Add Power to Automotive Purchase Incentives with Payment Choice

Add Power to Purchase Incentives with Payment Choice

Deciding when to hit the gas on purchasing a new vehicle depends on factors ranging from personal finances to the selection of cars on the lot—but getting across the finish line can often come down to the right mix of service, convenience and a compelling offer. In particular, purchase incentives rank among consumers’ top three considerations, according to Onbe’s Summer 2023 Automotive Survey.

While increased supply has helped automotive sales accelerate after a sluggish 2022, affordability remains a challenge to market recovery. According to Experian, the average monthly payment for a new vehicle was $725 in Q1 2023, an 11.5% year-over-year increase, and the average interest rate for a new vehicle was 6.58%, up from 4.10% in 2022. These conditions have priced out up to 10% of potential buyers, according to Cox Automotive. Although automotive companies can’t change what’s in their customers’ bank accounts, they do have the power to influence vehicle purchases through engaging incentive experiences that prioritize consumer choice and convenience. Dealerships can also drive repeat business by encouraging incentive spend-back and return visits for vehicle maintenance, making incentives a crucial tactic for strengthening customer loyalty over the long term.  

Lack of payment choice was a top customer frustration

To get the most out of their investment in incentives, automotive companies must deliver on consumers’ desire for payment choice. The lack of choice was a leading cause of frustration when receiving an incentive from an automotive company, the Summer 2023 Automotive Survey found. Vehicle buyers reported that in most cases, they received a physical check or a discount off the purchase price, however, nearly half of consumers preferred direct deposit, and nearly one-third preferred to receive funds via a payment app. When receiving incentives under $100, prepaid cards were automotive customer’s top preference. Consumers also expressed frustration with the time it took to receive their incentive; of those who’d had a negative payment experience, 47% named a long wait time as a cause of their dissatisfaction.

With today’s modern payments gateways, automotive companies can offer payment options to meet every preference—from ACH to instant digital payments. Not only is offering choice simpler with a single point of integration but providing customers with instant gratification doesn’t have to cost a premium. For instance, dealerships could issue cost-effective virtual cards for immediate redemption, giving their customers the flexibility to spend their incentive online or in person via a mobile wallet. This instant and convenient payment method is both customer-friendly and far more economical than legacy payment processes.

Nearly half of consumers would spend their incentive at the dealership

Digital-first payment solutions also offer more ways for dealerships to earn back a share of the incentives they’ve paid out. The Summer 2023 Automotive Survey found that nearly half of consumers are very or somewhat likely to spend back their incentive at the dealership that issued it. Over a quarter of customers stated they would use their incentives to purchase vehicle accessories, and 21% would put their funds toward vehicle modifications. Automotive brands can do more to encourage spend-back by promoting special offers at the time of payment, further expanding the choices available to the customer.  

Incentives offer dealerships a powerful tool for enticing customers to return for vehicle service and routine maintenance. Here, too, it’s clear that payment choice is key to customer satisfaction. When asked what type of incentive would most influence them to go back to the dealership for service, survey respondents were nearly evenly split among various options, including a virtual card, physical card, and payment via PayPal or Venmo. As payment preferences continue to diversify, fulfilling popular choices will be an important part of making every incentive experience a positive one, which in turn can help ensure customer relationships endure long past the primary vehicle purchase.  

And although the auto industry continues to face challenges, with the effects of labor strikes, supply chain issues, and strong consumer demand likely to impact new vehicle prices, modernizing the incentive experience is one way every automotive company can improve resiliency in the face of market turbulence. Learn more about Onbe’s automotive payment solutions.

About the 2023 Automotive Pulse Survey

Onbe conducted a 19-question survey of consumers who own a vehicle in the US. We had 732 total responses with a 52% qualification rate after two qualifying questions, bringing us to a sample size of 385 respondents. Of these respondents, most were between 30 and 60 years old and earned between $25k and $125k.

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