Car Buyers Switching from New to Used

Despite the US recession, some people are still buying cars. But the bad news for the automakers is that more and more people are looking at buying a used car rather than a new one. According to a recent Cars.com survey, 32% of car shoppers who were thinking of buying a new car are now looking for a more affordable used car as a result of the economy. That's up five percentage points from last October, when 27% of in-market shoppers said they would switch from buying new to buying used.
Certified pre-owned and used-car shopping activity continues to be strong on Cars.com, with consumer contact to dealers through the Cars.com website up 18% year-over-year for used cars, and more than double that for certified pre-owned cars. Cars.com is a subsidiary of Classified Ventures LLC, owned by Tribune, Gannett, Belo and The Washington Post Company.
“Consumers are still focused on cost-cutting, and one way to do that is to find a solid used car to help save on the depreciation costs that typically come with buying a new car,” said Cars.com Editor in Chief Patrick Olsen. “Manufacturer certified pre-owned programs also offer consumers a good value by giving them some of the benefits of a new car – extended warranties and certified inspections – but with the price of a used car,” he added.
According to the survey, consumers are also showing an increased willingness to extend the financing on their purchase. Currently, the median length of time consumers consider acceptable for a car loan is 60 months, up from 48 months just five months ago. However, the biggest change in the past five months has been the number of consumers willing to accept a loan of either 72 or 84 months, which has jumped from 10 percent to 26 percent.
“Obviously, the economy has consumers looking for ways to save by extending loans and cutting monthly payments. However, the real risk with that is consumers may wind up upside-down on their loan, owing more money on the car than it's worth. Consumers looking for these types of loans are better off looking for cars that hold their value longer,” Olsen said.We requested information from BIGResearch on consumers' intentions to buy used vs. new cars. Use it to your advantage in selling to dealers: Key is look at the percentage of consumers that will be purchase a used vehicle, a solid 46.4% up over last year.
RBR/TVBR observation: I can tell you from personal experience that broadcasting can sell used cars in a recession. In an earlier recession – yes, this is not the first one the US has seen – back in the 1970s I had a new car dealer on my account list who didn’t believe that Country Radio listeners bought new cars. But when he bought a new lot (from a bankrupt dealer) and expanded his used car business, he finally started advertising on our radio station. The used car lot manager and I wrote up lots of spots pitching specific new vehicles as they were added to the inventory and the dealer sold plenty of used cars. Enough, in fact, that he finally started using our Country station to advertise his new inventory as well. Lo and behold, he found that Country Radio listeners actually bought new cars and pickups! -- Jack Messmer, Executive Editor