Putting Cards on the Table With Used-Vehicle Shoppers
By Dennis McGinn
Originally published in the October 2022 edition of WardsAuto
More dealers are turning to used vehicles in the 5- to 7-year-old range, costing between $10,000 and $15,000. That leads to a logical question: How can used-vehicle salespeople prove to customers these vehicles are good purchases?
The global chip shortage and its impact on the auto industry is well-documented. Microchip supply chain issues have limited new-vehicle production and sent more customers into the used-vehicle segment.
The laws of supply and demand kicked in so quickly the situation has become a college economics class case study in the making: Used-vehicle sales jumped more than 9%, causing inflation in the used-vehicle market to reach double digits on an annualized basis for 12 consecutive months from early 2021 to early 2022, according to the Bureau of Labor Statistics.
As used-vehicle supply tightens and prices rise, more dealers are turning to used vehicles in the 5- to 7-year-old range with a price tag between $10,000 and $15,000. That leads to a logical question: How can used-vehicle salespeople prove to customers these vehicles are good purchases?
At Rapid Recon, we’re seeing more dealers sharing detailed reconditioning reports with their used-vehicle customers. In fact, a recent consumer car-shopping study by iPacket showed reconditioning reports were among the three most-viewed pieces of information by used-vehicle shoppers.
Reconditioning reports answer several crucial questions, including does the vehicle have new tires, has the interior been cleaned and sanitized, cosmetically repaired and renewed, and were any major mechanical or structural issues recently repaired?
Reconditioning reports are to used-vehicle sales what home inspections are to real estate transactions. A home buyer wouldn’t purchase a home without inspecting the roof, the foundation, the electric, the plumbing and anything else that could go wrong with a home.
Historically, dealerships have relied on vehicle history reports to help raise customers’ comfort level with used-vehicle purchases. VHRs do a great job of showing accident history and flood damage. Reconditioning reports take it one step further: They show the work that’s been done to the vehicle so it can be sold.
This is valuable information in the hands of a used-vehicle salesperson. New vehicles, when they roll off the assembly line, are similar from one vehicle to the next. When a new vehicle goes home with a customer, how the vehicle is cared for can vary greatly. Did the owner take care of the vehicle? Was it in an accident? Was it driven for thousands of tough city miles, or was it a nice easy highway ride into work every day? All those variables make every used vehicle a bit of a mystery.
As used-vehicle prices remain at or near all-time highs, these factors will combine to make used-vehicle shoppers even more discerning in coming months. If they plan to spend their hard-earned money into expensive used vehicles, they will want to know the vehicles are worth it. This is true not only of high-end used-vehicle customers, but it’s also true – and maybe even more important – for customers who shop in the $10,000 to $15,000 used-vehicle range.
These customers are more likely to live paycheck to paycheck. If something were to go wrong with their used vehicle, they might not be able to afford the repairs. Knowing a used vehicle, whatever its age, has been repaired through reconditioning for safety, performance and value is the best way to make this level of used-vehicle customer more comfortable.
The global microchip shortage is not going away any time soon. In fact, Intel CEO Pat Gelsinger and U.S. Commerce Secretary Gina Raimondo predicted earlier this year that the chip shortage will extend into 2024. What does this mean? First, that new-vehicle supply challenges likely will not abate any time soon. Second, it means dealers will continue to rely on used vehicles to get through turbulent times.
More and more customers are likely to shift from the ranks of new-vehicle customers to used-vehicle customers. They also are likely to take their time and closely evaluate the merits of each used vehicle they review. They will continue to be information-hungry and will demand as much detail on the used-vehicle transaction as possible. Smart dealers will demand a robust, detailed report from their recon providers to help consumers raise their confidence in their used-vehicle purchases.
About Rapid Recon
Reconditioning workflow automation from Rapid Reconis the industry standard in time-to-line inventory turn and speed-to-sale vehicle revenue enhancement for automotive retailers. Benchmarking data based on 13 million vehicles processed uniquely positions Rapid Recon to advise dealers on how to improve their store’s profitability. Used by more than 2,000 dealerships, Rapid Recon ensures the accountability of processes, property, and people. Hence, dealers know answers quickly, find assets anywhere, and sell vehicles promptly to grow dealership profitability. www.rapidrecon.com CALL US: +650-999-0497
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