--- BUTLER JIM Auto Tech Survey Analysis & Report. Ja911. Dates fielded: 10/29-11/8/2018 Respondents: 784 of 30,000 Response rate: 2.

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1 JIM BUTLER II cac:>cac:. V TLE Ja Auto Tech Survey Analysis & Report Dates fielded: 10/29-11/8/2018 Respondents: 784 of 30,000 Response rate: 2.6%

2 Understanding Today s Auto Consumers From the rise of autonomous vehicles to the arrival of digital subscription services, technology is changing the way people view and interact with their vehicles, giving today s consumers more options than ever before. Progressive auto dealers that remain at the forefront of technology are positioned to meet and even surpass modern consumer expectations. Through the continuous adoption of new digital services, the Jim Butler Auto Group is reinventing the auto experience to meet the convenience and lifestyle needs of its consumers. In the fall of 2018, the auto group embarked on a study of consumer attitudes and behaviors towards automotive technologies to understand what drives them, what daunts them and what they expect from a modern automotive relationship. The findings that follow paint a picture of a population increasingly comfortable with new modes and experiences enabled by technology. As it infuses more facets of their lives, technology is challenging established notions of brand loyalty, the purchasing process and vehicle ownership and operation. These insights offer compelling direction for competitively positioning the auto group s innovative customer experience. Key takeaway 1: While advanced auto features weigh heavier than brand loyalty, most feel carmakers keeping up with expectations In 2018, it should come as no surprise that a majority of respondents indicated they are comfortable with technology in all facets of their lives (Q8). As a result, technology factors weigh heavily on automotive decisions. Half of respondents say they would be willing to pay more for a vehicle to obtain the specific technologies they want, and more than half say they would be willing to buy/lease a different make and model if such features were unavailable by their preferred brand (Q19, Q20). In general, most respondents feel the pace of technological advancements offered by automakers is appropriate, with Bluetooth connectivity and smartphone integration rated among the top features important to respondents next vehicle purchase. In fact, 86% of surveyed consumers say they expect their vehicle to sync with their smartphone (Q22, Q23). While 26% of respondents feel technology features are making vehicles too complex, just 12% of respondents say they would be deterred into choosing a less-complicated vehicle (Q17). Key takeaway 2: Younger consumers are open to new, tech-enabled auto experiences Innovations in mobile technology are giving consumers new, convenient ways to get around, with the availability of ride-sharing services and new auto-subscription models managed by smartphone applications. Nearly 70% of respondents say they currently use subscription services to consume media, clothing and other products, and half of all respondents say they would consider using a similar i.

3 service for cars, trucks and vans (Q5). This interest was particularly strong among yearolds (70%) and year-olds (61%). Those uninterested in auto subscription services expressed a preference for owning or leasing their vehicle (Q6). The correlations between interest, age and ownership preferences could give rise to changing views on the relationship between consumers and their cars in the future. Advancements in mobile technology have also given rise to new payment methods, including digital wallet services. While just 30% of respondents indicate they use such options today, usage skewed higher with year-old drivers, highlighting a potential convenience factor for this demographic (Q3). Key takeaway 3: Enhanced digital transaction process could expand online auto sales Despite the prevalence and popularity of e-commerce, just 9% of respondents have ever bought a vehicle online; 13% say they were not aware of being able to do so. (Q9, 10). The biggest barrier to online sales? The test drive, which more than half of respondents cited as somewhat or very important (Q10). Respondents who say they would consider purchasing a new or used vehicle online cite advantages, including availability of the exact vehicle wanted (62%) and avoidance of sales pitch (50%). That 35% cited simplicity of transaction indicates an opportunity for online purchasing to grow with advancements in online processing and paperwork (Q15). Overall, consumers showed a higher level of comfort in buying a new vehicle online vs. a preowned vehicle (38% vs. 28%, Q11, Q13), with the following top five factors ranking as somewhat or very important for new vehicle purchases: 1. Price (96%) 2. Specific make/model (95%) 3. Simplicity of transaction (93%) 4. Specific features (92%) 5. Ability to test drive (90%) By contrast, consumers considering an online pre-owned purchase ranked price, mileage, availability of service records, specific make/model and ability to test drive as important. Key takeaway 4: Survey finds mixed response on importance of safety vs. convenience When asked to rank the relative importance of broad automotive technology categories, respondents ranked safety features more important than convenience and entertainment features (Q18). However, nearly half of respondents admitted to texting while driving, and in a head-to-head comparison of specific features, consumers ranked individual convenience and entertainment features higher than advanced safety features. (Q26, Q22). When asked their thoughts on technology s role in the problem of distracted driving, most respondents (46%) say it exacerbates the problem, 31% say it alleviates the problem, and 24% say it has no impact either way (Q25). ii.

