There are a number of reasons for the projected decline: higher interest rates, making cars more expensive to finance; a drop in used car prices; and a continuation of the trend of keeping cars longer. In order for new car dealers to buck this trend, a new report from AutoAlert suggests that dealers focus on shortening the trade-in cycle:
[A]uto dealers have the power to shorten their customer trade-in cycle by half to sell even more vehicles. The data shows that new sales opportunities await dealers who can identify trade cycle disruption prospects. Many dealers practicing trade-cycle disruption through data mining have reported increasing their sales up to 20%.
The average length of ownership of a new car is nearly 6.5 years (77.8 months) and the average ownership period for a used car is 5.25 years (63 months). The combined average is 67.9 months, more than five and a half years.
The AutoAlert survey found that 75% of consumers would be very or somewhat likely to trade in their current vehicle today if the monthly payment would be substantially the same; 49% did not know that the could upgrade to a new vehicle before the loan or lease reaches its end; and 63% would prefer to upgrade their cars at least every three years.
In other words, consumers would still rather drive a new car than an older one. Some things never change.
What is changing are consumers habits, and holding onto cars longer is one that could be turned around. AutoAlert reckons that 20% of a dealership’s customers can upgrade to a new car sooner than they—or even the dealer—may think possible. A dealer’s ability to find that 20% may be the key to keeping new car sales growing.
ALSO READ: 10 Cars Most Likely to Be Dumped
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