Table of Contents
Executive Summary
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- Used cars begin to rebound from a recessionary decline
- Reinvigorated new car sector increases the pressure
- Prices on the rise for used cars
- Market favors smaller cars
- High level of fragmentation in used car sales
- Sales start online, end on the lot
- Half of households purchased a used car in past three years
- Post-sale customer relationship management crucial to future sales
- Mid-size sweet spot in market, but families seek SUVs/minivans
- Average spend varies depending on source of data
- Place of purchase determined by demographic features
- Research process driven by spend on vehicle
- Decision process complicated by importance of numerous factors
- Trends across other demos replicated among blacks
Insights and Opportunities
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- From rent to sell, at record speed
- Putting “mobile” into automobile sales
Inspire Insights
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- Trend—“Boomerang Generation”
Market Size and Forecast
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- Key points
- Returning to growth after a steep decline
- High prices make used cars less competitive
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- Figure 1: Total U.S. sales and forecast for used cars and trucks, at current prices, 2005-15
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- Figure 2: Total U.S. sales and forecast for used cars and trucks, at inflation-adjusted prices, 2005-15
- Figure 3: Total U.S. unit sales for used cars and trucks, 2005-10
Market Drivers
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- Key points
- A difficult economy drives new interest—and scarcity—for used cars
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- Figure 4: U.S. new and used vehicle unit sales, 2005-10
- Additional factors drive increased prices
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- Figure 5: Manheim used car price index, 2005-11
- High fuel prices limit appeal of some used cars
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- Figure 6: Average U.S. gas prices, 2005-11
- Financing issues can increase sales hurdles
Competitive Context
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- Key points
- Mind the (pricing) gap
- Factors in the choice between used and new
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- Figure 7: Number of new and used vehicles sold, 2005-10
Segment Performance
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- Key points
- Fuel costs, poor economy drive changes in consumer tastes
- Fuel-efficient cars will continue to dominate
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- Figure 8: Used car and truck unit sales by segment, 2007-09
Retail Channels
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- Key points
- Overview
- The web emerges as a critical channel
- The dealership closes the deal
Leading Used Car Retailers
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- Key points
- Overview
- AutoNation
- AutoTrader.com
- CarMax
- eBay
Leading Information Service Companies
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- Key points
- Overview
- Pricing guides
- Print publications
- Online-only informational sites
- Vehicle condition report services
Innovation and Innovators
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- Key points
- CarMax
- CarWoo
Marketing Strategies
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- Key points
- Overview
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- Figure 9: Advertising spend by used car dealerships and related brands, 2008-09
- Promotions help drive interest
- Print advertising stays part of the mix
- TV advertising
- BMW promotes CPOs as good as new
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- Figure 10: BMW CPO ad, 2011
- CARFAX aims to be ubiquitous
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- Figure 11: CARFAX ad, 2011
- CarMax emphasizes choice and service
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- Figure 12: CarMax ad, 2011
- Toyota covers the basics
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- Figure 13: Toyota CPO ad, 2011
Purchase of a Used Car
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- Key points
- More than half of households purchased used car in past three years
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- Figure 14: Purchase of used vehicle in past three years, March 2011
- Households with 18-34s prime buyers of used cars
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- Figure 15: Purchased used vehicle in the past three years, by age, March 2011
- Figure 16: Purchased used vehicle in the past three years, by household income, March 2011
- Plans to purchase used on the rise
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- Figure 17: Next vehicle purchase, new vs. used, 2006-10
- Figure 18: Most recent vehicle purchase, used vs. new, 2006-10
Type of Car Replaced
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- Key points
- Repeat sales critical with most buyers repeatedly purchasing used
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- Figure 19: Type of car replaced with used car, by age, March 2011
- Upper-income households more likely to be replacing a new car
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- Figure 20: Type of car replaced with used car, by household income, March 2011
- Married households more likely to be replacing new vehicle
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- Figure 21: Type of car replaced with used car, by marital status, March 2011
Type of Car Purchased
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- Key points
- Mid-size sedans most popular
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- Figure 22: Type of used car purchased, March 2011
- 18-24s seek small cars, 25-44s want SUVs
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- Figure 23: Type of used car purchased, by age, March 2011
- Income drives type of car purchased
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- Figure 24: Type of used car purchased, by household income, March 2011
- Households with 2+ children key buyers of used SUVs and minivans
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- Figure 25: Type of used car purchased, by children in hh, March 2011
Used Car Spend
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- Key points
- Income is core driver of spend
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- Figure 26: Spend on most recently purchased used car, by age, gender, and income, March 2011
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- Figure 27: Spend on most recently purchased used car, by marital status, presence of children, and size of household, March 2011
Place of Purchase
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- Key points
- Company dealerships leading retail channel
