The Automotive Industry Report Q2 2018 the Report Explained

THE AUTOMOTIVE INDUSTRY REPORT Q2 2018 THE REPORT EXPLAINED

The automotive industry is ever-changing, making it the marketer’s job to explore new trends, big-picture ideas, and inventive strategies. IgnitionOne uses an index for every metric for efficient analysis of these trends.

The first year, quarter, or month in this report is set to a value of 100. Global statistics are broken down by region: North America, Europe, Latin America (LATAM), and Asia. Numbers are presented according to the North American and European car segmentations. EXECUTIVE SUMMARY

SITE VISITS In Q2 2018, the global automotive market saw a 4% increase in site visits from last year. This increase in traffic predominantly came from high growth in the LATAM market, which almost doubled in volume since Q2 last year. The mobile platform exhibited strong growth with a 21% increase in visits year-on-year, likely due to increased investments in mobile marketing and mobile site optimization.

ENGAGEMENT Overall site engagement grew by almost 10% this quarter over Q2 2017, driven primarily by higher quality visits in North America and EMEA. Engagement in North America this quarter was up 25% from Q2 last year, despite site traffic declining 2%. These numbers highlight the importance of identifying and prioritizing quality users with high intent, as opposed to focusing on site traffic volume alone.

LEAD VOLUMES Overall, leads in Q2 2018 stayed consistent with last year’s performance. Mobile continued its strong growth trend, with leads increasing by 13% from Q2 the prior year. Electric vehicles garnered an increase in leads by 32% in EMEA and 14% in North America, highlighting a key opportunity that is expected to expand in coming quarters. SEGMENT TRENDS SUVs continue to be highly popular globally, while trucks are receiving high interest in North America. The two segments attracted more than half of global site visits and leads in Q2, exhibiting sustained growth year-on-year. The significant increase in site visitors for SUVs across regions also corresponds with a decline in average engagement per visit—this is likely due to the changing composition of in-market customers at varying stages of the purchase journey.

YEAR-ON-YEAR FOCUS To provide meaningful indicators of industry trends, this quarter’s report highlights year-on-year analysis. The purchase cycle for car buyers is largely cyclical and can vary significantly by region and country; to account for seasonal factors, we prioritize highlighting year-on-year trends while still noting significant quarter-on-quarter shifts. SITE VISITS

GLOBAL BY QUARTER

Overall global auto site visits increased slightly this quarter, trending +4% year-on-year, driven in part by significant growth in developing markets in LATAM as well as continued elevated interest in EMEA. More broadly, the industry is bracing for an unpredictable 2H 2018 sales forecast due to pending tariffs and other economic factors.

120%

100% +4% YoY

80%

60%

40%

20%

0% 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 SITE VISITS

VISITS BY DEVICE

120%

100%

80% +21% YoY

60% -6% YoY -16% 40% YoY

20%

0% 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2

DESKTOP MOBILE TABLET

Desktop visits have dropped to a level more than 6% lower than Q2 2017. Tablet visits are declining significantly with 16% fewer site visitors than the same quarter in 2017.

In contrast, mobile continues to increase in importance for auto customers, showing 21% growth in mobile site visits from Q2 of last year. This growth can be attributed to auto marketers prioritizing mobile as a key channel, with investments in responsive sites, social strategies, and personalized site experiences to capture key customer journey moments. In particular, this focus on mobile marketing effectively captures millennial buying power: a report by JD Power states that 29% of new vehicles are bought by millennials, and estimates that by 2020 millennials are expected to be responsible for 40% of new car sales. The growing importance of mobile in the customer journey is evident in the increase in key performance indicators and growth trends surpassing desktop. SITE VISITS

VISITS BY REGION

200%

180%

160%

140% +83% YoY 120%

100%

80% +9% YoY 60% -2% YoY -17% 40% YoY

20%

0% 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2

EMEA NA LATAM APAC

The LATAM economic rebound has been a driving contributor to overall global growth in auto sales, with Brazil and Chile remaining as key players in regional growth. Overall KPIs remain strong YoY, though down from Q1 2018, which could indicate slower growth in the coming quarters.

