We’ve previously discussed on our blog that New car sales may see a decline in the coming years according to Borrell and Associates 2016 Auto Outlook. It’s safe to assume then, that while demand for new vehicles drops, it will rise for CPO and used inventory. Or, as Borrell puts it: “a new breed of high-quality, low mileage used cars” will be front and center.¹ Those who know this can gear up their CPO, used and service sides of the business.
We know from our own research in conjunction with Placed that new vehicles are considered less as shoppers move closer to purchase.² In Figure 1, we see that as consumers move closer to a purchase decision new vehicles slide below consideration of used vehicles with consideration of CPO being in slight flux.
Note that the percent of people considering a used vehicle is much higher than the percent of purchasers. In part, this is because our research only includes people that visit a dealership; used buyers from private parties are not represented, but in the moment of decision, shoppers also have a tendency to ‘buy up’ based on our research, which explains why we see a spike in new vehicles bought. How will this change as we move through 2017? That remains to be seen. We also know that consumer mindset suggests indecision on new vs. used throughout the shopping process with CPO considered less as a shopper’s intent moves closer toward a purchase³.
If we know consumers aren’t necessarily set on a specific stock type, there’s room to influence their decision when they visit a dealership regardless of which part of the shopping journey they are in because, again, consumers are searching for their own “best deal¹.”
When it comes to CPO, Cars.com falls in the middle of three major stakeholders with an interconnection of relationships; consumers, franchise dealers and OEMs³. We see our biggest areas of opportunity and influence in educating consumers on CPO and providing support to franchise dealers and OEMs by way of branding support.
Internally, we see value in creating content around the options CPO offers a consumer and the benefits of the franchise experience and a sort of ‘white glove’ treatment it offers a consumer. Many options exist for dealers to educate consumers on CPO by way of advertising content or on the lot information into what a consumer receives from a CPO vehicle. One example could be information booklets of a specific make’s CPO program made available in the vehicle itself made with a comparison to a new or used vehicle. There are many possibilities available to the dealer wishing to grow their CPO sales.
In any scenario, optimizing CPO inventory can be a great way to help offset any potential dig in New car sales the industry may see in 2017. Not all dealers may be affected, but CPO can be a great opportunity to help consumers to buy up.
[1] 2016 Auto Outlook: The Thinning of the Media Pack. Borrell & Associates, 2016.
[2] Placed Dealer Walk-In Analysis Report. Cars.com Data Insights, 2016.
[3] Dealer CPO study, Cars.com Strategic Insights, 2016
