Online research helps Malaysians decide on car purchases

Every year, about 600,000 new cars are bought by Malaysians, pushing car ownership in the country among the highest in the world


OWNING a car in Malaysia is certainly a big deal. Chances are, you might be deemed “strange” if you do not own or drive your own car.

Yes, to some, not having a car could be likened to committing another heinous crime — of not owning and using a smartphone!

Still, buying the perfect car is not an easy decision, especially when the market is always updated with the latest models for the various levels of buyers from different demographics.

Every year, about 600,000 new cars are bought by Malaysians, pushing car ownership in the country among the highest in the world.

In 2014, Malaysia ranked third in the world with 93% car ownership, as reported by the Nielsen Global Survey of Automotive Demand report.

The country has also recorded the highest incidence of multiple-car ownership globally with 54% of households having more than one car.

As it is, customers have more than 20 car brands to choose from when they decide to buy a new model.

The boom in car ownership has been boosted by the two national car brands — Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) — that have been offering more affordable cars compared to imported names.

However, many believe that the local automotive sector has already reached maturity with growth hardly reaching double digits.

The total industry volume (TIV), which breached the 600,000 level when 605,156 units were delivered in 2010, started seeing a decline in 2016 when sales went down 13% to 580,124 units.

Last year, the Malaysian Automotive Association (MAA) reported that the TIV of newly registered vehicles declined marginally by 0.6% to 576,635 units in 2017.

For 2018, MAA projected a TIV of 590,000 units, a modest 2.3% growth from the figure reported last year.

With the abundance of choice and yet flattish demand, this revelation of Malaysian customers’ journey to purchasing cars would serve as pointers for carmakers, dealers and any other auto players to up their game in sales.

Customers Do Online Research — a Lot!
These days, owning a car is no longer just about getting from point A to point B.

According to a study done by Google Inc and market research agency Kantar TNS, three out of 10 Malaysians expect to drive a lot less over the next three years due to the rising popularity of ride-sharing and improving public transportation.

Grab, after its consolidation with Uber Technologies Inc within the South-East Asian region, is posing a threat to the auto sector.

Meanwhile, public transportation is also expected to draw 40% of daily commuters by 2030, as outlined in the National Land Public Transport Masterplan.

The Google-Kantar TNS study revealed that 96% of Malaysians conduct their initial research online for an average of two months before they decide on a car.

The study, that involved a 253 sample size, has divided Malaysian car consumers’ journey into four stages.

The first stage is considered the purchase consideration, or “I want a new car”; while the second is the initial research, also dubbed as “I want to know my options”.

The third stage, or further research, is also known as “I want to narrow down my options”; and the fourth, the point of sale, is also known as “I want to purchase my final choice”.

The study revealed that research among auto buyers is regarded as the most important stage, especially when about 34% of them approach the purchase from no prior product knowledge.

Approximately 45% might have some knowledge about the auto business and only 21% would possess detailed information on their choices.

It is during the online research stage that one car brand could stand out from the others.

Keyword “user reviews” tops the search list, followed by “best prices”, “professional reviews”, “price comparisons”, “quality performance” and “offers”.

Google’s findings also showed that 74% of consumers are open to considering new brands in the early research stages.

However, brand loyalty remains high and the consideration set is small. For instance, 79% of buyers are said to return to the same brand, while having 2.7 average number of brands in their minds.

Buyers’ decision can still be influenced though, as 37% of respondents said they would usually end up buying brands that are not part of their initial intention.

So, how can auto companies win their next customers?

Video Content is Superior
The study stated that research begins with a search and ends with videos, which would then be followed by dealership visits.

“Offline and online work very well hand-in-hand. Online serves more for research that triggers the purchase. The validation point is the dealership.

“You can think of online leading to the dealership where people see it physically and test drive the cars,” Google Malaysia business development manager Meredith Wallace (picture) told The Malaysian Reserve at the company’s customer study briefing in Kuala Lumpur yesterday.

She said 37%, or roughly four in 10 consumers, went to a dealership after watching online videos including car reviews and testimonials that influenced their final car model choice.

The study also showed that one out of four buyers would decide to purchase a certain car directly after watching an online video about a particular brand.

“Nowadays, everyone has a phone and they look at reviews and product performance videos, almost like virtually testing the car before they make it to the dealership,” Wallace added.

She said automakers can increase their buyers if they can remain relevant online with the right channel and content, and supported by networks of dealerships.

The tip could certainly come handy at a time when the market is experiencing a little snag.

As of the first quarter of 2018 (1Q18), data from MAA showed TIV dropped by 4%, or 5,699 units less to 135,140, compared to 140,839 registered in the corresponding period last year.

Perodua has maintained its position as the market leader, while market share grew to 41.1% from 35.7% a year ago with 55,568 units sold.

Honda Malaysia Sdn Bhd came second, but retained its standing as the No 1 non-national car brand with 24,182 cars delivered in 1Q18, resulting in a 17.9% market share.

Proton was in third with 12,843 units and a 9.4% market share in 1Q18.

Looks like it’s time to promote more products online.