certified pre-owned understanding the customer · new-car shoppers pre post 55 % 69 % used-car...

UNDERSTANDING THE CUSTOMER

November 2013

Certified Pre-Owned

About the CPO Study

2

PURPOSE:

To trend shopper familiarity, opinion, and consideration of CPO vehicles.

METHODOLOGY:

A quantitative online survey was conducted in September 2013. 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.

Source: 2013 Certified Pre-Owned Research. Morpace.

THINGS YOU SHOULD KNOW

November 2013

Half a dozen

CPO is a good lower cost alternative

for those who cannot afford a new vehicle.

4

1

CPO is important now more than ever.

5

“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.”

New-vehicle shoppers are now more open to considering a used vehicle, especially CPO.

6

Consider

Used

2012

2013

26%

33%

Consider

CPO

2012

2013

43%

55%

S2. Thinking about your next vehicle, how likely are you to consider…?


Their CPO consideration is even approaching levels seen for Used Shoppers.

7

CPO Consideration

New-Car Shoppers

2012

2013

43%

55%

Used-Car Shoppers

2012

2013

61%

60%



New-vehicle shoppers’ familiarity with specific aspects of CPO has dropped.

8

New-Car Shoppers

2012

2013

73%

65%

Used-Car Shoppers

2012

2013

67%

68%

CPO “Fully Inspected”

HOWEVER …

A3a. Which of the following best define the concept of Certified Pre-Owned (CPO) vehicles? Please select all that apply.


New-vehicle shoppers’ familiarity with specific aspects of CPO has dropped.

9

New-Car Shoppers

2012

2013

68%

55%

Used-Car Shoppers

2012

2013

52%

54%

CPO “Warranty”

HOWEVER …



Once CPO was explained, shoppers’ willingness to consider CPO increased.

10

New-Car Shoppers

Pre

Post

55%

69%

Used-Car Shoppers

Pre

Post

60%

66%

CPO Consideration


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?


Reasons for CPO consideration haven’t shifted much.

11

CPO Shoppers

67%

48%

37%

33%

32%

31%

20%

Peace of mind

Warranty

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

R1. Why would you consider purchasing a CPO vehicle? Please select all that apply.


The premium remains the barrier to converting

many used-vehicle shoppers.

12

2

Used-vehicle shoppers remain highly open to considering CPO.

13

Consider

New

2012

2013

33%

33%

Consider CPO

2012

2013

61%

60%



Used shoppers willing to pay a CPO premium has dropped.

14

New-Car Shoppers

2011

2013

67%

62%

Used-Car Shoppers

2011

2013

51%

34%

HOWEVER …

P1. Would you be willing to pay more for a Certified Pre-Owned (CPO) vehicle compared to a used Non-Certified vehicle?


Affordability is the main barrier for Used-Car shoppers to pay the premium.

15

47%

22%

10%

Can’t afford it

Budgeted a certain amount

Inspection is not worth it

P5. You indicated that you are not willing to pay more for a CPO vehicle. Why?


Those who are willing to pay a premium find

the warranty and inspection most important.

16

3

The acceptable premium for CPO more than doubled among all shoppers.

17

New-Car Shoppers

2011

2013

$1,245

$2,940

Used-Car Shoppers

2011

2013

CPO Shoppers

2011

2013

$1,292

$2,163

$1,670

$2,434

P2. How much extra would you be willing to pay for Certified Pre-Owned (CPO) vehicle?


Warranty and inspection are the top reasons why shoppers pay a premium for CPO.

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?


New Shopper Used Shopper CPO Shopper

Warranty 60% 60% 65%

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%

New Shopper Used Shopper CPO Shopper

Warranty 60% 60% 65%

Inspected/certified 58% 66% 69%

New Shoppers Used Shoppers CPO Shoppers

Manufacturer Powertrain Warranty 16% 18% 16%

Comprehensive Limited Warranty 15% 16% 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%





As a result, the warranties and inspection are the most valuable aspects of a CPO program.

19

P3B. What percentage of (the amount of $ willing to pay extra for a CPO vehicle) would you allocate for the following benefits?


Share of Premium (Mean Percent)





They are also the top reasons why shoppers would walk away from a CPO vehicle.

Must-Haves for Consideration

P3C. Which benefits would you say are so important that you would not Consider a CPO vehicle that did not offer them?

Source: 2013 Certified Pre-Owned Research. Morpace. 20

Most shoppers believe

the dealership certifies vehicles.

21

4

Only 1-in-3 shoppers are aware that the OEM is involved in certifying the vehicles.

22

New-Car Shoppers

OEM

Dealer

Used-Car Shoppers

OEM

Dealer

CPO Shoppers

OEM

Dealer

37%

66%

35%

70%

41%

72%



Manufacturer certifications are viewed as the most reliable – but only by a slim margin.

23

New Shopper CPO Shopper Used Shopper

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 ... ?


New Shopper CPO Shopper Used Shopper

Manufacturer 89% 92% 88%

O CP

These brands have been most successful at creating awareness for CPO among all shoppers.

24

A8. To your knowledge, which manufacturer(s) certify their used vehicles?


Brands that offer CPO programs — New-car shopper awareness.

25

24% 24% 26%

28% 28% 29%

36% 37% 37% 39%

41%

0%

10%

20%

30%

40%

50%



Brands that offer CPO programs — Used-car shopper awareness.

