Table of Contents
Executive Summary
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- Top takeaways
- Market overview
- Impact of COVID-19 on the used vehicle market
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- Figure 1: Short-, medium- and long-term impact of COVID-19 on used vehicle sales, September 2020
- Opportunities and Challenges
- Lack of used vehicle inventory will lead to an increase in value
- Dealerships need to further digitize their car buying experience
- Third party retailers should push service center offerings
The Market – Key Takeaways
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- Much like new, used vehicle sales have decreased in the short term due to COVID-19
- As unemployment numbers decrease, more consumers may buy cars
- Consumer confidence makes small gains after severe losses
Market Size and Forecast
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- COVID-19 to have less of an impact on used vehicle sales
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- Figure 2: Total US retail sales and forecast of used vehicle sales, at current prices, 2015-25
- Impact of COVID-19 on the used vehicle market
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- Figure 3: Short-, medium- and long-term impact of COVID-19 on the used vehicle market, September 2020
- Lockdown
- Reemergence
- Recovery
- COVID-19: US context
- Learnings from the last recession
- Declining vehicle sales could once again lead to shuttered dealerships and more
Market Breakdown
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- More US households could become two-car homes
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- Figure 4: Vehicle ownership, April 2020
Market Factors
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- Decreasing unemployment numbers could spur vehicle purchases
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- Figure 5: Unemployment and underemployment, January 2007- August 2020
- Declining traffic volumes in 2020 could hinder vehicle purchases
- Consumers are slightly more optimistic about the US economy
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- Figure 6: Consumer Sentiment Index, January 2007-August 2020
Market Opportunities
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- Facial recognition tech to serve as a staff COVID tracker
Competitive Strategies
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- How Carvana sells cars
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- Figure 7: Carvana – Ditch the Dealership, August 2019
- Figure 8: Carvana – Pioneers of 100% Online Car Buying, June 2020
- How CarMax sells cars
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- Figure 9: CarMax – Everywhere is a CarMax, July 2020
- How dealerships sell cars
- Jeep-centric dealerships find success during the pandemic
- Declining sales have dealer groups cutting their losses, and jobs
The Consumer – Key Takeaways
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- Despite pandemic, consumers’ car buying behavior stays consistent
- Consumers pick dealerships as the most popular retailer
- Young adults and parents of young drivers are looking for warranties
- COVID keeps car buyers hesitant to enter dealerships
Vehicle Purchase Intent
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- Despite pandemic, car buying behaviors remain unchanged
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- Figure 10: Purchase intent timeline, May 2020
- Most consumers plan to trade in their current vehicle
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- Figure 11: Trade-in intent, May 2020
- Adults want to buy new vehicles
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- Figure 12: Vehicle type consideration, May 2020
Vehicle Retailer Locations
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- Status quo helps dealerships thrive
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- Figure 13: Recently acquired vehicle location, May 2020
- Young car buyers more willing to try out third party dealers
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- Figure 14: Recently acquired vehicle location, by age, May 2020
Perceptions of Vehicle Retailers
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- Retailer trust lags behind the best deal
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- Figure 15: Reason for purchasing from a specific retailer, May 2020
- CarMax customers attracted to trust, reliability
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- Figure 16: Consumer trust among vehicle retailers, May 2020
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- Figure 17: Vehicle warranty as reason for retailer selection, May 2020
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- Figure 18: Ease of car purchasing process, by retailer, May 2020
- Young car buyers and parents want warranties
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- Figure 19: Warranty as retailer purchase reason, by age May 2020
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- Figure 20: Warranty as retailer purchase reason, by parental status, May 2020
Vehicle Retailer Attributes
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- Dealerships are the “worst,” unless compared to other vehicle retailers
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- Figure 21: Warranty as retailer purchase reason, by parental status, May 2020
- Consumers tolerate dealerships, dislike staff
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- Figure 22: Perceptions of dealerships and staff, May 2020
- CarMax crushes Carvana in car buyer perception
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- Figure 23: Perceptions of Carvana and CarMax, May 2020
- Car purchasing process, not retailer, intimidates car buyers
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- Figure 24: Perceptions of intimidating retailers, May 2020
Vehicle Retailer Selection Factors
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- Consumers emphasize variety over value
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- Figure 25: Top factors when selecting a vehicle retailer, May 2020
- Young car buyers prioritize health safety; older consumers prioritize price
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- Figure 26: Top factors when selecting a vehicle retailer, by age, May 2020
- Brand name matters more to Boomers and Swing Generation
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- Figure 27: Top factors when selecting a vehicle retailer, by age, May 2020
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- Figure 28: Presence of favorite dealership, May 2020
- Dealerships should lean into localism
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- Figure 29: Perception of dealerships as a local business, May 2020
- Have deal, consumers will travel
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- Figure 30: Likelihood of travel for best vehicle deal, May 2020
- COVID causes more hesitancy in young car buyers over old
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- Figure 31: Reluctance to enter dealership, by age, May 2020
- Gen Z doesn’t buy into stigma of used car retailers
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- Figure 32: Consumer lack of trust in used car retailers, by generation, May 2020
- Feelings of being understood could drive dealership loyalty
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- Figure 33: Consumer sentiment of being understood, May 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Forecast
- Consumer survey data
- Consumer qualitative research
- Direct marketing creative
- Manufacturer Retail Selling PriceAbbreviations and terms
- Abbreviations
- Terms
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