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2016 CPO Study: Capitalizing on the Value of CPO

2016 CPO Study: Capitalizing on the Value of CPO. Full Report December 2016. Table of Contents. CAPITALIZING ON THE VALUE OF. CPO. THERE ARE. SHOPPING FOR A VEHICLE. *. CONSUMERS. RIGHT NOW. *Based on incidence of those who intend to purchase in the next 6 months.

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2016 CPO Study: Capitalizing on the Value of CPO

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  1. 2016 CPO Study: Capitalizing on the Value of CPO Full Report December 2016

  2. Table of Contents Source: 2016 CPO Study provided by Autotrader

  3. CAPITALIZING ON THE VALUE OF CPO

  4. THERE ARE SHOPPING FOR A VEHICLE * CONSUMERS RIGHT NOW *Based on incidence of those who intend to purchase in the next 6 months

  5. Most shoppers are in the mindset for a Used vehicle 3.0 Million 5.8 Million 13% are in the market for CPO 13.9 Million

  6. CPO Sales Continue to Grow Total Off Lease Unit Volumes (Millions) CPO Total Sales (Millions) Projections based on: Industry average lease term maturity Avg growth rate last 3 yrs + regression CPO as % of Franchised Used while assuming used car sales at franchised dealers Source: IHS PolkInsight; NADA, Autodata/Motor Intelligence

  7. What if we told you the market for CPO could actually be much BIGGER? BIGGER?

  8. The CPO market could be twice as big 5.2 Million This means an additional 2.2 Million CPO shoppers

  9. A clear understanding of vehicle types increases CPO interest

  10. MESSAGE & EDUCATE THE RIGHT INVENTORY The 4 cornerstones tomaximize the market potential ACCELERATE CPO OFFER DELIVER ON EXPERIENCE

  11. THE RIGHT INVENTORY MESSAGE & EDUCATE Is key to attracting CPO shoppers. Sales tactics should start with make, model, year, and style CPO also sells faster and is valued $3000 more than the same non-certified used vehicle CPO shoppers are looking for the essentials – but they’re willing to pay more for quality condition and technology. CPO can also help draw in millennials; focus on warranty and tech The 4 cornerstones tomaximize the market potential ACCELERATE CPO OFFER DELIVER ON EXPERIENCE CPO Leasing can convert Used shoppers to CPO, especially for millennials Benefits packages are another way to enhance CPO, with increasing purchase interest as packages are layered in Experience matters. Not only can highly rated dealers attract more interest in CPO, but CPO purchase has also shown to create loyalty for both OEMs and dealers. An electronic F&I experience could further enhance this

  12. THE RIGHT INVENTORY is key to attracting CPO shoppers When prospects arrive on the lot, the sales approach should start with make, model, year, and style THE RIGHT INVENTORY Most important criteria for vehicle purchase MAKE/MODEL Make/model Model year Style preferred (sedan, etc.) New/Used/CPO Warranty coverage Most important criteria for vehicle purchase DEALER Dealers overestimate (2x) the importance of warranty coverage to shoppers, and underestimate (1/2x) the importance of vehicle type (e.g., new, used, CPO)

  13. CPO inventory sells faster and generates more revenue THE RIGHT INVENTORY Shoppers value CPO on average $3000 OR MORE over the same non-certified used vehicle DAYS After vehicle frontline ready, how many days it took to sell DEALER Dealers underestimate the value of CPO to shoppers, thinking consumers value a CPO vehicle on average $1260 more compared to a used, non-certified vehicle DAYS

  14. CPO SHOPPERS ARE LOOKING FOR THE ESSENTIALS… Certified/backed by OEM/dealership Passed a detailed inspection Extended warranty Vehicle history report Scheduled maintenance from dealer MESSAGE & EDUCATE Items looking for in a CPO vehicle • …But they’re willing to pay more for • GREATCONDITION & TECHNOLOGY Mechanically perfect Better condition than used Latest tech features Items that shoppers would be willing to pay more for in a CPO vehicle DEALER Dealers correctly identify the essentials and their interest among CPO shoppers

  15. CPO IS A WAY TO TAP INTO THE MILLENNIAL MARKET MESSAGE & EDUCATE • Millennial CPO Shoppers are willing to pay more for • warranty & technology than Non-Millennials Items that shoppers would be willing to pay more for in a CPO vehicle • Millennials place a higher value on CPO than Non-Millennials Non- Millennial Millennial Willingness to Pay More Added CPO Value or more or more 18-24 25-34 35-50 51-64 Willingness to Pay More Added CPO Value