4 Key takeaway 5: Consumers not ready to turn the keys over to autonomous vehicles While recent headlines suggest automakers are moving closer to fully autonomous vehicles, consumers indicate they are not yet ready to turn their keys over to self-driving cars. A majority of consumers display some level of discomfort with operating or riding in self-driving vehicles (72%), and more than half went further, expressing outright distrust of the technology (Q27-28). Driver-assist technologies, including hands-free calling, built-in navigation and lane-departure warnings, fared better in the survey, with 60% or more respondents indicating somewhat or very comfortable (Q29). What Does the Future Hold? Today s automotive consumers indicate a comfort with technology and a willingness to try services and learn new features. Younger consumers showed a particular openness towards online vehicle purchases and subscription auto services. With continued advancements in the online transactional experience and further education around auto delivery services, we would expect usage of these services to increase. While drivers are most comfortable with the convenience and entertainment features afforded by technology, safety continues to be an important factor for consumers. However, they are less trustful of safety features that reduce their level of vehicle control. With respondents showing some comfort with driver-assist features, only time will tell how quickly autonomous vehicles enter the mainstream or whether they will go the way of flying cars, which just 19% of respondents believe they will see in their lifetime. Methodology The Jim Butler Auto Group conducted the 2018 Technology Survey between October 28, 2018, and November 8, 2018, via social media and to approximately 30,000 existing and prospective customers nationwide. The survey received 784 responses with a completion rate of 84.03% (659 completed surveys) and a response rate of approximately 2.6%. Respondents were asked to identify themselves by age groups, with 100 respondents (13%) identified as years old; 289 (37%) as years old; and 389 (50%) as 55-years old or older. Four respondents were disqualified from the survey for not fitting into these age ranges. iii.

5 Q1 I am a: Answered: 782 Skipped: 2 N/A yrs 12.79% 55 yrs % yrs 36.96% Driver years of age Driver years of age Driver 55 years of age or older None of the above 12.79% % % % 4 TOTAL 782 Q2 Within the next year, I am considering: Answered: 784 Skipped: 0 100% 80% 60% 40% 20% 0% Buying a new or used vehicle Leasing a new or used vehicle Joining a vehicle subscription service (payi... None of the above Buying a new or used vehicle Leasing a new or used vehicle Joining a vehicle subscription service (paying a fee to use one or more vehicles for a defined period of time) None of the above 40.31% % % % 437 TOTAL 784 1/24

6 Q3 Do you use a digital wallet service like Apple Pay, Google Pay, or Square on your phone or watch to pay for transactions? (Please choose one of the following) Answered: 763 Skipped: % 80% 60% 40% 20% 0% Yes, and I m comfortable with the technology Yes, but I m not entirely comfortable with the technology No, I m not comfortable with the technology No, I ve not found the need for this technology Yes, and I m comfortable with the technology Yes, but I m not entirely comfortable with the technology No, I m not comfortable with the technology No, I ve not found the need for this technology 21.89% % % % 421 TOTAL 763 Q4 Do you currently utilize any subscription services such as Netflix (television and movie viewing), Spotify (music), Stitch Fix (clothing), Dollar Shave (grooming), Post-Dispatch (newspaper), or Blue Apron (food)? Answered: 764 Skipped: 20 Yes No 69.50% % 233 TOTAL 764 2/24

7 Q5 Would you consider using a vehicle subscription service? Vehicle subscription services typically bundle automotive costs including insurance and maintenance into one monthly payment and allow members to use vehicles for a defined period of time, with the opportunity to switch vehicle selection. Answered: 765 Skipped: 19 Yes (depending on the cost and/or vehicles available) No 49.93% % 383 TOTAL 765 3/24

8 Q6 If you wouldn t consider using a vehicle subscription service, why not? (Please choose all that apply) Answered: 378 Skipped: % Universe 80% 60% 40% 20% 0% I like to own my vehicles I like to lease my vehicles I don t want/need to trade out vehicles... This seems expensive Other (please specify) By Age Range I like to own my vehicles I like to lease my vehicles I don t want/need to trade out vehicles frequently This seems expensive Other (please specify) Total Respondents: 378 See Appendix A % % % % % 17 4/24

