BANDON, Ore. —CNW Research noted in its July newsletter that about 60 percent of consumers and small business owners who purchase a certified pre-owned vehicle were originally in the market for a new car. Driving the switch are home-centric economics, the research firm concluded.

The market research firm said the trend really took shape after the Great Recession, which changed not only buying patterns, but the mindset of vehicle shoppers as well.

“The trend during the 1990s was for a decreasing percentage of new intenders selecting a used vehicle instead. But, beginning in 2005 — prior to the recession — it appeared to begin a slight upward movement or flat, at best, into the two to three percent range,” Spinella wrote. “Beginning in 2009, the upward trend mirrored the ‘90s downward movement with each succeeding year seeing more new intenders electing by used.”

The trend also matches the growth in CPO sales. During the first six months of 2013, nearly six percent of new intenders moved to the used-car column. For the full-year 2013, this translates into more than 1.2 million potential new-car buyers switching to used, Spinella noted. And the majority of those switching to used are selecting one- to five-year-old models, he added.

“About 98 percent of used-vehicle shoppers, including those who dropped out of the new-car market, say they would definitely consider an off-lease certified model,” Spinella wrote. “That figure has been growing steadily over the past decade.”

CNW also noted that repo vehicles are suffering under this new trend. “At one point in 1997, fully 70 percent of used intenders said they would consider a repossessed vehicle with only six percent saying they would definitely not consider a repo,” Spinella wrote. “Dial the time machine forward to the first half of this year and only 31.8 percent say they would definitely consider a repo, with nearly 55 percent saying they definitely would not consider one.”

For automakers, Spinella said the drive to add more vehicles to their growing and profitable CPO fleet relies on having a major insourcing of off-lease vehicles. That means, Spinella continued, more lease incentives, more advertising money spent on CPO units and giving dealers added incentives to sell CPOs.

“Dealers, recognizing the potential, are upping trade-in values by as much as 15 percent for cars and trucks that they consider to be certifiable,” Spinella wrote.


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