Year-on-year, Q2 2018 saw 9% more site visits in EMEA than Q2 of the previous year, with a similar pattern of June receiving the highest traffic within the quarter. From a quarter-on-quarter perspective, European website visits have dropped by 11% in Q2 compared to Q1, which is generally consistent with the global trend. SITE VISITS

EUROPEAN SEGMENT VISITS BY SHARE BY QUARTER

SUVs remain extremely popular in Europe, although smaller SUVs (J1 and J2 segments) saw a decline in site visits in Q2 compared to previous quarters. Meanwhile, mini-cars and small cars (A- and B-segments) received more site visits than in Q1. Year-on-year, all SUV segments demonstrate notable growth despite seeing fewer visits than the previous quarter, while C-segment mediumEU CLASSIFICATION cars exhibit consistent gradual decline.

7% A-segment mini cars 9% 14% B-segment small cars 13% 22% C-segment medium cars 16% 5% D1-segment large cars 5% 5% D2-segment large cars 3% 2% E-segment executive cars 2% 1% F-segment luxury cars 1% 16% J1-segment mini SUV 19% 14% J2-segment compact SUV 16% 4% J3-segment SUV 6% 3% M1-segment mini-MPV 3% 1% M2-segment MPV 1% 0% M3-segment minibus 0% 2% N-segment 2% 1% P-segment pick-up 1% 3% S-segment sports coupes 2%

0% 5% 10% 15% 20% 25%

2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 SITE VISITS

NORTH AMERICAN SEGMENT VISITS BY SHARE BY QUARTER

Consistent with broader industry trends in North America, site visits for SUVs were up significantly compared to Q2 2017, while interest in compact and midsize cars went down. Some auto manufacturers have made moves to reduce sedan production to align with observed trends in tracked site visitation. NA CLASSIFICATION

15% Compact Cars 13% 4% Large Cars 6% 9% Middle Cars 7% 3% Small Pickup Trucks 3% 23% Small SUVs 26% 14% Standard Pickup Trucks 10% 18% Standard SUVs 20% 1% Station Wagons 1% 8% Sub Compact Cars 7% 4% Two Seaters 4%

0% 5% 10% 15% 20% 25% 30%

2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 ENGAGEMENT

ENGAGEMENT BY QUARTER

The average level of site engagement grew by almost 9% in Q2 2018 compared to the same quarter last year, indicating higher potential purchase intent. This increase means that the growth in site visits also consists of better quality traffic, which in turn is positive indication of future sales growth.

120%

100% +9% YoY

80%

60%

40%

20%

2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 ENGAGEMENT

ENGAGEMENT BY REGION

In Q2 we saw a promising increase in site engagement for North America: while site visits decreased slightly, the quality of visitors in Q2 was high. Newly launched vehicles, updated models, and site personalization strategies are likely driving this increase in engagement.

140%

120%

100% NA +25% 80% YoY EMEA APAC +3% LATAM YoY -2% 60% FLAT YoY YoY

40%

20%

EMEA NA LATAM APAC

Other regions exhibited less pronounced trends, though Europe experienced a similar pattern of high quality traffic: as site visitors increased (+9%), engagement has similarly sustained a slight increase (+3%), indicating not just more volume, but more engaged customers. ENGAGEMENT

ENGAGEMENT BY SEGMENT (EU CLASSIFICATION)

While site visits indicated increased interest in the A and B segments against the SUV segments J1 and J2, all segments saw a decline in engagement by site visitors. This decline in engagement suggests that customer interest in SUVs may have reached a saturation point when considering the changing composition of newly browsing visitors and those more engaged in research and closer to their purchase decision. A pattern of increased visits but decreasing average engagement can be attributed to effective media campaigns that attract a high volume of new visitors still very much in the awareness stage of the customer journey. EU CLASSIFICATION

120%

100%

80%

60%

40%

20%

A-segment Mini Cars B-segment Small Cars J1-segment Mini SUV J2-segment Compact SUV J3-segment SUV

2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 ENGAGEMENT

ENGAGEMENT BY SEGMENT (NA CLASSIFICATION)

Engagement for compact cars was up, while SUV engagement went down slightly due to an increase in site traffic tied to diminished average engagement per user.

NA CLASSIFICATION

120%

100%

80%

60%

40%

20%

Compact Cars Large Cars Small Pickup Trucks Small SUVs Standard Pickup Trucks Standard SUVs Subcompact Cars

2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 LEADS

LEADS BY QUARTER

After several quarters of growth, leads remained relatively consistent with numbers from Q2 of last year. While site visitors exhibited higher engagement, overall lead numbers this quarter were brought down due to a decline in lead volume in the APAC region.

