Now is the time to start optimizing CPO business.  According to Borrell Associates’ latest report, “2016 Auto Outlook, The Thinning of the Media Pack,” a six-year growth in new-vehicle sales is coming to a head having seen an average of 11 percent growth per year since 2010.  However, 2016 is estimated to have had 0.5 percent increase in new vehicles sold¹.  It’s forecasted to continue to drop through 2018 and slowly creep back up thereafter¹.

If new vehicle sales do indeed drop over the next few years, attention needs to be given to CPO programs and service programs at the dealership.  This requires more training for dealership employees on the benefits of CPO and more education for consumers so they realize why a CPO vehicle could be the “best deal” for them. Additionally, it will require branding support to OEMs from third parties like Cars.com.

How Dreaming and Hunting Result in Buying

We’ve done extensive research into the consumer journey to offer our customers the latest insights and trends to better reach and influence shoppers.   Specifically, our research yielded a great deal of insights into the new, used and CPO car shopper journeys.  Here, we are diving into how dreaming and hunting result in CPO buying.

There are three primary “modes” consumers go through when buying a car, regardless of stock type².  That journey includes different tipping points to move to purchase and while consumers make shifts by stock type for sure, it’s important to understand the baseline to see the differences.

Consumers begin their entry into the car shopping journey in either the Dreaming (Plan), Hunting (Discovery + Vetting) or Buying (Decide) stage.  It’s important to note that these various modes are not linear but cyclical.  This means the “Buying” mode can lead back to the “Hunting” mode and even “Dreaming” mode based on obstacles or new information the consumer encounters on his or her journey.  When in the Dreaming mode, the idea of buying a new car starts to circulate in the consumer’s mind.  As a consumer enters the Hunting mode, commitment kicks in and the customer is in preparation, learning, researching, and exploring mode.  The final mode of Buying is when the customer narrows down, sees, touches and feels and finds the car that is right for them¹.

This presents an opportunity for dealers by knowing what mode a consumer is in when they walk onto the lot. We know all consumers have the same goal – to get the best deal² – but how they succeed varies by stock type.

The best deal for new car shoppers has to do with “the car I want.”  These shoppers like to have make and model options, know the type of car and features they want, and know they want a good price.

Used car shoppers seek the best deal for them around the idea of “the best I can get for my money.”  This includes considerations around the vehicle being in their price range, the style of car they want, and the most features they can get for the right price.

What about CPO shoppers? Their best deal is “a car I can rely on.” CPO shoppers are looking for reliable ratings when considering make and model, the nicest vehicle they can afford, and the right features.

Some dealers aren’t maximizing their CPO offerings for various reasons.  “Cost” is the overwhelming frustration expressed when deciding whether or not to certify a used vehicle³.  This leads us to believe that education around the ROI of CPO vehicles is an opportunity for growth.  Indeed, our research suggests that the estimated average cost spent getting a vehicle reconditioned and certified as CPO is $820³.  Other examples holding back vehicle certification included a lack of inventory to certify, space and staff availability at the dealership, OEM requirements for certification and market conditions to name a few³.

There is significant value in building up a CPO program, if done right. Throughout May, we’ll be discussing CPO vehicles and how best optimize CPO vehicles at the dealership.  Stay tuned!

[1] 2016 Auto Outlook; The Thinning of the Media Pack, Borrell Associates, 2016

[2] Shopper Differentiation Study, Cars.com Strategic Insights, 2016

[3] Dealer CPO Study, Cars.com Strategic Insights, 2016