Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Consumer survey data
- Sales data
- Abbreviations and terms
Executive Summary
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- Market size and forecast
- Competitive context
- Segment performance
- Market drivers
- Used vehicle usage
- Brand qualities
- Most popular type of used cars
- Where consumers purchase used cars
- Innovation and innovators
- Advertising and promotion
- Buying cars for commuting purposes and for children
- Attributes commonly considered when purchasing a used vehicle
- Reasons for purchasing used vehicle
- Most important elements of the purchase process
- Race and ethnicity
Insights and Opportunities
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- Used auto sales more profitable than new cars
- Consider partnering with food, discount or department stores to create in-store used car marketing kiosks
- Routinely survey current and potential customers in order to learn how to better serve them and gain competitive advantage
- Online search tools likely to become more popular, especially during recession
- Develop viral campaigns to drive word of mouth recommendations
- Consider promoting vehicles through mobile phone alerts and promotions
- Annual increases in vehicle cost despite monthly payment sweet spot
- Demand for used cars higher among Spanish-speaking Hispanics, who also tend to be more receptive to marketing efforts
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- Figure 1: Attitudes toward advertising among Hispanics, by language preference, May 2006-June 2007
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- Figure 2: Metropolitan areas with the largest number of Hispanic residents, by country of origin, 2006
Inspire Insights
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- Trend 1: Drive Less, Get More
- What’s it all about
- What we’ve seen
- Implications
- Trend 2: Customization
- What’s it all about?
- What we’ve seen
- Implications
Market Size and Forecast
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- Key points
- Sales of cars and trucks drop as a result of recessionary pressures and a drop in consumer demand
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- Figure 3: Total U.S. sales of used cars and trucks at current prices, 2003-13
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- Figure 4: Total U.S. sales of used cars and trucks at inflation-adjusted prices, 2003-13
- Unit sales remain well below 2002 levels; price increases partially mitigated effect of low sales volume
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- Figure 5: Total number of used cars and trucks sold in US, 2002-07
Competitive Context
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- Key points
- Use of public transportation, bikes and walking on the rise
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- Figure 6: Incidence of public transportation use, by age, October 2008
- Zipcar provides viable alternative to ownership for millions of urban dwellers and college students
- The internet is making it easier for individual sellers to compete with dealerships
Segment Performance
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- Key points
- Used trucks sales grew faster than cars during the housing boom
- Fuel economy concerns will fuel used car growth, hinder used truck growth
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- Figure 7: U.S. sales of used cars and trucks, by segment, 2003-13
- Figure 8: U.S. sales of used cars and trucks, by segment, 2006 and 2008
- 35-44 year olds spend the most on used cars and trucks
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- Figure 9: Percentage of US used car and truck sales, by age of householder, 2006
Segment Performance—Used Cars
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- Some dealers focus more on used segment as new car sales plummet, and used sales remain relatively steady
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- Figure 10: Total U.S. sales of used cars at current prices, 2003-13
- Figure 11: Total U.S. sales of used cars at inflation-adjusted prices, 2003-13
Segment Performance—Used Trucks
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- Used truck market showed momentary resilience, but is poised for continued decline
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- Figure 12: Total U.S. sales of used trucks at current prices, 2003-13
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- Figure 13: Total U.S. sales of used trucks at inflation-adjusted prices, 2003-13
Market Drivers
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- Key points
- Consumer confidence undermines willingness to purchase automobiles
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- Figure 14: Consumer sentiment index, 2001-08
- Used car segment may be less susceptible to recessionary pressures
- Americans are keeping their cars longer
- Young adult segment will help drive market growth
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- Figure 15: Population aged 18 or older, 2003-13
- Increase in Hispanic population will help fuel used vehicle market growth
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- Figure 16: Population by race and Hispanic origin, 2003-13
- American lifestyles changing, many driving less
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- Figure 17: Number of miles driven annually on all U.S. roads, November 2003-November 2008
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- Figure 18: Eco-friendly strategies for reducing energy spending, by age, October 2008
- From extra credit in 2003 to insufficient credit in 2008
- Bailout of U.S. auto companies could aid sales of U.S. made used cars
Brand Qualities
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- Key points
- Most popular used makes and models
- Japanese mid-size vehicles among the most popular in the U.S.
