Half-Million Recent New Car Shoppers Steered to Used Cars, Edmunds.com Reports
February 18, 2009
SANTA MONICA, Calif. -- At a time when automakers are desperate for every sale that they
can make, a significant number of shoppers are drifting out of the new-car market and purchasing a used car instead.
Edmunds.com has determined that approximately 510,800 used cars sold in the past three months would have been new-car sales in a different economy. In manufacturing terms, that amounts to about two assembly plants of new-car production.
Projecting ahead, this could represent a seasonally adjusted annual rate (SAAR) of more than 2 million vehicles, which equates to more than 15 percent of total new-car sales.
Edmunds.com Senior Analyst David Tompkins, PhD, said about two-thirds of incremental used car sales -- or about 343,000 -- were sold to consumers who, in a normal market, would have considered a new car, but instead began their shopping process focused on a used car. The remaining third, about 167,000 vehicles, were bought by people who demonstrated purchase intent for new vehicles, but, at some point in the buying process, switched to used cars.
Edmunds.com's research shows that used vehicles one year old and younger have been sold at a faster rate by franchise dealerships lately; in the past those vehicles made up about 11 percent of all dealership sales, but lately they have jumped to 16 percent.
"It is probably safe to assume that many shoppers who normally would be tempted by 'new car smell' and the latest automotive technology made a more cost-conscious decision because of economic pressures," surmised Tompkins, whose team studied historical ratios of online research and actual sales of new cars versus used cars.
"Dealerships need to maximize their short-term profitability more than usual in this tough economy, and so it is really no surprise to learn that salespeople seem to be directing car buyers toward used cars, which have historically delivered a much higher margin at the point of purchase," observed Edmunds.com CEO Jeremy Anwyl.
In particular, certified pre-owned vehicles represent the value consumers are seeking. Sales of those vehicles backed with the manufacturer have seen an uptick in sales as new cars and used cars as a whole have declined at double-digit rates.
Joe Spina, Edmunds.com's senior manager of remarketing, believes the appeal of CPO programs is as simple as it is strong. "During these uncertain economic times," he said, "CPO sales are a good option. "People still need to buy cars, and a safe bet is to get a CPO vehicle."
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