CAPITALIZING ON THE VALUE OF CPO. CPO Forum 2016 Scott Hernalsteen

Transcription

1 CAPITALIZING ON THE VALUE OF CPO CPO Forum 2016 Scott Hernalsteen

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

3 5.8 Million 3.0 Million Most shoppers are in the mindset for a Used vehicle 13% are in the market for CPO 13.9 Million 3

4 CPO Sales Continue to Grow Total Off Lease Unit Volumes (Millions) CPO Total Sales (Millions) Million 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 4

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

6 5.2 Million The CPO market could be twice as big This means an additional 2.2 Million CPO shoppers 6

7 A clear understanding of vehicle types increases CPO interest 7

8 THE RIGHT INVENTORY MESSAGE & EDUCATE The 4 cornerstones to maximize the market potential ACCELERATE CPO OFFER DELIVER ON EXPERIENCE 8

9 THE RIGHT INVENTORY THE RIGHT INVENTORY is key to attracting CPO shoppers Most important criteria for vehicle purchase MAKE/MODEL When prospects arrive on the lot, the sales approach should start with make, model, year, and style Most important criteria for vehicle purchase 1. Make/model 2. Model year 3. Style preferred (sedan, etc.) 4. New/Used/CPO 5. Warranty coverage DEALER Dealers overestimate (2x) the importance of warranty coverage to shoppers, and underestimate (1/2x) the importance of vehicle type (e.g., SUV, sedan, etc.) 9

10 THE RIGHT INVENTORY CPO inventory sells faster and generates more revenue Shoppers value CPO on average $3000 OR MORE over the same non-certified used vehicle After vehicle frontline ready, how many days it took to sell DAYS DAYS 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 10

11 MESSAGE & EDUCATE CPO SHOPPERS ARE LOOKING FOR THE ESSENTIALS Items looking for in a CPO vehicle 1. Certified/backed by OEM/dealership 2. Passed a detailed inspection 3. Extended warranty 4. Vehicle history report 5. Scheduled maintenance from dealer But they re willing to pay more for GREAT CONDITION & TECHNOLOGY Items that shoppers would be willing to pay more for in a CPO vehicle 1. Mechanically perfect 2. Better condition than used 3. Latest tech features DEALER Dealers correctly identify the essentials and their interest among CPO shoppers 11

12 MESSAGE & EDUCATE CPO IS A WAY TO TAP INTO THE MILLENNIAL MARKET Millennial CPO Shoppers are willing to pay more for warranty & technology than Non-Millennials Millennials place a higher value on CPO than Non-Millennials Willingness to Pay More Millennial Non- Millennial Items that shoppers would be willing to pay more for in a CPO vehicle Millennial Non- Millennial Extended warranty 53% 37% Added CPO Value or more or more Latest tech features 50% 41% Mechanically perfect 50% 65% Willingness to Pay More Added CPO Value 63% 79% 68% 41% $1700 $4600 $3300 $1000 Better condition than used 47% 50% 12

13 MESSAGE & EDUCATE THREE TERRIFYING WORDS 13

14 ACCELERATE CPO OFFER THROUGH LEASING LEASING attracts Used shoppers and spurs conversion to CPO especially among Millennials 1 in 3 CPO shoppers are considering a lease (1.7 Million) Half of Used shoppers are considering a lease (6.0 Million) Likelihood to Lease a CPO MILLENIAL USED SHOPPERS Non-Millennial Used Shoppers 14

15 ACCELERATE CPO OFFER WITH BENEFITS PACKAGES Concierge Picking up your vehicle for service Free wash/detail with scheduled service Loaner vehicle during servicing Towing coverage Security Free GPS tracking Vehicle alarm notification Engine/ignition failsafe/lockdown Maintenance Free oil/fluid changes 1 year cosmetic damage coverage Covered services available at any franchise across US 15

16 ACCELERATE CPO OFFER WITH BENEFITS PACKAGES As CPO vehicle benefits packages increase, so does purchase interest CPO No Additional Packages Likelihood to Purchase (Lift) Concierge Security Maintenance All Packages Concierge, Security and Maintenance 16

17 Likelihood to Purchase (Lift) DELIVER ON EXPERIENCE But it s not all about packages highly rated dealers can command a premium on EXPERIENCE 3 STAR DEALER 4 STAR DEALER 5 STAR DEALER 17

18 DELIVER ON EXPERIENCE CPO INCREASES SATISFACTION PURCHASE SATISFACTION and CREATES LOYALTY for OEMs BRAND LOYALTY 18

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

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

21 THE RIGHT INVENTORY 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 ACCELERATE CPO OFFER 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 The 4 cornerstones to maximize the market potential MESSAGE & EDUCATE 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 DELIVER ON EXPERIENCE 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 21

22 THANK YOU If you have any questions regarding this study or would like more information about Autotrader CPO Solutions, please contact your Autotrader Account Executive. 22