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- Figure 19: Ranking of 10 most popular types of used vehicles, Q2 and Q3 of 2008
- Consumer perceptions of popular makes and models
- Honda
- Toyota
- Ford
- Domestic models popular among used car buyers
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- Figure 20: Brand of car most recently acquired, by acquisition type, April 2007-June 2008
Innovation and Innovators
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- Key points
- The LIVE X/Wal-Mart partnership
- CarMax: Creating a seamless transition between online research and the purchase process
- Creating confidence: The Hyundai Assurance
- GPS to ensure vehicles are not lost when loans default
- Certified pre-owned programs
Advertising and Promotion
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- Key points
- Analysis of key advertising themes
- Technology and twenty-somethings
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- Figure 21: The way car buying should be, carmax,.com, 2008
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- Figure 22: Cars.com ad targeted to young males ad, 2008
- Pre-owned BMWs: Too good to be true?
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- Figure 23: Man Brings Priest with him, 2008
- The importance of the internet: Most customers conduct research and purchase a car they found online
- Carmax.com
- Usedcars.com
- Marketing strategies to drive growth
- Providing customers with the emotional experience they want
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- Figure 24: Feeling experienced when driving, August-September 2008
- The rise of 2.0 and importance of community
- The importance of Hispanics
Used Vehicle Usage
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- Key points
- Most households own a used vehicle; young adults heavy users
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- Figure 25: Incidence of used car purchase, by age, April 2007-June 2008
- Households with 18-24 year olds have a higher average number of used vehicles
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- Figure 26: Number of used vehicles owned in household, by age, November 2008
- Lower income households more likely to purchase used cars
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- Figure 27: Incidence of used car purchase, by income, April 2007-June 2008
- Demand for used cars often higher in rural areas
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- Figure 28: Number of used vehicles owned in household, by population density, November 2008
Most Popular Type of Used Cars
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- Key points
- Midsize cars most popular used models
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- Figure 29: Type of car most recently acquired, by acquisition type, April 2007-June 2008
- Four-door passenger sedans are a hot item
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- Figure 30: Vehicle type, by age, November 2008
- Most customers favor models that are at least three years old
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- Figure 31: Age of last used vehicle bought, by age, November 2008
Where Consumers Purchase Used Cars
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- Key points
- Dealerships are the most commonly utilized channel
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- Figure 32: Purchase location of last used vehicle, by income, November 2008
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- Figure 33: Purchase location of last used vehicle, by age, November 2008
Common Uses of Used Cars
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- Key points
- Commuting most common use of used cars
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- Figure 34: Primary purpose of used vehicle, by age, November 2008
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- Figure 35: Primary purpose of used vehicle, by income, November 2008
Attributes Commonly Considered when Purchasing a Used Vehicle
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- Key points
- Comfort, gas mileage, and performance most important attributes
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- Figure 36: Most important factors in purchase besides price and odometer reading, by age, November 2008
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- Figure 37: Most important factors in purchase besides price and odometer reading, by income, November 2008
Reasons for Purchasing Used Vehicle
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- Key points
- Affordability and need for better gas mileage key drivers of used vehicle purchase
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- Figure 38: Reason for purchasing a used opposed to new vehicle, by age, November 2008
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- Figure 39: Reason for purchasing a used opposed to new vehicle, by income, November 2008
Most Important Elements of the Purchase Process
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- Key points
- Test drive, vehicle history report, and dealer warranty all critical elements in closing a deal
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- Figure 40: Most important purchase process components, by income, November 2008
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- Figure 41: Most important part of the purchasing process, by age, November 2008
Race and Ethnicity
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- Key points
