REV UP THOSE USED-VEHICLE SALES

Many dealers fail to market used vehicles as effectively as they could, despite growing customer interest in pre-owned cars.

So says Rik Kinney, reporting on Dohring Co.'s 2001 survey of consumer preferences and buying habits.

“My advice to dealers is to tap into that used-car market where there are tremendous opportunities, especially if there's a downturn in new-car sales this year,” says Mr. Kinney, Dohring's senior vice president and overseer of the eighth annual survey which polled 8,000 American drivers.

Forty-eight percent of that group say their next vehicle purchase would be a used model. That's up by 10% from the 2000 Dohring survey.

“Dealers should create a whole new niche of used-vehicle marketing.”
— Rik Kinney Senior Vice President Dohring Co.

Conversely, 52% say they'd next purchase a new vehicle. That's down by 10% compared to last year's polling.

Moreover, 19% of current new-car owners say their next purchase will be a used vehicle, compared to 15% who said the same thing last year.

Mr. Kinney cites various reasons for the shift towards used vehicles.

“People are becoming more value conscious as well as more apprehensive about the economy and the stock market,” he says. “And with so many off-lease vehicles entering the market, there are a lot of quality used vehicles out there.”

Five of 10 consumers tell Dohring they'd rather purchase a higher-end used vehicle for $20,000 than a new vehicle for the same price.

New-car dealers who've concentrated on marketing used vehicles know they're a profit center, requiring a lower investment and offering a higher margin than do new vehicles.

However, says Mr. Kinney, “Dealers historically look at used cars as a step down from new. After all, they are new-car dealers.”

Consequently, most dealers spend relatively little time and money marketing used vehicles.

“They should change that emphasis and create a whole new niche of used-vehicle marketing,” says Mr. Kinney.

Dohring is an automotive market research firm based in Glendale, CA. Other highlights of its national survey:

Safety features

In the past four years, Dohring has tracked a marked increase in consumers saying that air bags, ABS brakes, traction control and crush/crumple zones are important considerations in new-vehicle purchases.

For instance, in 1998, 63% of respondents said air bags were “important” or “very important.” That rose to 86% this year. Likewise the importance of ABS brakes rose from 78% to 89% in the same period.

“Safety features' popularity is at an all-time high,” says Mr. Kinney. “Consumers not only expect them, they demand them.”

Negotiated price

“Eight out of 10 consumers negotiate the price of a vehicle, and most have a good experience about it,” says Mr. Kinney.

Only 16% of surveyed people say they'd likely buy from a one-price dealership. Moreover, 84% say they'd shop around for a better deal after obtaining a price at a one-price store.

Environmentally friendly cars

A majority of people — 58 % — say automakers should offer more environmentally friendly vehicles. Yet 42% say automakers should continue to produce conventional vehicles to meet demand.

“People are interested in it, but they are not quite comfortable yet buying a ‘green’ car,” says Mr. Kinney.

He adds, “It doesn't appear consumers' demand for environmentally friendly vehicles is anywhere near the consumers' ‘eco-consciousness.’”

The Internet

Few people actually buy cars over the Internet, but a growing number — 27% this year compared to 13% last year — say they went on line as part of the purchase process.

Most went to consumer guides (82%), manufacturers' websites (68%) and dealer websites (46%). They were mostly researching on line, according to Mr. Kinney.

“They are looking for information,” he says. “They are not necessarily interested in buying on line or in avoiding the dealership at all costs.”

Such consumers enter the dealership well-informed and armed with information. That makes for an easier sale for a “professional” sales person, says Mr. Kinney.

“The pressure is on the sales people,” he says. “They've got to know their stuff. So the Internet will push their professionalism to a higher level than we've ever seen.”