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 that hit the market in 2019. 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.
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 our new Pre-Owned Plus VSA, perfect for independent dealers. Contact your Sales rep for details!