120%

100%

80%

60%

40%

20%

0% 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 LEADS

LEADS BY DEVICE

140%

120%

100%

80% +13% YoY 60% Flat -11% YoY

40% YoY

20%

0% 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2

DESKTOP MOBILE TABLET

Similar to site visits, leads from mobile exhibited strong growth with an increase of 13% year-on-year despite a drop from last quarter. Desktop exhibited initial indications of a downward trend, while tablet performance remained flat from a lead gen perspective, highlighting the need for continued focus on mobile and its growing potential to engage and convert interested customers. LEADS

EUROPEAN LEADS (EU SEGMENTS)

In line with industry sales trends, the J1 and J2 segments continue to exhibit strong growth in leads, up 7% and 4% respectively year-on-year. Additionally, the J1 segment accounted for 26% of leads this quarter compared to only 19% of site visits, indicating that leads are outperforming site visits for this segment. The B and C segments show the opposite trend, with a decreaseEU CLASSIFICATIONin leads of 2% and 7% respectively this quarter relative to Q2 2017.

11% A-segment mini cars 12% 18% B-segment small cars 16% 25% C-segment medium cars 17% 4% D1-segment large cars 3% 2% D2-segment large cars 1% 1% E-segment executive cars 0% 0% F-segment luxury cars 0% 19% J1-segment mini SUV 26% 7% J2-segment compact SUV 11% 2% J3-segment SUV 3% 5% M1-segment mini-MPV 4% 1% M2-segment MPV 1% 0% M3-segment minibus 0% 2% N-segment 3% 1% P-segment pick-up 0% 2% S-segment sports coupes 1%

0% 5% 10% 15% 20% 25%

2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 LEADS

NORTH AMERICAN LEADS (NA SEGMENTS)

Car segments are gearing toward a 60-year low, according to Automotive News reports. SUV and truck segments continue to dominate consumer engagement, amassing 59% of total site visits and 65% of total leads this quarter. The availability of fuel-efficient SUVs and trucks coinciding with low fuel prices seems to be driving the popularity of these segments. Automakers are continuing to orient production around the sustained popularity of larger vehicles, with some stopping production on sedans. Within the SUV segments, leads for small SUVs areNA outpacing CLASSIFICATION leads for standard SUVs.

13% Compact Cars 18% 4% Large Cars 3% 6% Middle Cars 5% 5% Small Pickup Trucks 4% 21% Small SUVs 29% 16% Standard Pickup Trucks 13% 25% Standard SUVs 19% 2% Station Wagons 1% 6% Sub Compact Cars 4% 1% Two Seaters 2%

0% 5% 10% 15% 20% 25% 30%

2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 LEADS

MARKET SNAPSHOT: EV LEADS

Our lead data also reflects the European trend of ongoing growth in electric vehicle (EV) car registrations. The number of leads for EVs in Europe grew by more than 30% YoY. Similar trends in the US show a 14% increase in EV leads year on year. This shift in the market toward electric vehicles is significant, and interest is expected to increase in the coming quarters.

EMEA NA 160%

140%

120%

100%

80% EMEA EV +32% YoY NA EV +14% YoY 60%

40%

20%

0% 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 2017–Q2 2017–Q3 2017–Q4 2018–Q1 2018–Q2 CONTRIBUTING AUTHORS

RACHEL PIERSON Global Director of Strategic Accounts Rachel has over 15 years of diverse marketing and advertising experience within the automotive category. Throughout her career she has worked with agencies and global marketing teams to develop innovative strategies to drive brand awareness and increase marketing performance. Notably she has partnered with brands including Cadillac, Chevrolet, Ford, and FCA to name a few.

STEPHAN VAN DEN BREMER Head of Automotive Stephan has worked in the automotive industry for over thirteen years. As IgnitionOne’s Global Head of Automotive, Stephan is responsible for driving business growth in the automotive vertical, focusing on expansion and performance excellence. He has held various sales and marketing positions within the Volkswagen Group in the Netherlands. Prior to joining IgnitionOne, he led Autobytel Netherlands, focusing on online lead generation and CRM solutions for the automotive sector.