|People started talking about Generation X back in the early 90s. Now we're hearing a lot about Generation Y. Generation Y is just now coming of age and they're primed to have a big impact on your business—especially your used car business.|
|Studies show that members of Generation Y (broadly defined as people born in the US between 1977 and 1994) are voracious Internet users. Nothing surprising there; these kids grew up with the Internet and have never had a reason to fear technology. The age group represented by Generation Y (people now between the ages 12 and 30) are, or are about to become, big-time used car buyers. Indeed, used vehicles make up a significant majority of cars bought by, or for, people between the ages of 15 and 24.
According to the 2006 Used Autoshopper.com Study conducted by J.D. Power and Associates study, more than half of used car buyers use the Internet in their search and that number jumps to 72 percent with car buyers under age 35 (67 percent of trucks). According to JupiterResearch, the Internet is now responsible for more used car sales than print ads. Generation Y is a major factor in these trends.
There are multiple reasons to aggressively pursue the used car market:
Increase gross profits—In 2006, franchise dealers averaged $294 more per pre-owned vehicle than they did on new vehicles sales. According to NADA, $1,776 was the average gross profit compared to $1,482 new vehicle.
Reduce expenses—Aged inventory is expensive. For this reason, dealers must stock the proper used vehicle inventory and market their used inventory aggressively for the quickest turn.
Control your dealership’s success—With manufacturers exerting more control over new car retailing, you still have the ability to run the used car side of your business as you see fit
With this in mind, here are three key things you can do to maximize your used car business:
1. Identify and fix the issues that may be limiting the success of your online used car business.
Is your online inventory always out of date? There are outsourcing solutions which can help by taking some of the responsibility off your shoulders. Many vendors also have free training to help you develop processes that make important listing tasks easier and less time-consuming.
Are your Internet sales managers, or ISMs, prepared to sell your used car inventory? Problems here can take a number of forms. Your ISMs must have the latitude to suggest appropriate used cars to prospects who initially say they want to buy new. Eliminate any incentive-related issues that make them less inclined to do so. ISMs must have the unique skills needed to sell used vehicles. Clearly communicating dealership goals, making necessary adjustments to policies and incentive plans, and providing needed training can make a big difference.
2. Use your Web site to promote your used car inventory.
This is advice that will help you connect with all used car buyers, but some creative thinking will help you target Generation Y customers. We don't want to make blanket generalizations about the group as a whole, but you should be attuned to visible Generation Y subgroups in your area. If you are in farm country, young buyers who have grown up with trucks are likely to want one of their own. If you are on the Pacific coast, the 20-year-old who's looking for the perfect vehicle for hauling his dogs and surfboard will probably overlook a few dings.
3. Consider buying used car leads.
The significance of Generation Y may be over-hyped in many areas, but used automotive online retail isn't one of them. You still have time to prepare, but remember that kids grow up pretty quickly and they all want cars.
Binary Automotive Solutions has added Capitol City Honda of Olympia, Wash., to its network of Lifetime Warranty Program dealers.