9 Q7 How frequently do you use ride-hailing services like Uber or Lyft? 100% Answered: 755 Skipped: 29 80% 60% 40% 20% 0% Daily Weekly Monthly Rarely Never Daily Weekly Monthly Rarely Never 0.13% % % % % 491 TOTAL 755 Q8 Which of the following statements most accurately reflects your overall usage of technology? 100% Answered: 754 Skipped: 30 80% 60% 40% 20% 0% Technology is not at all important Technology is not very important to me Technology is somewhat important Technology is very important Technology is not at all important in my life. I have little to no desire to use it. Technology is not very important to me. I may use it occasionally, but I find it increasingly difficult. Technology is somewhat important in my life. I am comfortable with many programs and I am not at all fearful to learn new programs. Technology is very important in my life. I try to stay on the cutting edge. 2.39% % % % 150 TOTAL 754 5/24

10 Q9 Have you ever bought/leased a new or used vehicle online? (By "online," we mean completing all paperwork and negotiations electronically or by phone, with no actual visit to a dealership.) Answered: 753 Skipped: 31 Yes No 8.63% % 688 TOTAL 753 Q10 If "No," why not? (Please choose all that apply.) Answered: 703 Skipped: % 80% 60% 40% 20% 0% Not aware vehicles can be bought online Local dealer had what I wanted Want a test drive Prefer in-person assistance Concerned about local service abilities Other (please specify) Not aware vehicles can be bought/leased online Local dealer had what I wanted Want a test drive Prefer in-person assistance with paperwork Concerned about local service abilities Other (please specify) See Appendix A2, A3, A4 Total Respondents: % % % % % % 74 6/24

11 Q11 If you were in the market to buy/lease a NEW vehicle, how comfortable would you be completing the deal online? Answered: 699 Skipped: 85 Universe By Age Range UNCOMFORTABLE UNCOMFORTABLE NEITHER UNCOMFORTABLE NOR COMFORTABLE COMFORTABLE VERY COMFORTABLE TOTAL 24.89% % % % % /24

12 Q12 If you would consider buying/leasing a NEW vehicle online, please rate the importance of the following: Answered: 683 Skipped: 101 NOT IMPORTANT UNIMPORTANT NEITHER UNIMPORTANT NOR IMPORTANT IMPORTANT VERY IMPORTANT TOTAL Dealer is close to where you live 6.46% % % % % Vehicle delivery options 3.68% % % % % Ease-of-delivery 1.91% % % % % Financing options 8.43% % % % % Specific features 1.34% % % % % Available warranties 2.21% % % % % Vehicle is recall-free 1.62% % % % % Simplicity of paperwork/transaction 0.29% % % % % Ability to test drive/tryout locally 1.32% % % % % Specific make/model 0.74% % % % % Price 0.89% % % % % Other (please specify) See Appendix A5 8/24

13 Q13 If you were in the market to buy/lease a USED vehicle, how comfortable would you be completing the deal online? Answered: 697 Skipped: 87 Universe By Age Range UNCOMFORTABLE UNCOMFORTABLE NEITHER UNCOMFORTABLE NOR COMFORTABLE COMFORTABLE VERY COMFORTABLE TOTAL 37.16% % % % % /24

14 Q14 If you would consider buying/leasing a USED vehicle online, please rate the importance of the following: Answered: 674 Skipped: 110 NOT IMPORTANT UNIMPORTANT NEITHER UNIMPORTANT NOR IMPORTANT IMPORTANT VERY IMPORTANT TOTAL Price 0.74% % % % % Certified Pre-Owned 1.94% % % % % Age 1.49% % % % % Mileage 0.59% % % % % Specific make/model 0.60% % % % % Specific features 1.20% % % % % Dealer is close to where you live 4.47% % % % % Ability to test drive/tryout locally 1.49% % % % % Ease-of-delivery 2.40% % % % % Financing options 7.95% % % % % Available warranties 1.50% % % % % Service records available 0.60% % % % % Simplicity of paperwork/transaction 0.75% % % % % Vehicle delivery options 2.55% % % % % Vehicle is recall-free 1.05% 7 Other (please specify) See Appendix A6 1.50% % % % /24