  16. LEASING attracts Used shoppers and spurs conversion to CPO – especially among Millennials ACCELERATE CPO OFFER THROUGH LEASING 1 in 3 CPO shoppers are considering a lease (1.7 Million) Half of Used shoppers are considering a lease (6.0 Million) MILLENIAL USED SHOPPERS Likelihood to Lease a CPO Non-Millennial Used Shoppers

  17. Picking up your vehicle for service • Free wash/detail with scheduled service • Loaner vehicle during servicing • Towing coverage ACCELERATE CPO OFFER WITH BENEFITS PACKAGES • Free GPS tracking • Vehicle alarm notification • Engine/ignition failsafe/lockdown • Free oil/fluid changes • 1 year cosmetic damage coverage • Covered services available at any franchise across US Maintenance Concierge Security

  18. As CPO vehicle benefits packages increase, so does purchase interest ACCELERATE CPO OFFER WITH BENEFITS PACKAGES CPO No Additional Packages Likelihood to Purchase (Lift) Maintenance Concierge Security All Packages Concierge, Security and Maintenance

  19. Likelihood to Purchase (Lift) But it’s not all about packages – highly rated dealers can command a premium on EXPERIENCE DELIVER ON EXPERIENCE 3 STAR DEALER 4 STAR DEALER 5 STAR DEALER

  20. CPO INCREASES SATISFACTION andCREATES LOYALTY for OEMs DELIVER ON EXPERIENCE PURCHASE SATISFACTION BRAND LOYALTY

  21. CPO also creates twice as much loyalty for Dealers DELIVER ON EXPERIENCE Have used or intend to use service department at same dealer Will make their next purchase from the same dealership

  22. Those buyers who went through an electronic F&I experience were MORE SATISFIED DELIVER ON EXPERIENCE ELECTRONIC EXPERIENCE TRADITIONAL EXPERIENCE Purchase Experience Satisfaction(5-completely satisfied) Likelihood to Recommend(5-very likely) Source: MakeMyDeal 2015 Finance & Insurance Study (Phase 2)

  23. THE RIGHT INVENTORY MESSAGE & EDUCATE Is key to attracting CPO shoppers. Sales tactics should start with make, model, year, and style CPO also sells faster and is valued $3000 more than the same non-certified used vehicle CPO shoppers are looking for the essentials – but they’re willing to pay more for quality condition and technology. CPO can also help draw in millennials; focus on warranty and tech The 4 cornerstones tomaximize the market potential ACCELERATE CPO OFFER DELIVER ON EXPERIENCE CPO Leasing can convert Used shoppers to CPO, especially for millennials Benefits packages are another way to enhance CPO, with increasing purchase interest as packages are layered in Experience matters. Not only can highly rated dealers attract more interest in CPO, but CPO purchase has also shown to create loyalty for both OEMs and dealers. An electronic F&I experience could further enhance this

  24. Extended Results MESSAGE & EDUCATE

  25. CPO Perceptions MESSAGE & EDUCATE

  26. CPO Perceptions – CPO Owners MESSAGE & EDUCATE

  27. Helpfulness of Resources in Learning about CPO/Used Vehicles (Very Helpful) – CPO Owners MESSAGE & EDUCATE

  28. Activities Done Online – CPO Owners MESSAGE & EDUCATE

  29. Activities Done at the Dealership – CPO Owners MESSAGE & EDUCATE

  30. Top Questions for Dealers – CPO Owners MESSAGE & EDUCATE

  31. ACCELERATE CPO OFFER THROUGH LEASING Extended Results

  32. Features that Drive Interest in CPO Leasing (Much More Interested) – CPO Owners ACCELLERATE CPO OFFER

  33. Extended Results DELIVER ON EXPERIENCE

  34. Vehicle Inspected by Independent Mechanic DELIVER ON EXPERIENCE

  35. Luxury owners and Chevy owners want assurance that the CPO vehicle they purchase is inspected by an independent mechanic Vehicle Inspected by Independent Mechanic – CPO Owners DELIVER ON EXPERIENCE

  36. Would Consider Same OEM in the Future – CPO Owners DELIVER ON EXPERIENCE

  37. Mindset When Shopping for Next Vehicle – Owners DELIVER ON EXPERIENCE

  38. Mindset When Shopping for Next Vehicle – CPO Owners DELIVER ON EXPERIENCE

  39. Experience vs Expectations (Better than Expected) DELIVER ON EXPERIENCE

  40. Vehicle Sentiment (Strongly Agree) DELIVER ON EXPERIENCE

  41. Brand Perceptions – CPO Owners DELIVER ON EXPERIENCE

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