As the economy has improved, consumer interest in auto purchases has increased. The latest Auto Shoppers Forecast from Ad-ology indicates that while 35.6% of consumers hope to buy a new vehicle this year, only 15.6% are looking into used vehicle purchases. This change in the used vehicle market will lead dealers to modify their promotions to clear their lots.
According to the Used-Car Market Intelligence Report, 2012 started out well. Consumers came into January with some pent-up demand and credit was easier to obtain. At the same time, dealers were easily accessing supply, especially from the repo market where creditors were showing less patience with delinquent consumers. Supply also picked up from vehicles coming off lease. And residual values for cars lease have skewed higher this year, particularly for midsize pickups, subcompacts, and full-size cars.
But things have begun to change. As Ad-ology Research noted in its findings, demand for used-cars over the next 12 months is expected to drop.
Dealers may also be tempted to emphasize new car promotions through the end of the year because new models have arrived on the lot. Who can blame them? The high prices dealers are paying at wholesale for used vehicles crimps the profit in each sale.
Despite the slowdown, dealers still need to move the used cars off their lots and to do so, they should advertise to the ‘want’ buyers. These buyers differ from the ‘need’ buyers who had been flooding the lots earlier this year looking for something to replace their old cars which in many cases had been on the road for 11+ years. Some of these want buyers, sensing market improvement, are ready to finally make a purchase decision.
The pricing and availability changes, along with an easing credit market is creating “more used opportunities for both the independent and franchised dealers” so promotions targeting the right consumers should boost sales.[Sources: Zulovich, Nick and Rubenoff, Sarah. Used Car Market Intelligence Report. Autoremarketing.com. July 2012. Web. 20 Jul. 2012]