UNDERSTANDING THE CUSTOMER

Transcription

1 Certified Pre-Owned UNDERSTANDING THE CUSTOMER November 2013

2 About the CPO Study PURPOSE: To trend shopper familiarity, opinion, and consideration of CPO vehicles. METHODOLOGY: A quantitative online survey was conducted in September To qualify, respondents must have been planning to purchase a vehicle in the next 6 months. A total of 862 interviews were completed: Primary New vehicle considerers: 298 interviews Primary Used (non-certified) vehicle considerers: 264 interviews Primary CPO vehicle considerers: 296 interviews Weights were applied to Male/Female for New & Used vehicle considerers. 2

3 Half a dozen THINGS YOU SHOULD KNOW November 2013

4 1 CPO is a good lower cost alternative for those who cannot afford a new vehicle. 4

5 CPO is important now more than ever. Manufacturers are working with their dealers to offer certified pre-owned programs where buyers can stretch their budget by purchasing a two- or three-year-old vehicle that has gone through an extensive inspection and, if necessary, repairs and replacements. Such vehicles may cost slightly more than a conventional used model but usually include a like-new warranty. 5

6 New-vehicle shoppers are now more open to considering a used vehicle, especially CPO. Consider Used % 33% Consider CPO % 55% S2. Thinking about your next vehicle, how likely are you to consider? 6

7 Their CPO consideration is even approaching levels seen for Used. CPO Consideration Used-Car % 60% New-Car % 55% S2. Thinking about your next vehicle, how likely are you to consider? 7

8 HOWEVER New-vehicle shoppers familiarity with specific aspects of CPO has dropped. CPO Fully Inspected New-Car % 73% Used-Car % 68% A3a. Which of the following best define the concept of Certified Pre-Owned (CPO) vehicles? Please select all that apply. 8

9 HOWEVER New-vehicle shoppers familiarity with specific aspects of CPO has dropped. CPO Warranty New-Car % 68% Used-Car % 54% A3a. Which of the following best define the concept of Certified Pre-Owned (CPO) vehicles? Please select all that apply. 9

10 Once CPO was explained, shoppers willingness to consider CPO increased. CPO Consideration New-Car Pre Post 55% 69% Used-Car Pre Post 60% 66% S2. Thinking about your next vehicle, how likely are you to consider? C1. Now that you have seen the definition of CPO vehicles, how likely would you be to consider a CPO vehicle for your next vehicle purchase? 10

11 Reasons for CPO consideration haven t shifted much. CPO Peace of mind 67% Warranty 48% Can t afford a new vehicle Can afford a new vehicle, but don t want to pay that much Economy (new vehicle no longer an option) Less immediate depreciation Can t secure financing for a new vehicle 20% 37% 33% 32% 31% R1. Why would you consider purchasing a CPO vehicle? Please select all that apply. 11

12 2 The premium remains the barrier to converting many used-vehicle shoppers. 12

13 Used-vehicle shoppers remain highly open to considering CPO. Consider New % 33% Consider CPO % 60% S2. Thinking about your next vehicle, how likely are you to consider? 13

14 HOWEVER Used shoppers willing to pay a CPO premium has dropped. New-Car % 62% Used-Car % 51% P1. Would you be willing to pay more for a Certified Pre-Owned (CPO) vehicle compared to a used Non-Certified vehicle? 14

15 Affordability is the main barrier for Used-Car shoppers to pay the premium. Can t afford it 47% Budgeted a certain amount 22% Inspection is not worth it 10% P5. You indicated that you are not willing to pay more for a CPO vehicle. Why? 15

16 3 Those who are willing to pay a premium find the warranty and inspection most important. 16

17 The acceptable premium for CPO more than doubled among all shoppers. New-Car $1,245 $2,940 Used-Car $1,292 $2,163 CPO $1,670 $2,434 P2. How much extra would you be willing to pay for Certified Pre-Owned (CPO) vehicle? 17

18 Warranty and inspection are the top reasons why shoppers pay a premium for CPO. New Shopper Used Shopper CPO Shopper Warranty 60% 60% 65% New Shopper Used Shopper CPO Shopper Warranty 60% 60% 65% Inspected/certified 58% 66% 69% Inspected/certified 58% 66% 69% Reliable/dependable 40% 51% 46% Low mileage 36% 32% 43% Good price/value 26% 20% 22% Better quality 26% 19% 17% Safety 24% 30% 18% P3A. You indicated that you would be willing to pay more for a Certified Pre-Owned (CPO) vehicle. Why are you willing to pay more for a CPO vehicle? 18