15 Q15 If you would consider buying/leasing a new/used vehicle online, what would be your chief reason(s) to conclude the deal online vs. in-person? (Please choose all that apply.) Answered: 686 Skipped: % 80% 60% 40% 20% 0% Availability of the exact vehicle Simplicity of paperwork Avoidance of sales pitches/"up sells" Do not live near the dealership Comfortable making major purchase online Other (please specify) Availability of the exact vehicle I want Simplicity of paperwork Avoidance of sales pitches/"up sells" Do not live near the dealership Comfortable making major purchases online Other (please specify) Total Respondents: 686 See Appendix A7, A % % % % % % 59 11/24

16 Q16 Please indicate your agreement level with the following statement: "Technological features have an influence over my decision to buy/lease a new or used vehicle." Answered: 687 Skipped: 97 Disagree 11.79% (81) Agree 61.71% (424) Neutral 26.49% (182) STRONGLY DISAGREE DISAGREE NEITHER DISAGREE NOR AGREE AGREE STRONGLY AGREE TOTAL 4.51% % % % % /24

17 Q17 Please choose the statement below that most closely matches your feeling regarding the pace that auto makers are introducing new technologies: Answered: 672 Skipped: 112 Not fast enough 9.08% Too Complex 25.60% Appropriate 65.33% "Vehicles are becoming too complex due to technology." "The technologies being offered in vehicles are appropriate to the times." "Auto makers are not introducing enough technologies fast enough." 25.60% % % 61 TOTAL /24

18 Q18 Automotive technology is generally available in three categories: convenience, entertainment, and safety. Please rate the importance of these categories to you: Answered: 673 Skipped: 111 ANSWER CHOICES NOT IMPORTANT UNIMPORTANT NEITHER UNIMPORTANT NOR IMPORTANT IMPORTANT VERY IMPORTANT TOTAL Convenience features 1.04% % % % % Entertainment features 5.82% % % % % Safety features 0.15% % % % % /24

19 Q19 Please indicate your agreement level with the following statement: "I would pay more to buy/lease a vehicle with the advanced technologies that I want." Answered: 668 Skipped: 116 Agree 49.70% (332) Universe Disagree 22.9% (153) Neutral 27.40% (183) Agree 59.33% (46) Disagree 13.34% (10) Neutral 25.33% (19) Agree 54.37% (137) Disagree 20.63% (52) Neutral 25.00% (63) Agree 43.95% (149) Disagree 26.55% (90) Neutral 29.5% (100) STRONGLY DISAGREE DISAGREE NEITHER DISAGREE NOR AGREE AGREE STRONGLY AGREE TOTAL 8.98% % % % % /24

20 Q20 Please indicate your agreement level with the following statement: "If the technological features I want are not available with my preferred make/model, I would buy/lease a different make/model to obtain the technological features I want." Answered: 673 Skipped: 111 STRONGLY DISAGREE DISAGREE NEITHER DISAGREE NOR AGREE AGREE STRONGLY AGREE TOTAL 7.43% % % % % /24

21 Q21 Please finish the following sentence with the choice that best applies to you: "If I were considering buying/leasing a vehicle with technological features that seemed difficult, I would... Answered: 661 Skipped: 123 "...choose a less complicated vehicle." "...make my vehicle choice and figure out how to use the features later." "...ask the dealer/seller for assistance." "...learn all I could about operating the features, then make my choice." Other (please specify) 11.95% % % % % 5 TOTAL 661 # OTHER (PLEASE SPECIFY) DATE 1 Use the ones i learn to love!!! 11/5/2018 5:47 PM 2 I drop by the dealer every now and then when I can't figure something out. Need to go now, as a matter of fact. 10/31/2018 1:30 AM 3 only use the ones I need 10/30/2018 2:04 PM 4 Depends on the application. Radio: research later. 4wd or hybrid tech capabilities and limitations: research before purchase. 10/30/2018 8:37 AM 5 if features are not safety/operation related, buy it-figure & out later 10/30/2018 7:53 AM 17/24

22 Q22 Please rate the importance of the following technological features in your decision to buy/lease your next vehicle: Answered: 662 Skipped: 122 TECHNOLOGICAL FEATURE DO NOT WANT NEUTRAL (COULD TAKE OR LEAVE) MUST HAVE I'M NOT FAMILIAR W/ THIS TECHNOLOGY TOTAL Smartphone integration 4.54% % % % Accident avoidance systems (auto braking, warning, blind spot monitoring) 4.24% % % % Bluetooth connectivity 3.03% % % % Apple CarPlay or Android Auto 12.18% % % % Vehicle-to-vehicle communications 17.12% % % % Wi-Fi/4G LTE/hot spot connectivity 12.44% % % % Onboard (built-in) navigation system 5.29% % % % Parking Assistance 10.79% % % % Keyless ignition/locks 5.75% % % % Remote starting 3.18% % % % Touchscreen dashboard display 3.65% % % % Other (please specify) See Appendix A9 Heads-up display Back-up camera Wireless device charging Satellite radio Maintenance messages/diagnostics OnStar or similar service Fully autonomous driving (self-driving) 6.70% % % % % % % % % % % % % % % % % % % % % % % % % % % % /24

