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May

Used vs. New Floor Traffic

Posted by bkrouse  Published in Home

For the past two years we have run a 80% new vs. 20% used ratio with our Black Book online lead generation tool and this past 4 months the ratio has switched to about 60% looking to buy used and only 40% looking for a value on their used car considering a New unit. We have worked really hard to keep our new unit sales “flat” vs. last year and are seeing an almost 35% increase in used volume as we keep and recondition older units we used to wholesale. What is happening on the ocasts?

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Dale Pollak said in May 5th, 2008 at 8:32 am

Mr. Krouse,

I think that the economy is pushing a lot of otherwise new car buyers into the used car market. Unfortunately, I also think that a lot of traditional used car buyers are being pushed down into the sub-prime and even the buy-here, pay-here segments. Last week I was interviewed about this phenomena by a New York Times reporter. Your comment validates the shift that I think we’re all experiencing in the market place. Thanks for your comment and I invite others to share their thoughts as well.

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Carguy2008 said in May 6th, 2008 at 5:01 am

Dale-
This is an interesting observation. So, we checked the mix of leads coming in to about 100 dealers who are using our Black Book Online service.

In 2007 the ratio was 68% new vehicle requests but in 2008 new vehicle requests dropped to 58% of the mix. Krouse is correct in noting the shift. It looks like payment, credit and consumer attitude are driving this shift. Dealers may also benefit from the higher gross margins on the used business as well provided they see the opportunity to keep their lots properly stocked and have the talent in place to leverage the opportunity.

We will watch this trend and report any changes here.

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