HADDONFIELD, N.J. -

Many Canadian auto dealers are concerned about consumers becoming armed with more information, according to a report from Kijiji Autos.

For dealers, are better-informed consumers good or bad for business?

The answer could be both. The knowledgeable-consumer trend could have a negative impact on dealership profitability, but in the short term, more knowledgeable consumers can be more efficient to serve, and that could help increase profitability, according to Kijiji Autos.

But Kijiji says knowledge is power.

“And with Canadian shoppers gaining ever more — including knowing exactly what to pay for a vehicle —margin pressure is a true reality,” Kijiji said in its Kijiji Autos Annual Dealer Research Report.

The report, titled, “Driving Change: Navigating the journey to the ‘New Norm’ of car shopping in Canada,” says its key finding for 2019 is that consumers are more knowledgeable than ever, before entering the dealership.

“These highly informed buyers tend to visit fewer dealerships, value information quality over vehicle variety and have little interest in price negotiations,” the report states.

The report adds, “They’re also increasingly open to the idea of buying a car entirely online.”

Despite that finding, however, the report describes the test drive as remaining “a critical and highly valued part of the purchase process, making it a key area of focus for dealerships.”

Dealerships must deliver a welcoming, hospitable atmosphere to stay competitive, according to the report, which added that dealers must support that atmosphere with product experts who offer complete price transparency.

“Those that do will have a significant advantage in navigating the ever-evolving road ahead,” the report states.

For its report, Kijiji partnered with brand and shopper insights research company BrandSpark International. In conducting two surveys across Canada, BrandSpark asked auto retailers and consumers for their opinions on the year’s marketing trends, perceptions and practices.

“The rise of the empowered consumer” was a top trend.

“Today’s buyers are doing their research,” the report states.

How much research? In 2019, the average Canadian spent seven weeks browsing vehicle types, reading reviews, and comparing pricing.

Kijiji says more information is always a good thing. But the company stated that the consumer’s newfound knowledge “has led to a fundamental shift in the customer-dealer relationship.”

Traditional sales tactics don’t work for today’s car buyers, Kijiji said. Often, buyers know which car they want and what it should cost.

“What is increasingly valuable to them, however, are dealers that can make their buying experience as easy and pleasant as possible,” the report states.

The report is loaded with facts and figures to make its case: 40% of recent buyers only visited one dealership. Twenty-nine percent of consumers value the ability to negotiate price at the dealership. And 39% of consumers would consider purchasing directly online.

But with all that in mind, “pricing is still king,” according to the report.

Many Canadians are on a tight budget and want to lower expenses. Because of that, more buyers are traveling farther to save money on the car purchase. Specifically, they are willing to travel 70 kilometers to save $500 on average. Also, zero-percent financing piques their interest.

Sales and promotions a top selection influencer

Another key finding of the report: Sales or promotions that dealerships offer is the No. 1 factor influencing consumer selection.

“That being said, having quality vehicle information online is also crucial for success, as more and more consumers are researching their potential purchases and forming opinions before they enter the dealership,” the report said.

Another trend from the report: Although 53% of 18- to 34-year-old consumers use their mobile devices as part of their purchase or lease process, that means almost half of younger consumers do not use their mobile device as part of the buying process.

Dealerships that invest as if all younger consumers use their mobile devices in their buying or leasing process might not see the return on investment they’re expecting.

“These competing priorities require a balancing act — investing in and serving those using the “new” way, while still appealing to those who have yet to change,” the report states.

'Precipitous fall of Twitter'

The report goes on to note that although investment in digital advertising remains strong, mobile advertising has declined by 15% since 2017. However, the percentage of dealers planning to reduce their spending on traditional advertising has also decreased by 9% since 2017.

One reason for the decline might be what the report describes as “the precipitous fall of Twitter.” Twenty-five percent of dealers now use Twitter, compared to almost 50% in the prior year.

Dealers are abandoning the social media network, according to the report, which stated, “it appears some believe they jumped into mobile advertising too soon.” Sixty-seven percent of dealers used mobile advertising in 2018, compared to 82% in 2017.

The report offered a “regional insight,” noting that 78% of Ontarians said they were not likely to use social media as part of their search for a vehicle to purchase or lease.

The report offers some “top takeaways for dealers,” and the first is to “embrace the knowledgeable consumer.”

“Do a website content audit to ensure all vehicle information is clear, accessible, and communicates the information consumers are looking for,” the report said.

Additional takeaways are for dealers to ensure their online properties are optimized across all devices. And they should review their social media strategy and use data to evaluate which platforms and vendors might offer the highest rate of return.

What consumers want: Reviews matter

“So, what is it that consumers want?” the report asks.

In addition to the sales and promotions mentioned earlier, the report notes that “ratings and reviews matter.” The report describes dealer recognition of the importance of those reviews and “one of the biggest perceptual shifts for dealers over the last few years.”

But they don’t need to be all five-star ratings, the report notes. A rating of 4.4 along with a good number of recent, detailed reviews is much more effective than a 5-star-rated dealership with fewer, less detailed reviews, according to the report.

The report notes the top five aspects consumers value most when entering a dealership:

— Sales and promotions

— Past dealership experience

— Transparent pricing online

— Quality of vehicle information online

— Online ratings and reviews of the dealership

The report concludes that Canadian consumers want a seamless, transparent shopping experience tailored to their needs.

That means no pressure and no haggling.

“Dealers that invest in understanding and meeting these needs today can better navigate the ever-evolving road ahead,” it said.