23 Q23 When I buy/lease a vehicle I expect it to sync with my smartphone. (Please select all that apply.) 100% Answered: 661 Skipped: % 60% 40% 20% 0% Yes, for hands-free phone calls Yes, for texting Yes, for navigation Yes, to read my s Yes, to Yes, to interact play with music Apple/Android No Yes, for hands-free phone calls Yes, for texting via vocal recognition Yes, for navigation capabilities Yes, to read my s to me Yes, to interact with Apple/Android apps Yes, to play music and podcasts I have saved to my phone No 81.69% % % % % % % 94 Total Respondents: 661 Q24 Where technology is available through both a vehicle and a smartphone (e.g. navigation, music, etc.), do you prefer to use your phone or the vehicle? Answered: 658 Skipped: % 80% 60% 40% 20% 0% Smartphone Vehicle No preference Both Neither I prefer using my smartphone technology I prefer using my vehicle technology I don't have a preference - sometimes I use my smartphone, sometimes my vehicle I use both technologies together I don't use either 26.60% % % % % 46 TOTAL /24

24 Q25 Do you believe technology helps or hurts the problem of distracted driving? Answered: 658 Skipped: 126 Helps Alleviate 30.55% Adds to the Problem 45.90% No Impact 23.56% Technology adds to the problem Technology does not impact the problem one way or the other Technology helps to alleviate the problem TOTAL 45.90% % % Q26 Have you personally texted while driving? Answered: 659 Skipped: 125 Rather Not Answer 5.31% Yes, frequently 5.16% No 49.92% Yes, occasionally 39.61% Yes, frequently Yes, occasionally No Would rather not answer 5.16% % % % 35 TOTAL /24

25 Q27 Please indicate your agreement level with the following statement: "I trust self-driving technology." Answered: 655 Skipped: 129 Agree 14.96% (98) Universe Neutral 25.50% (167) Disagree 59.54% (390) STRONGLY DISAGREE DISAGREE NEITHER DISAGREE NOR AGREE AGREE STRONGLY AGREE TOTAL 36.18% % % % % /24

26 Q28 Please rate your comfort level with operating or riding in a selfdriving vehicle: Answered: 655 Skipped: 129 Comfortable 12.67% (83) Universe Neutral 15.11% (99) Uncomfortable 72.21% (473) UNCOMFORTABLE UNCOMFORTABLE NEITHER UNCOMFORTABLE NOR COMFORTABLE COMFORTABLE VERY COMFORTABLE TOTAL 49.31% % % % % /24

27 Q29 Please rate your comfort level with the following driver-assist features: Answered: 653 Skipped: Yr Olds (88.89%) Yr Olds (84.51%) Yr Olds (89.63%) Yr Olds (88.24%) Yr Olds (62.5%) 55 Yr Olds+ (79.47%) 55 Yr Olds+ (81.01%) Yr Olds (61.41%) 55 Yr Olds+ (64.28%) (41.66%) (45.64%) 55+ (45.7%) (34.72%) (37.35%) 55+ (38.87%) (43.06%) (34.44%) 55+ (33.92%) (26.39%) (21.58%) 55+ (18.64%) (15.28%) (14.16%) (12.23) TECHNOLOGICAL FEATURE UNCOMFORTABLE NEUTRAL COMFORTABLE VERY COMFORTABLE HAVEN'T USED/NOT FAMILIAR W/ THIS TECHNOLOGY TOTAL Adaptive cruise control 6.43% % % % % Lane departure warnings 4.61% % % % % Hands-free calling 2.15% % % % % Navigational systems 1.85% % % % % Automatic parking assist 8.45% % % % % Pedestrian detection 4.45% % % % % Fully autonomous driving functionality 34.36% % % % % Automatic emergency braking 11.96% % % % % Other (please specify) See Appendix A10 23/24

28 Q30 Do you believe flying vehicles will become commonplace transportation within your lifetime? Answered: 655 Skipped: 129 Yes No 19.24% % 529 TOTAL /24