- Hispanics over-index on used car purchase and have higher average annual expenditures
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- Figure 42: Incidence of used car purchase, by race/ethnicity, April 2007-June 2008
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- Figure 43: Number of used vehicles owned in household, by race/ethnicity, November 2008
- Hispanics spend far more on used trucks than non-Hispanics
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- Figure 44: Average annual expenditure on used cars and trucks, Hispanic vs. Non-Hispanic, 2006
- Demand for used cars is higher among Spanish speaking Hispanics
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- Figure 45: Vehicle most recently acquired in Hispanic households, by language preference, April 2007-June 2008
- Hispanics and whites somewhat more likely to favor American-made vehicles
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- Figure 46: Brand of used car most recently acquired, by race/ethnicity, April 2007-June 2008
- Hispanics and blacks driven to purchase largely by need for commute vehicle
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- Figure 47: Primary purpose of used vehicle, by race/ethnicity, November 2008
- Hispanics and blacks often purchase older vehicles with more miles than the average
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- Figure 48: mileage at point of purchase of last used vehicle bought, by race/ethnicity, November 2008
- Dealer financing especially important to Hispanics and blacks
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- Figure 49: Most important part of the purchasing process, by race/ethnicity, November 2008
Cluster Analysis
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- Testers
- Who they are
- Opportunity
- Dealers
- Who they are
- Opportunity
- Traders
- Who they are
- Opportunity
- Cluster characteristics
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- Figure 50: Used car clusters, November 2008
- Figure 51: How many used vehicles does your household own? by used car clusters, November 2008
- Figure 52: Where did you purchase your last used vehicle? by used car clusters, November 2008
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- Figure 53: Why did you purchase a used vehicle and not a new vehicle? by used car clusters, November 2008
- Figure 54: What was the mileage of the last used vehicle your household bought at point of purchase?, by used car clusters, November 2008
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- Figure 55: Which of these components of the purchase process of a used car were most important to you?, by used car clusters, November 2008
- Figure 56: Thinking about the last used vehicle your household bought, what kind is it?, by used car clusters, November 2008
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- Figure 57: For what primary purpose(s) does the used vehicle your household uses the most serve?, by used car clusters, November 2008
- Figure 58: How old is the last used vehicle your household bought?, by used car clusters, November 2008
- Cluster demographics
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- Figure 59: Used car clusters by gender, November 2008
- Figure 60: Used car clusters by age group, November 2008
- Figure 61: Used car clusters by income group, November 2008
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- Figure 62: Used car clusters by race, November 2008
- Figure 63: Used car clusters by Hispanic origin, November 2008
- Cluster methodology
Custom Consumer Groups
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- Key points
- Young males, families with teens and the working class are key elements of the target market
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- Figure 64: Incidence of used car purchase, by income, April 2007-June 2008
- Market for most popular midsize models diverse
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- Figure 65: Incidence of used car purchase, by income, April 2007-June 2008
Appendix: Other Useful Consumer Tables
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- Figure 66: Brand of used car most recently acquired, by HH income, April 2007-June 2008
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- Figure 67: Type of used car most recently acquired, by race/ethnicity, April 2007-June 2008
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- Figure 68: Most important factors in purchase besides price and odometer reading, by race/ethnicity, November 2008
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- Figure 69: Vehicle type, by race/ethnicity, November 2008
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- Figure 70: Age of last used vehicle bought, by race/ethnicity, November 2008
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- Figure 71: Purchase location of last used vehicle, by race/ethnicity, November 2008
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- Figure 72: Reason for purchasing a used opposed to new vehicle, by race/ethnicity, November 2008
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- Figure 73: Reason for purchasing a used opposed to new vehicle, by income, November 2008
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- Figure 74: Type of car most recently acquired, by HH income, April 2007-June 2008
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- Figure 75: Vehicle type, by income, November 2008
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Appendix: Trade Associations
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