26

18% 19% 20% 22%

24% 26% 27% 27%

31% 33%

0%

10%

20%

30%

40%

50%

Used shoppers are less likely to be

aware of luxury brand CPO programs.



Brands that offer CPO programs — CPO shopper awareness.

27

20% 21%

25% 25% 26% 29%

31%

36%

40% 42% 42%

0%

10%

20%

30%

40%

50%



CPO buyers research longer, and the Internet

is their number one source for information.

28

5

Before making a purchase, CPO buyers spend more time researching than the average shopper.

29

Base: CPO Buyer

Source: 2013 Polk Car Buyer Study

Average Shopper

2011

2013

17h 30m

14h 48m

CPO Shopper

2011

2013

17h 6m

16h 6m

The Internet is the top source used to research their next vehicle purchase.

30

5% 8% 6%

17% 13% 14%

33%

75%

9% 12% 10%

26%

14% 20%

35%

71%

RadioOutdoorAds

DirectMail

NewspaperMagazineTelevisionReferralInternet

2011 2013

Sources Used to Shop (Online & Offline Buyers)

Base: CPO Buyer


Significantly higher / lower than 2011

Time spent online by CPO buyers is growing.

31

2013 2011

17h 6m total

11 hrs 6m 16h 6m total

12 hrs 24m

Online

63%

Online

77%

online online

Base: CPO Buyer



Third-party sites continue to be their top online resource – reaching 8-in-10 CPO buyers.

32

49% 46%

65%

51%

42%

36%

81%

70%

20132011

Online Sources Used to Shop (Online Buyers)

Third-Party Site

OEM Site

Dealer Site

Search Site


Base: CPO Buyer


In addition, they are more likely to use third-party and dealer sites than the average shopper.

33

76%

59%

49%

42%

81%

65%

49%

42%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Third-Party Sites Dealer Sites Search Sites OEM Sites

ALL

CPO

Base: CPO Buyer


The Internet is the most influential source, with half citing it as what led to their vehicle purchase.

34

0%

1%

1%

2%

2%

2%

19%

46%

Radio

OutdoorAds

Magazine

DirectMail

Newspaper

Television

Referral

Internet

Source that Led to Purchase (Online & Offline Buyers)

Base: CPO Buyer


1-in-5 CPO buyers use either a smartphone or tablet to vehicle shop.

35

Devices Used to Shop (Online Buyers)

55% 48% 17% 18%

Base: CPO Buyer


CPO programs help build long-term

relationships with car owners.

36

6

CPO owners are more loyal to their dealership.

37

current CPO owners 60%

never owned CPO 47%

vs.

O8. How likely are you to shop for the [S4a MAKE/MODEL] from the dealership where your [CO3 MAKE/MODEL] was purchased?


CPO owners are more likely to express service loyalty.

38

current CPO owners 70%

never owned CPO 61%

vs.

O6. How likely are you to visit the dealership where your purchase or lease your next vehicle for car service or repairs?


And …

39

the same brand. 92% are likely to buy

are shopping for another

CPO vehicle.

45% of CPO owners

O4c. How likely are you to purchase another CPO [BRAND] vehicle?


All of which is important for when…

40

are shopping for a

new vehicle.

55% of CPO defectors

S3. Thinking about your next vehicle, what are you most likely to consider…?


CPO can be a good entry point

into the brand for Millennials.

41

7

Millennials have a higher likelihood to consider CPO than older shoppers.

42

New Shoppers

Millennials

35+ Years Old

79%

42%

Used Shoppers

Millennials

35+ Years Old

65%

55%



Millennials are not as familiar with specific aspects of CPO.

43

New Shoppers

Millennials

35+ Years Old

56%

70%

Used Shoppers

Millennials

35+ Years Old

64%

73%

CPO “Fully Inspected”



Millennials are not as familiar with specific aspects of CPO.

44

New Shoppers

Millennials

35+ Years Old

48%

59%

Used Shoppers

Millennials

35+ Years Old

51%

59%

CPO “Warranty”



Once CPO was explained, Millennials’ willingness to consider CPO increased.

45

New Shoppers

Pre

Post

79%

86%

Used Shoppers

Pre

Post

65%

73%

CPO Consideration


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?


Millennials are even more willing to pay a premium for CPO.

46

New Shoppers

Millennials

35+ Years Old

74%

55%

Used Shoppers

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?


Millennial shoppers are the most likely to learn about CPO on the internet.

47

A2. Where did you first learn about Certified Pre-Owned (CPO) vehicles?


32%

21% 22% 21%

9%

27%

11%

43%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Internet TV Friends & Family Dealership

Millennial

35+ years old

CPO Shopper

Half A Dozen Things You Should Know

48

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.


49

UNDERSTANDING THE CUSTOMER

Certified Pre-Owned

For more information, please contact

your AutoTrader.com Sales Executive

or email [email protected].

mailto:[email protected]

Demographics

50

New

Shoppers (A)

n=298

Used

Shoppers (B)

n=264

CPO

Shoppers (C)

n=296

% Male 55% BC 38% 38%

% College Grad 51% BC 29% 43% B

Mean Age 46 BC 39 42 B

Mean Income $72.9k BC $46k $55.6k B

% Married 55% B 37% 50% B

certified pre-owned understanding the customer · new-car shoppers pre post 55 % 69 % used-car...

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