19 As a result, the warranties and inspection are the most valuable aspects of a CPO program. Share of Premium (Mean Percent) New Used CPO Manufacturer Powertrain Warranty 16% 18% 16% New Used CPO Comprehensive Limited Warranty 15% 16% 16% Manufacturer Powertrain Warranty 16% 18% 16% Comprehensive Limited Warranty 15% 16% 16% Detailed Inspection 14% 15% 16% Detailed Inspection 14% 15% 16% Transferrable Warranty 9% 7% 8% Buyback Guarantee 9% 11% 11% Vehicle History Report 9% 7% 8% Emergency Roadside Assistance 7% 7% 8% Towing Coverage 7% 6% 6% Rental Car Assistance 7% 7% 6% Trip Interruption Benefits 6% 6% 6% P3B. What percentage of (the amount of $ willing to pay extra for a CPO vehicle) would you allocate for the following benefits? 19

20 They are also the top reasons why shoppers would walk away from a CPO vehicle. Must-Haves for Consideration New Used CPO Manufacturer Powertrain Warranty 40% 31% 40% Comprehensive Limited Warranty 40% 32% 42% Detailed Inspection 45% 41% 45% P3C. Which benefits would you say are so important that you would not Consider a CPO vehicle that did not offer them? 20

21 4 Most shoppers believe the dealership certifies vehicles. 21

22 Only 1-in-3 shoppers are aware that the OEM is involved in certifying the vehicles. New-Car OEM Dealer 37% 66% Used-Car OEM Dealer 35% 70% CPO OEM Dealer 41% 72% A3a. Which of the following best define the concept of Certified Pre-Owned (CPO) vehicles? Please select all that apply. 22

23 Manufacturer certifications are viewed as the most reliable but only by a slim margin. New Shopper CPO Shopper Used Shopper New Shopper CPO Shopper Used Shopper Manufacturer 89% 92% 88% Manufacturer 89% 92% 88% Dealership 81% 83% 78% Own mechanic 77% 77% 73% Independent agency 74% 76% 69% *Top 2 Box: Very/Somewhat Reliable R3A. How reliable would you feel the certification would be if performed by...? 23

24 These brands have been most successful at creating awareness for CPO among all shoppers. CP O A8. To your knowledge, which manufacturer(s) certify their used vehicles? 24

25 Brands that offer CPO programs New-car shopper awareness. 50% 40% 36% 37% 37% 39% 41% 30% 24% 24% 26% 28% 28% 29% 20% 10% 0% A8. To your knowledge, which manufacturer(s) certify their used vehicles? 25

26 Brands that offer CPO programs Used-car shopper awareness. 50% 40% 30% 20% Used shoppers are less likely to be aware of luxury brand CPO programs. 18% 19% 20% 22% 24% 26% 27% 27% 31% 33% 10% 0% A8. To your knowledge, which manufacturer(s) certify their used vehicles? 26

27 Brands that offer CPO programs CPO shopper awareness. 50% 40% 36% 40% 42% 42% 30% 20% 20% 21% 25% 25% 26% 29% 31% 10% 0% A8. To your knowledge, which manufacturer(s) certify their used vehicles? 27

28 5 CPO buyers research longer, and the Internet is their number one source for information. 28

29 Before making a purchase, CPO buyers spend more time researching than the average shopper. Average Shopper h 48m 17h 30m CPO Shopper h 6m 16h 6m Base: CPO Buyer Source: 2013 Polk Car Buyer Study 29

30 The Internet is the top source used to research their next vehicle purchase. Sources Used to Shop (Online & Offline Buyers) 71% 75% 35% 33% 20% 14% 14% 13% 26% 17% 10% 6% 12% 8% 9% 5% Internet Referral Television Magazine Newspaper Direct Mail Outdoor Ads Radio Significantly higher / lower than Base: CPO Buyer Source: 2013 Polk Car Buyer Study 30

31 Time spent online by CPO buyers is growing Online 63% Online 77% Significantly higher / lower than h 6m total 11 hrs 6m online 16h 6m total 12 hrs 24m online Base: CPO Buyer Source: 2013 Polk Car Buyer Study 31

32 Third-party sites continue to be their top online resource reaching 8-in-10 CPO buyers. Online Sources Used to Shop (Online Buyers) 70% 51% 46% 36% 81% 65% 49% 42% Third-Party Site Dealer Site Search Site OEM Site Significantly higher / lower than 2011 Base: CPO Buyer Source: 2013 Polk Car Buyer Study 32

