Keep Your Focus on the Future With a Certified Pre-Owned Program That Gives Independent Dealers an Edge With Millennial Car Buyers (1)

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Keep Your Focus on the Future With a Certified
Pre-Owned Program That Gives Independent Dealers
an Edge With Millennial Car Buyers

• An axiom of military history says that generals
  spend all their time planning to fight the last
  war, making them ill-prepared for the next war. 
•  That same thing is happening with vehicle
  dealers today. They are planning for the future
  as they did with the past. 
• The past was about the baby boomers. The future
  belongs to the millennials, and they are very
  different shoppers. 
• Unlike their parents, millennials are
  ultra-frugal about their purchase of vehicles.
  Big box dealerships with their 20 million price
  tags that impressed their parents are a turn-off
  and an unneeded expense to this group. 
• The millennial generation likes to buy vehicles
  others have taken the depreciation on but they
  also show a tendency toward the security provided
  by new car warranties.
• That makes the millennial group perfect for the
  used car industry for a couple of reasons.
•  

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For one, used car dealers can couple vehicles
that have depreciated with a remaining factory
warranty. And they can certify pre-owned vehicles
as a viable way to let millennial buyer enter
into vehicle ownership.  Two factors make the
millennial demographic predisposed to looking at
the certified pre-owned option.  The first is
their propensity to buy used cars, and with that,
a higher rate of acceptance of CPO
vehicles.  The second is their desire to be
secure from the added expenses caused by
mechanical breakdown. That makes a majority of
millennial used vehicle purchasers open to a
certified vehicle purchase.  Millennial buyers
consider themselves much savvier buyers than
their parents were because of their ability to
use mobile devices. But they are not necessarily
as educated on all aspects of CPO as their
predecessors.  A study conducted this year by
NADA Used Car Guide found 50 percent of 18- to
34-year-olds millennials said they were
slightly or not at all familiar with CPO
programs, a higher percentage than older
generations. They are, however, willing to
learn, and they will add value to the product and
increase their purchases of CPO vehicles when
they are educated on those aspects. 
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Even though they are looking for the security
provided by CPO, they are not sure about the
parts of the certification process that provide
that security. Millennials are much less likely
to understand the value of the inspection aspect
of the program, nor do they in general grasp the
warranty portion.  But, like other buyers, when
those components of the program are explained,
millennials chances of purchasing a CPO unit
rise. According to Autotraders 2015 CPO Study,
68 percent of used car shoppers said they would
consider buying a CPO vehicle from the beginning,
but once they learned the definition of what CPO
really means, that number rose to 83
percent.  One of the most compelling aspects of
marketing to the millennial generation is their
willingness to learn and accept new ideas that
is, as long as the learning can be done via the
Internet. Thats where millennials shops and
learn about products.  Autotraders 2015
Automotive Buyer Influence Study found 74 percent
of online shoppers say they use a smartphone or
tablet to do their research almost double the
percentage from the previous years study and
millennial customer are at the forefront of that
trend.  The Internet is the most likely place
for a millennial to find out about certified
pre-owned program, other than a personal visit to
the dealership. The problem with customers
finding out about the benefits of CPO after
theyve done their dealership research is, while
it helps sell the vehicle, it doesnt help
convince customer s to visit your store.
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Marketing to social media outlets with an
educational message about CPO is the best way to
reach this very valuable group of consumers.
Millennials shoppers are much more likely to get
their information from those sources and to
process and believe it than the preceding
generations. Reaching millennials means getting
those customers to your website. While they very
much rely on in-person sales experience, their
purchase process begins on their tablet or
smartphone, long before they arrive at the
dealership.  Carrying certified pre-owned
vehicles that hit this groups cool factor is
the best way to reach the segment. Using search
criteria millennials prefer increases the
likelihood they will see you first.  Millennials
may dream of Audi, Mercedes and BMW, but they are
more likely to search for Honda, Chevrolet,
Toyota and Ford, in that order. They also have a
penchant for off-brand or discontinued vehicles
like the Chrysler Pacifica, Dodge Magnum and
Chevrolet TrailBlazer.  Factory certification
programs only certify up to six years, so
independent used car dealers who can find a
reputable national certification program that
will certify back to the mid-2000s and beyond,
such as the NIADA Certified program, can attract
customers who are looking for those special
vehicles and still want the safety and
reassurance provided by CPO inspections and
warranties. 
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Millennial customers are going to spend more time
on third-party and dealer websites than their
