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    Increase your pre-owned profits - Real opportunities. Real strategies. Part one: Current market opportunities.

    It's no secret that used cars are a bankable source of new dealership profits. Since 1999 used car sales have consistently represented close to 30 percent of the average dealership's sales [Source: NADAź Data 2005]. But there are two powerful market forces on the rise that will change the used car market considerably over the next five years and push those numbers even higher for smart dealers:

    The "Generation Y" demographic (or the baby boomer's baby boom). Steadily rising Internet usage among used car buyers. Dealers who are aware of the market opportunities these two forces are already creating can adjust their marketing strategies in time to ride a very profitable wave. First, let's look at a snapshot of current used car buyer Internet usage, keeping in mind that this is basically the starting point of a five-year trend line that's yet to hit its profit peak. (In other words, you still have time to cash in on it.)

    Get ready. Used car shoppers are booting up fast.
    J.D. Power and Associates 2004 Used Auto Shopper.com Study documented the rising influence of the Internet on the used car buyers. The study showed that:


    • 36 percent of all used vehicle buyers are influenced in their make/model decisions by information they find online.
    • 22 percent of all used vehicle buyers are influenced in their dealership selection by information found online.
    • 21 percent of automotive Internet users say that an Internet vehicle locator was the primary method used to locate their vehicle.


    The automotive Internet usage (or "AIU") rate is still higher among new car buyers than among used car buyers. But the percentage of used car buyers who use the Internet is growing at a faster rate (i.e. it's a steeper trend line). J.D. Power and Associates found that between 1999 and 2004, new car buyer AIU went from 40 percent to 65 percent-a 25-point increase. But in that same time, used car buyer AIU went from 20 percent to just below 50 percent-a 30-point increase. Furthermore, used car buyers will close the AIU gap even tighter in the near future. The reason starts with a "Y."

    Understand the "Y" factor: Their boom = your boom.
    Generation Y. Maybe you're sick of hearing the phrase (who isn't?). But who are they? And why should you care? The short answer is: Because they're heavy-duty used car buyers and they're heavy-duty Internet users (they have higher AIU rates than any other demographic of car buyers). Which means the Internet plays a bigger role in their purchasing decisions than any other marketing channel. Here are the key facts every car dealer should know about Generation Y and its coming impact on used car sales:


    • Generation Y is comprised of 10-27 year olds.
    • It represents a demographic of 38 million people, or currently 19 percent of licensed US drivers.
    • In 2010, the last of Generation Y turns 16. By this time, Generation Y will equal 29 percent of all US drivers.
    • 67 percent of first vehicles purchased are used cars purchased for 15-19 year olds.
    • 53 percent of 20-24 year olds purchase used vehicles as well.

    [Source, all statistics: J.D. Power and Associates, August 2004 Power Report.]

    Those are the facts. Here's what they mean for you: Generation Y is driving the growing AIU rates among used car buyers. Within five years they'll be one-third of your potential market. Unlike any generation before them, they're used to getting the product information they want online and they're used to shopping online. They're not spending their weekend driving around to different auto centers and dealerships to find the used car they want. They don't read classified ads in the Sunday paper, and they Tivo past television ads or mute them out. But Generation Y's money is green and they're shopping online for used cars in massive numbers. Will they find your dealership there? And if they do, will they be able to check out your pre-owned inventory easily? No question, this is a demographic that is ready to buy. Is your dealership ready to sell to them?

    Next time, we'll discuss strategies for selling more used cars to an Internet-savvy generation while reducing your marketing costs. Specifically, we'll look at how to lower your cost to sell per vehicle retailed, how to reduce wholesale losses, and how to increase pre-owned unit sales through more effective Internet marketing. There are some simple-but-effective things you can do to make sure your dealership comes up on the winning side of this rising opportunity curve.

Copyright © 2004 Boost Motor Group. All rights reserved.