car brands, luxury automakers have the data to support their optimism.
“In the last seven days, luxury searches on our site are up 25%,” explained CEO of Cars.com Alex Vetter to Penta. “The bounce is becoming very apparent.” Are pent-up consumers with steady jobs preparing for their next exciting purchase?
Luxury carmakers seem prepared for good sales numbers as the economy reopens. What have their ad numbers been the last two months and how have they shifted their creative approach?
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Overall Car Spending Is Down, But Luxury Sales Look Promising
COVID-19 has caused global car sales to drop over the last several months, with many automakers reporting that April was the worst month for sales in decades.
According to the Wall Street Journal, industry-wide U.S. auto sales in April were down 50% YoY, and the selling pace was the lowest since 1979. Though overall sales dropped off, online sales helped soften the blow. Not to mention, a 50% cut felt better to automakers than the 80% drop-off in China.
“It is really not doom and gloom,” said vice president of data and analytics at research outfit J.D. Power Tyson Jominy. “It’s pretty remarkable how quickly we’re actually rebounding.” Many predict a strong rebound in the States, just like China has seen.
BMW CEO Oliver Zipse told shareholders there was a “glimmer of hope coming from China.” Despite the 88% drop in sales for the luxury brand in February, sales were up 14% YoY in April.
The 14% increase in sales YoY is impressive considering the massive cut just months prior and the fact that general passenger car sales are still down 1.5%. While the market is certainly different in China than the US, the rapid increase in luxury sales provides hope to U.S. counterparts.
Vetter reported that the bulk of online car shoppers are typically looking for vehicles under $20,000, but last month the number of searches for cars over $30,000 doubled.
Why? Cars.com research shows that people are using their cars to go on leisurely drives to get out of the house, while others who previously used ride-hailing or alternative forms of transportation are looking for their own private vehicles.
The total national auto advertising in April was down 25% MoM. This is significant because last year spend was flat between March and April, showing that this is not a seasonal drop.
When we narrow in on mass automakers compared to luxury car brands, we see big differences.
On average, the weekly ad spend of mass automakers dropped 30% MoM. The average weekly spend of luxury car brands also dropped, but not by nearly as much. Luxury ad spend experienced a 16% MoM decrease.
Luxury brands adjusted creative quickly during the pandemic to reflect how they are now doing business.
Brands that are still actively advertising include BMW, Mercedes-Benz, Lexus and other luxury lines.
Luxury automakers have shifted their creative to have a more human-first voice and to feature how shoppers can still make purchases while at home.
As the economy reopens, we will continue to examine how the car industry performs and what that means for key players in media.
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