older counterparts. People who spend the most
time on those sites tend to be CPO shoppers or
they become CPO shoppers during the shopping
experience.  The more time customers spend
looking on the Internet, the more they are able
to focus on specific models and equipment and the
more time they have to learn the advantages of a
particular dealers services, commitments and
ethics, which can be broadcast on the dealers
sites and are an integral part of a CPO
program. Millennial shoppers are looking for
security in their vehicle purchase and ownership,
and having a warranty can create that peace of
mind for buyers who cannot afford a new vehicle
or just want to spend as little as possible to
avoid the depreciation attached to the purchase
of a new vehicle. CPO is more important to this
frugal generation because they dont want to save
money by buying a used vehicle only to discover
they have bought someone elses problems. Using
tools such as Carfax, AutoCheck or any of the
vehicle history reports gives a sense of the
vehicles past, and an inspection and a warranty
provide additional peace of mind. That has a
real tangible value in the view of the millennial
buyer. Even frugal car buyers see a real monetary
value and willingly pay a premium for a certified
vehicle. In fact, according to Autotraders 2014
Certified Pre-Owned Study, millennial CPO
purchasers pay an average of 2,000 more for a
vehicle that has been certified. 
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Finding the right vehicles for that group of
buyers and a certification process that they can
buy into along with announcing on your website
a commitment to the certification process and a
great partnership to deliver the coverage to the
customer is a sure way to attract millennials
business. The most common reason consumers dont
purchase certified vehicles is simply a lack of
awareness of CPO programs. Autotraders 2015 CPO
Study showed that while consumers familiarity
with CPO is steadily rising, only 49 percent of
used car shoppers surveyed said they were
familiar with certified pre-owned vehicles.  But
when they learn about whats involved in the CPO
process, most consumers see the value in the
inspection and warranty. The same Autotrader
study found the peace of mind that comes with
certification and warranty are the two top
reasons cited by customers for buying CPO
vehicles.  That means if you can get the
millennial customers to your website, it becomes
a matter of selling the customer on the right car
one that fills their needs but still leaves
room for the protection that generation demands
in the products they buy.  In other words, if
you can get your message to where millennials
shop, 90 percent of those shoppers are going to
see value in the CPO inspection process and the
warranty attached to it.  
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 It is very apparent from market research that
the places millennials prefer to get their
information are online from third-party sites,
and the dealers own website is the next-most
popular place. Where they do not go for
information are OEM sites they prefer unbiased
accounts to what they perceive as propaganda from
the manufacturer. Millennial customers are the
future of the automotive industry, which should
be music to the independent used car dealers
ears. Those buyers are not going to behave as
their parents did. Things that turn on their
parents, such as the glitz and glamour of new car
facilities and the prestige of new car ownership,
are not the kinds of things likely to ensnare
millennials. While many auto dealers continue to
approach their target marketing from a baby
boomer mindset, those who tailor their marketing
and operations toward the millennial generation
will find their stores staying relevant to a huge
vehicle buying demographic for many years.  So
how do independent dealers move forward from
yesterdays playbook of success and prepare for
this buying segments preferences?   They must
first recognize this is a different that is going
to behave in a different manner from its
predecessors and must therefore be approached in
a different manner.    
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Independents will have to find ways to reach
millennials in their favorite social media spots.
Dealers might have to stock vehicles to which
todays younger buyers assign a certain cachet of
ownership. Millennials are not willing to forgo
the security of warranties and service contracts
to get these older vehicles. That makes it
important to find a national partner for the
certification process that has the three items it
takes to be a good finance product claims,
coverage and an overall drive toward customer
service and can reach back to the early 2000s
to cover the vehicles the millennial generation
values and can afford. Aligning with a program
like NIADA CPO that does all that allows
independent used car dealers to attract
millennial buyers to their vehicles and deals
using their lower overhead. Millennials want to
be able to shop using smartphones and texting for
communication until they are ready to meet
face-to-face, but they also want a dealership
experience and a demo ride when it is time to
buy. Millennial buyers care most about the
warranty and inspection and will pay a premium
for it, and will become your loyal customer for
life.  While others are still chasing the
boomers, you can set up a program geared toward
the future, selling to the millennial generation
via the media they dwell in.  For more details
about Warrantech feel free to visit https//warra
ntech.com/blog/february-2017/donE28099t-look-ba
ck/