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- Figure 28: Place of purchase, by age, March 2011
- Lower-income households turn to smaller dealers and private sellers
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- Figure 29: Place of purchase, by household income, March 2011
- Married households more likely to turn to exclusive brand dealerships
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- Figure 30: Place of purchase, by marital status, March 2011
Research Prior to Purchase
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- Key points
- Three-quarters undertake research
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- Figure 31: Research prior to purchase, by age, March 2011
- Upper-income households undertake the most research
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- Figure 32: Research prior to purchase, by household income, March 2011
- Those with 2+ children undertake more research
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- Figure 33: Research prior to purchase, by children in hh, March 2011
- Married households undertake more research
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- Figure 34: Research prior to purchase, by marital status, March 2011
The Decision Process
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- Key points
- Features
- Fuel economy and roominess top factors taken into consideration
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- Figure 35: Role of features, by household income, March 2011
- Those ages 25-34 seek most qualities in their used car
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- Figure 36: Role of features, by age, March 2011
- Figure 37: Role of features, by presence of children in hh, March 2011
- Wear and tear
- Body condition and mileage are key measures of wear and tear
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- Figure 38: Role of wear and tear, by household income, March 2011
- Price, financing, and warranties
- Women place higher value on warranties and certification programs
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- Figure 39: Financial factors, by gender, March 2011
- Those ages 18-34 seek financing; 25-34s value warranties, certification
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- Figure 40: Financial factors, by age, March 2011
- Households with 2+ children seek warranties, CPOs, special financing
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- Figure 41: Financial factors, by presence of children in the household, March 2011
Cluster Analysis
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- I Need a Car!
- Characteristics
- Demographics
- Opportunities
- Quick Deciders
- Characteristics
- Demographics
- Opportunities
- Bang for Bucks
- Characteristics
- Demographics
- Opportunities
- Characteristic tables
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- Figure 42: Used car clusters, March 2011
- Figure 43: Participation in used vehicle purchase, by used car clusters, March 2011
- Figure 44: Spend on most recent purchase of a used car, by used car clusters, March 2011
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- Figure 45: Research accomplished, by used car clusters, March 2011
- Figure 46: Features impacting purchase decision, by used car clusters, March 2011
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- Figure 47: Type of vehicle purchased, by used car clusters, March 2011
- Figure 48: Place of purchase, by used car clusters, Month 2009
- Demographic tables
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- Figure 49: Used car clusters, by gender, March 2011
- Figure 50: Used car clusters, by age, March 2011
- Figure 51: Used car clusters, by household income, March 2011
- Figure 52: Used car clusters, by race, March 2011
- Figure 53: Used car clusters, by Hispanic origin, March 2011
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- Figure 54: Used car clusters, by marital status, March 2011
- Figure 55: Used car clusters, by children under 18 in household, March 2011
- Figure 56: Used car clusters, by household size, March 2011
- Cluster methodology
Race/Hispanic Origin
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- Key points
- Blacks most likely to be replacing a used vehicle
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- Figure 57: Type of car replaced with used car, by race/Hispanic origin, March 2011
- Mid-size sedan preferred by minority groups
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- Figure 58: Size of used car purchased, by race/Hispanic origin, March 2011
- White households show highest spend
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- Figure 59: Type of car replaced with used car, by race/Hispanic origin, March 2011
- Black households least likely to research, “other” race the most
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- Figure 60: Research prior to purchase, by race/Hispanic origin, March 2011
- Whites to exclusive brand dealerships, blacks to regional and local ones
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- Figure 61: Where purchased used car, by race/Hispanic origin, March 2011
- Minority groups place importance on greater range of vehicle qualities
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- Figure 62: Factors of importance related to intrinsic properties of car, by race/Hispanic origin, March 2011
- Minority groups value warranties and seek financing
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- Figure 63: Factors considered important when purchasing used car, by race/Hispanic origin, March 2011
Custom Consumer Groups: Moms
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- Moms love SUVs
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- Figure 64: Size of used car purchased, by children in hh, March 2011
- Moms turn to dealers where they can browse varied brands
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- Figure 65: Where moms purchased used car, March 2011
- Moms check out Kelley Blue Book and CARFAX/AutoCheck
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- Figure 66: Research prior to purchase by moms, March 2011
- Moms value roominess, storage capacity, and electronic amenities
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- Figure 67: Factors of importance when purchasing used car, by gender, March 2011
Appendix—Other Useful Consumer Tables
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- Figure 68: Factors of importance when purchasing used car, by household income, March 2011
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- Figure 69: Purchased used vehicle in the past three years, by race/Hispanic origin, March 2011
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- Figure 70: Size of used car purchased, by gender, March 2011
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Appendix—Trade Associations
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