33 In addition, they are more likely to use third-party and dealer sites than the average shopper. 90% 80% 81% 76% 70% 60% 65% 59% 50% 40% 49% 49% 42% 42% ALL CPO 30% 20% 10% 0% Third-Party Sites Dealer Sites Search Sites OEM Sites Base: CPO Buyer Source: 2013 Polk Car Buyer Study 33

34 The Internet is the most influential source, with half citing it as what led to their vehicle purchase. Radio Outdoor Ads Magazine Direct Mail Newspaper Television Referral Source that Led to Purchase (Online & Offline Buyers) 0% 1% 1% 2% 2% 2% 19% Internet 46% Base: CPO Buyer Source: 2013 Polk Car Buyer Study 34

35 1-in-5 CPO buyers use either a smartphone or tablet to vehicle shop. Devices Used to Shop (Online Buyers) 55% 48% 17% 18% Base: CPO Buyer Source: 2013 Polk Car Buyer Study 35

36 6 CPO programs help build long-term relationships with car owners. 36

37 CPO owners are more loyal to their dealership. 60% current CPO owners vs. 47% never owned CPO O8. How likely are you to shop for the [S4a MAKE/MODEL] from the dealership where your [CO3 MAKE/MODEL] was purchased? 37

38 CPO owners are more likely to express service loyalty. 70% current CPO owners vs. 61% never owned CPO O6. How likely are you to visit the dealership where your purchase or lease your next vehicle for car service or repairs? 38

39 And 45% of CPO owners are shopping for another CPO vehicle. 92% are likely to buy the same brand. O4c. How likely are you to purchase another CPO [BRAND] vehicle? 39

40 All of which is important for when 55% of CPO defectors are shopping for a new vehicle. S3. Thinking about your next vehicle, what are you most likely to consider? 40

41 7 CPO can be a good entry point into the brand for Millennials. 41

42 Millennials have a higher likelihood to consider CPO than older shoppers. New Millennials 35+ Years Old 42% 79% Used Millennials 35+ Years Old 55% 65% S2. Thinking about your next vehicle, how likely are you to consider? 42

43 Millennials are not as familiar with specific aspects of CPO. CPO Fully Inspected New Millennials 35+ Years Old 56% 70% Used Millennials 35+ Years Old 64% 73% A3a. Which of the following best define the concept of Certified Pre-Owned (CPO) vehicles? Please select all that apply. 43

44 Millennials are not as familiar with specific aspects of CPO. CPO Warranty New Millennials 35+ Years Old 48% 59% Used Millennials 35+ Years Old 51% 59% A3a. Which of the following best define the concept of Certified Pre-Owned (CPO) vehicles? Please select all that apply. 44

45 Once CPO was explained, Millennials willingness to consider CPO increased. CPO Consideration New Pre Post 79% 86% Used Pre Post 65% 73% S2. Thinking about your next vehicle, how likely are you to consider? C1. Now that you have seen the definition of CPO vehicles, how likely would you be to consider a CPO vehicle for your next vehicle purchase? 45

46 Millennials are even more willing to pay a premium for CPO. New Millennials 35+ Years Old 55% 74% Used Millennials 35+ Years Old 37% 30% P1. Would you be willing to pay more for a Certified Pre-Owned (CPO) vehicle compared to a used Non-Certified vehicle? 46

47 Millennial shoppers are the most likely to learn about CPO on the internet. CPO Shopper 50% 45% 43% 40% 35% 30% 25% 20% 32% 27% 21% 22% 21% Millennial 35+ years old 15% 10% 5% 9% 11% 0% Internet TV Friends & Family Dealership A2. Where did you first learn about Certified Pre-Owned (CPO) vehicles? 47

48 Half A Dozen Things You Should Know 1. CPO is a good lower cost alternative for those who cannot afford a new vehicle. 2. The premium remains the barrier to converting many used-vehicle shoppers. 3. Those who are willing to pay a premium find the warranty and inspection most important. 4. Most shoppers believe the dealership certifies vehicles. 5. CPO buyers research longer, and the Internet is their number one source for information. 6. CPO programs help build long-term relationships with car owners. 7. CPO can be a good entry point into the brand for Millennials. 48

49 Certified Pre-Owned UNDERSTANDING THE CUSTOMER For more information, please contact your AutoTrader.com Sales Executive or 49

50 Demographics New (A) n=298 Used (B) n=264 CPO (C) n=296 % Male 55% BC 38% 38% % College Grad 51% BC 29% 43% B Mean Age 46 BC B Mean Income $72.9k BC $46k $55.6k B % Married 55% B 37% 50% B 50