The Rise of Used
The Rise of Used
Is the newest trend in auto sales…something old?
Demand for new vehicles may be running on fumes, but used vehicles are expected to have another strong sales year. Part of the forecasted success in the used vehicle segment will directly result from falling new vehicle demand amid multiple market challenges. We wanted to know what’s driving buyers to pre-owned vehicles, and how dealers can capitalize on this area of opportunity.
Higher Prices, Rates
Prices for new vehicles have been on the rise and show no signs of hitting a ceiling just yet. Average transaction prices and monthly payments are reaching YOY highs virtually every month, stretching the affordability of these vehicles for more consumers. At the same time, last year’s base rate increases are still rippling through the lending market: through April, the percent of new vehicle loans with an interest rate over 10% was the highest it has been in a decade.
As fewer buyers are able to afford new vehicles, used vehicles are getting more than just a second look from some shoppers – they’re getting the sale. Dealers who offer excellent pre-owned inventory and products that help customers protect their investment can come out on top in this challenging—and competitive—market.
Aiding in the appeal of used vehicles is a tidal wave of off-lease, late-model units hitting the market in 2019. Analysts expect more than 3 million such vehicles to return to dealer lots this year. These cars and light trucks are only a few years old, have low mileage, and contain many of the technology and safety features that draw consumers to new vehicles in the first place—but at a lower price than their new counterparts.
They’re an excellent option for buyers who wanted a new vehicle but were priced out of their first choice. For customers who are wary of not having the protection of the original factory warranty that comes with a brand-new vehicle, near-new off-lease units are prime candidates for F&I products such as service contracts. A program that protects the mechanical components of these vehicles and their advanced technology is a must-have. In short, dealers should be equipped with a program that offers new vehicle-level protection for used vehicles.
CPO Gaining Ground
Alongside off-lease vehicles, Certified Pre-Owned units are proving popular with buyers this spring. Certified vehicles offer shoppers value as well as security since CPO status requires that the vehicle pass an inspection prior to sale. CPO vehicles often come with a limited warranty, which further strengthens their value proposition. For dealers looking to offer their customers quality certified inventory with the protection of a limited warranty, partnering with a product provider that offers a CPO program is a must. These programs are open to all makes and models (rather than being dependent on a factory program) and can help dealers differentiate their inventory and increase customer satisfaction.
Does your F&I product provider have what your dealership needs to compete and succeed in today’s automotive marketplace? National Auto Care offers a full suite of protection products for new and used vehicles alike, including a Certified Limited Warranty program. Contact your Sales rep for details!
For additional information, articles or interviews please contact:
Alexi Gonzalez at firstname.lastname@example.org
National Auto Care Corp. provides F&I products, administration, consulting services, training and marketing support to independent agents, insurance companies, financial institutions, third-party administrators, and credit unions. National Auto Care Corp. focuses on increasing agent and dealer profitability by providing unique F&I products in protected markets.
National Auto Care is a multi-year award winner for Top Workplace and F&I Product Provider Excellence.