The Aging Automobile and the Challenge for Dealers
By: Daniel Beckelman
|
|
Recent surveys show that the average American car is approaching a decade old. While the median vehicle may have been bought while the Yankees and Mets fought it out during the Subway Series and Gore and Bush fought for the White House, the advanced age of the average car offers tremendous opportunities for new car franchises looking to grow out of a devastating recession.
Working in the dealership environment over the last year I saw more and more trade-ins were not gently used four-year old vehicles, but often vehicles that were exceeding the decade mark. These customers present an interesting dichotomy, as many are ready to make a change but at the same time are looking to make a sound investment for the long term. These customers need to be sold on value and long-term durability at the same time they need reinforcement of the massive improvements in vehicles over the last decade. Often, a certified pre-owned, with up-to-date features, becomes a logical alternative for the owner trading in an aged vehicle.
How dealers approach the older trade-ins that customers bring them may affect their overall business strategy. Some dealerships view older trade-ins that were not of the parent brand as undesirable. Because of the age and condition of these older units many dealerships choose not to sell them "as-is" and many don't qualify for even a basic power-train warranty.
Thus the only option for these vehicles is to wholesale them at a lower profit. While this is the safe route, the dealership gives up the chance to bring in an aspirational customer that needs some basic wheels right now, but has the potential to move up the food-chain into new and more profitable units in the future.
Dealerships should consider other alternatives for these aged trade-ins. Maybe they can hold a "Scratch and Dent Sale" or even "Clear out the Clunkers" sale to make a bit more money and expose the dealership to a broader customer base. Remember the quality of vehicles has drastically improved and high mileage vehicles with some cosmetic flaws are still a good value to many consumers. Be sure you clearly mark any vehicle that is being sold, "As Is" and adhere to any of your state's regulations on these transactions.
While the Internet does generate "random" buyers that do not turn into repeat sales or service at a dealer, some of these older vehicles sell to longtime customers as entry-level or stopgap alternatives to a newer car. Recently we sold a 1999 Ford Taurus to a longtime customer's daughter, resulting in a profitable sale as well as another way of cementing a relationship with a family of buyers.
Dealers should also consider reconditioning some of these older vehicles to convey to prospects that you care about this market too. Longer warranties must be evaluated as an option to give buyers piece of mind as well as a possible growth spot for service departments. A good mix of inventory is crucial as well.
It seems that the ideal older car marketing needs to be flexible and have an assortment of various makes available and ones that also appeal to first-time buyers are crucial as well.
In the end, a strong re-marketing effort on older vehicles can build up a dealers brand as a trusted source for vehicles and lead to referrals and future business. In today's market, it is a vital key to success for any franchise.
Daniel Beckelman has a longtime passion for automobiles and marketing. He is currently the Assistant Business Development Manager at Douglas Volkswagen in Summit, New Jersey.
|
|
