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Auto Dealerships Continue to Dominate Sales of Late-Model Used Vehicles: Power Study

November 16, 2000

The one-stop shopping process available at auto dealerships continues to be the venue of choice when purchasing late-model used-vehicles, according to the J.D. Power and Associates 2000 Used-Vehicle Market Assessment StudySM released Nov. 16. Of the used-vehicle buyers surveyed, 86 percent purchased their vehicle through a dealership. The remainder made purchases via private parties or through other venues.

"Despite some negative comments one might hear about car dealers, no one else has put together the complete auto-buying transaction the way they have," said Chris Denove, a partner at J.D. Power and Associates. "Dealers handle financing, trade-ins and registration, and some even offer used-vehicle assessment or certification. Most Internet buying services don’t offer this type of one-stop shopping, and neither do private-party sellers. Buyers also have more immediate recourse options through dealerships if problems arise."

The study indicates that 11 percent of late-model, used-vehicle buyers currently purchase through a private party, and approximately 15 percent indicated they intend to use a private party for their next vehicle purchase.

Buying a used-vehicle from a private party is often the option for consumers with enough cash to purchase a vehicle outright, since private-party sellers normally don’t offer financing. On the other hand, selling a vehicle to a private party often requires the seller to go without a vehicle until the next purchase is made or incurring the cost of owning two vehicles at once.

"Dealing with a private party does generally require more legwork and up-front cash," said Denove. "Until this changes, dealerships will continue to dominate used-vehicle sales. Awareness of certified-vehicle programs has greatly increased; however, the value placed on certification has diminished."

Seventy-one percent of used-vehicle buyers in the study are aware of certification programs, compared to only 55 percent in 1999. On the other hand, a willingness to pay for certification has dropped from 35 percent in 1999 to 22 percent in 2000. Additionally, those who are willing to pay for certification will pay no more than an average of $681 down 40 percent from 1999 results.

"This indicates a strong need for manufacturers and dealers to emphasize the value of certification," said Denove.

The 2000 Used Vehicle Market Assessment Study is based on responses from more than 6,000 buyers of late-model used-vehicles.

J.D. Power and Associates can be accessed through the Internet at www.jdpa.com.

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