Who searches where? A new car buyer study

Abstract

In this research, we address an important gap in the literature as to the search behavior of new car buyers. While the effect of the Internet on this process is known, the literature still lacks a comprehensive study which (1) concurrently covers time periods before and after the launch of the Internet, and (2) compares trends of consumer search across those combined years. Our unique survey dataset, which spans 22 years and includes consumer search information for new cars from both the pre- and post-Internet eras, enables us to investigate this important gap. Using a latent class model, we classify respondents according to variables that measure consumer search for new automobiles. We unveil changes in characteristics of the six latent segments of car shoppers. Our main findings show that, over the years since the advent of the Internet, the segment of car buyers who mainly search through car dealers/stores has been shrinking drastically. We also find evidence that, over time, the heavy Internet user segment has become less likely to have decided on the manufacturer/dealer prior to searching. Our findings benefit researchers, practitioners, car manufacturers, dealers, and buyers.