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November 25, 2019

US Car Sales Shift to Used Models, Potentially Signaling "Peak Car"

American car buyers are increasingly favoring used models over new ones, according to data from independent investment research firm CFRA Research, published earlier in the year in a Business Insider feature.

In fact, the data indicates that user cars are selling at the fastest pace in more than 10 years, with buyers showing an ever-increasing interest in pre-owned vehicles.

Automotive industry experts have posited a number of reasons for this shift in buying habits, including a surge in new car sales throughout 2018 that may have resulted in “peak car” and made a significant amount of used inventory available for purchase.

The increase in used car sales has affected almost every brand, although high-end car brands appear to be the most effective. For example, demand for new models from brands like Aston Martin and Rolls-Royce has fallen sharply, with many consumers instead buying pre-owned.

Similar data published by MarketWatch indicates that many people are buying pre-owned as a method of taking advantage of the large savings that are available on used cars.

According to the article, which sources its pricing data from Edmunds, the average difference in pricing between a new car and a three-year-old used car of the same make and model was 62% as of 2018 -- significantly more than the 56% price gap recorded in 2013.

Increasing interest rates on many new car financing arrangements may also be driving a larger percentage of consumers towards used models.

It’s good news for car dealerships that specialize in used vehicles, including Florida-based used car giant HGreg. The company, which operates 30 locations in the US and Canada, maintains a large inventory of pre-owned vehicles from an equally large selection of manufacturers.

However, the surging demand for used cars doesn’t necessarily mean that new car sales are on the way out. Instead, demand for many new vehicles is adjusting to match the evolving tastes of car buyers.

With sales of SUVs and crossovers increasing as a percentage of total car sales, many dealers are adjusting their business model to better focus on these vehicles. Car brands, including both domestic and international companies, are also adjusting their offerings to suit consumers.

For example, HGreg recently announced a purchase of Florida-based Nissan dealership Nissan Kendall. The dealership provides the used car company with access to the lucrative Miami area market and an exclusive lineup of Nissan’s SUV and crossover vehicles.

With Nissan’s crossover vehicles among the top-selling models in their class, the brand is one of several that’s taken aggressive steps to reinvision its model lineup as consumers turn away from conventional sedans and towards larger vehicles.

The move also provides HGreg with access to an even larger inventory of used vehicles, with the dealership a leading seller of Certified Pre-Owned Nissan vehicles.

Nissan was one of several manufacturers to report increasing sales throughout the last year, with the brand’s US car sales increasing 7.6%, from 138,226 in December 2017 to a total of 148,720 during the same period in 2018.

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