Used Car Sales See Upswing

Auto sales and economic conditions are on the upswing, provided you’re talking certified used automobiles.

In a year when new vehicle sales could settle below 14 million, the lowest in almost a decade, certified used sales are up 2%, through August, per Autodata, Woodcliff Lake, N.J. Comparatively, new vehicle sales are down 11.2%.
 
More than 40 million used vehicles are sold every year in the U.S., from the in-family transfer for $1 to the 1.7 million units that will be sold as certified used vehicles this year.

Add to that the fact that several automakers, including Ford and General Motors, earlier this year scaled back their leasing programs, and the market for used is very strong. “There are a lot of people who right now just can’t afford a new vehicle,” said Jim Hossack, vp at industry consultancy AutoPacific, Tustin, Calif. “And there are a lot of good deals out there and a lot of ways to find those deals.”

For this segment of the auto industry, digital sales and marketing trumps traditional methods. More than 90% of General Motors used-vehicle marketing spend, for example, will be online.

Last month, GM launched its new online push called Usedcarambush.com. Here, undercover film operators show the potential drawbacks of buying a used vehicle that is not certified. “This new need to educate consumers about things like a certified used program is driving our marketing,” said Mark Mathews, director of used-vehicle activities at General Motors. “Digital is where used car buyers are. We are almost exclusively on the Web because used car buyers, and there are more right now, are not in market as long as new car buyers and we need to get to them right away.”

Toyota, which saw a 5% increase in certified used vehicles through August, regularly enhances toyota.com/certified.


Why? “Brands are trying to tell a price story and you have a public that is very price conscious right now, so this is what happens,” said Mitch Lowe, CEO of Jumpstart Automotive Media. “People are seeing that they can get into a $22,000 car for $18,000 if they are willing to look.”

Toyota and others also keep increasing ad spends at third-party auto sites like Autotrader.com. “We’re on 300 different sites, mostly third party, and we’ve been out of print, save for maybe some rare newspaper or magazine stuff, for nearly three years,” said Norm Olson, sales operations manager of Toyota certified used vehicles.

Third-party sites have come to dominate the used car market. Most marketers in charge of used cars at automakers, like Toyota’s Olsen, spend almost exclusively online.

As many as 80% of all vehicle buyers visit a third-party sites before hitting a car dealership. As a result, traffic and advertising at Autotrader.com, for one, is up around 10%.
 
Based in Atlanta, Autotrader.com is continuing to expand its role in the marketplace. It will reprise last year’s “Armada” ad on Oct. 11 during an outdoor NBA preseason game. The 30-second spot, voiced by Christian Slater, will run throughout the season. The ad opens with a couple searching the Internet for a car, then cuts to a large group of vehicles rolling down a highway. It ends as three cars of the couple’s choosing arrive in their driveway. Tag: “The ultimate automotive marketplace.” The agency is Doner, Southfield, Mich.

Autotrader.com earlier this year announced a partnership with KBB.com, another car shopping site, and broadened its links to Edmunds.com and MSN Autos.

For those still relying on brick-and-mortar sales of used cars, like CarMax, good luck. In announcing to analysts last week a 78% drop in earnings, CarMax CEO Tom Folliard said, “To be honest with you what’s really missing is customer traffic. Until consumer spending comes back I’m not sure we’re going to see a dramatic change in our sales rate.”