2. Sales Activity Has Been Less Than Robust
As published in Edmunds Used Vehicle Market Report, February 2017, total used vehicles sales during 2016 were million, a quite small 0.6% increase over 2016.
Franchise and CPO (Certified Pre-Owned) used vehicle sales performed much better, at increases of 1.5% and 3.5%, respectively, compared to CPO accounted for 22.8% of all franchise used car sales.
Fast-forward to Edmunds Q report and total sales decreased 3.0%, compared to Q3 2016, or million and 9.67 million, respectively.

3. Major Disruption on the Horizon
Although new-car and used-car dealerships and lenders are concerned about the 3.9 million vehicles with expiring leases during (300,000 more than 2017), automotive industry economists expect used car sales to increase 2% to 5% during 2018.
Used car prices, however, are forecast to decrease 2% to 5% during 2018, because of the expected glut of off-lease, late-model, lower- mileage vehicles, which favors new-car dealers, and fewer 5- to 8-year-old models, which will decrease supply for independents.
Alix Partners, as are many auto industry forecasters, is predicting a significant decrease in new car sales, or 16.6 million, compared to million for This will decrease used vehicle prices further, resulting in what it calls the “time bomb.”

4. Taking a Ride with the Used-Vehicle Consumer
According to Crimson Hexagon’s in-depth research of social media and other digital channels, MP3 connectivity/Bluetooth is consumers’ top used-car feature, at 31%; followed by low miles, 28%; automatic transmission, 17%; and leather interior, 7%.
The largest age group discussing new cars in social media are adults 18–24, at 50%, compared to just 16% for used cars. Conversely, the largest age group discussing used cars are 35 and older, at 58%, while only 16% discuss new cars.
The gender comparison between new and used cars reveal women are leading the discussions, at 53% and 51%, respectively, while men are 47% and 49%, respectively.

5. How Price and Value Affect the Market
A major challenge for the used-car market is the slower increase in the average transaction price. It increased 4.3% from Q to Q3 2016, but only 1.0% from Q to Q
Although the volume of vehicles with expiring leases has been very large, these near-new vehicles also have very low mileage. This combination maximizes their used prices, but the consumer market for near-new, low-mileage vehicles is quite limited.
As the chart on page 2 of the Profiler shows, midsize SUVs retain at least 50% of their value at a higher mileage point than midsize cars; and since more light trucks and SUVs have expiring leases, there should be a good market for these used vehicles, and at top prices.

6. Leasing a Used Vehicle
With off-lease volume totaling 3.6 million units during and forecast to be 3.9 million units during 2018, many in the industry are promoting the idea of used- car leasing, as most of these 2- and 3-year-old vehicles have plenty of remaining value.
The leasing of CPO vehicles could be of particular interest to consumers, since the remaining new-car warranty and the CPO warranty will remain in effect, protecting consumers from costly repairs often associated with standard used-car purchases.
The Van Horn Group of 10 dealerships in Plymouth, WI has been a pioneer in used-car leasing, as a boost to its buy-here/pay-here used car lot. The program allows the dealership to qualify more B- and C-tier credit customers to a low-cost alternative.

7. How Car Sharing and Ride Sharing Could Depress the Market
According to the Alix Partners report, personal vehicles are still the #1 form of transportation among those participating in the survey, at 79%. Ride sharing was 5th, at 12%, and car sharing was last of the 11 categories, at 2%.
Survey respondents’ awareness of car-sharing services have decreased since Alix Partners’ survey, with Zipcar awareness declining from 83% to 65% and Car2go awareness declining from 45% to 29%.
Conversely, survey participants had much higher awareness of ride-sharing services, with Uber at 94% and Lyft at 81%. (The question wasn’t asked for the 2013 survey).

8. Advertising Strategies
TV is an excellent advertising medium for forward- leaning dealers to promote the used-vehicle leasing option, emphasizing the remaining value of recently leased vehicles and the warranty advantages of CPO vehicles.
Recommend that dealers emphasize the higher manufacturing quality of used vehicles with more than 100,000 miles, especially midsize SUVs, compared to those of decades ago.
Dealers should also highlight the used vehicles on their lots with the features consumers favor the most, such as MP3 connectivity/Bluetooth and others cited in the Profiler.

9. New Media Strategies
Research the conversation topics that used-car buyers are having on social media, as listed on page 2 of the Profiler. Enter those conversations, matching the topics to the value of buying a used vehicle today.
Various data sources agree that Facebook is the top social media site for adults 35+, and since they are the largest age group discussing used cars online, used-car dealers should use Facebook exclusively to reach this audience.
Dealers can invite customers to upload photos and/or videos to the dealers’ (and customers’) social media pages showing how they have accessorized their new, used vehicle to personalize it. Conduct a contest for the best idea and award an appropriate prize.