Here is an interesting survey from Maritz on what the typical consumer expects, and how he reacts to prices and incentives.
Did you know that the majority of pre owned vehicles purchased by dealers for resale is done through auctions. Especially the recent model, low kilometer, off lease vehicles.
Auctions are an ideal marketplace to dispose vehicles by the captive financial companies that are owned by manufacturers. Its an efficient wholesale market to achieve the highest price for a vehicle.
The auctions convert lease return vehicles to money, which is then used by the captive financial companies to fund additional transactions.
At an auction its the highest bidder that wins, not the lowest. The winner is competing with floor bidders, and online bidders literally across Canada. An auction fee is added to the selling price of the vehicle.
An auction is a captivating "reality show" where all the action is in "real time". The drama, tension, satisfaction, frustrations, competition, are palpable, you can feel it in the air!
The seller wants the highest price, the buyer wants the lowest price, the auctioneer is working for the seller.
The auction format does not allow for low purchase prices. Especially the recent model low kilometer vehicles, with a clean history.
Good vehicles command, and always get "premium prices". The 3 year old, one owner vehicle with reasonable kilometers, balance of warranty, does not come at a bargain price.
The good vehicle offered at retail by a dealer, was paid at current wholesale market price, with bidders from across Canada competing to purchase the vehicle.
Once a vehicle is purchased at an auction by an independent or franchised dealer it needs to be retailed to a customer to keep the wheels of automotive commerce turning.
Most manufacturers have developed CPO (Certified Pre Owned) programs for their franchised dealers. These programs comprise a vehicle inspection (the professional dealer will always inspect a vehicle), once the vehicle is inspected it becomes "certified".
Its no longer a used vehicle its a "Certified Pre Owned" vehicle because it was inspected and it has a balance of factory warranty (good marketing).
For the manufacturer to make additional money, and give the customer peace of mind, the franchised dealer will put an extended warranty on the just created "Certified Pre Owned". Depending on the make and model the price increases by a thousand to several thousands. In many cases the customer has no choice, he is obligated to buy the extended warranty.
At Strada we offer similar extended warranties for less money, and giving additional flexibility to the customer.
Leasing plays an important, and often crucial role in selling new vehicles, residual values of vehicles are a critical element in structuring lease parameters on new vehicles. ALG is the North American authority on lease residuals. It is in every manufacturer's best interest to maintain high residual values for their vehicles.
By having CPO programs through franchised dealers, adding extended warranties, adding low interest finance or lease rates from the captive financial company, this all helps in raising the transaction price of the CPO vehicle. The manufacturers through their franchised dealers collect this data, and create a database which depicts high selling prices, and consequently justifies higher residual values.
As a customer when you are considering a CPO vehicle with an extended warranty, a low interest rate, and a high price. Is the value proposition all in your favor? Or is the value proposition assisting multi billion dollar corporations advance their cause?
Bank of Canada rate is 4.25%, the chartered banks prime rate is 6.00%, automotive funding is usually 2 to 3% above bank prime for "A" credit. When anyone is offering rates lower than chartered bank prime for loans or leases on used vehicles? It begs the question, What's Up? It tends to get opaque.
CPO vehicles give you the appearance of additional peace of mind, a lower interest rate, at a higher transaction price. The value proposition is shared between the customer and multi billion dollar corporations.
At Strada you get a Selected vehicle with balance of warranty, with extended warranty if you want, at a competitive interest rate, with a fair and honest price. All in a clear, transparent deal. The value proposition serves our customers only.
From the 3 initial choices, you have to get down to the 1, and do a deal to ultimately get a vehicle.
Yes its easier to talk about it, than to actually do it.
You need the right vehicle with the least compromises (you do need some flexibility) that appeals to your emotions. Yes, emotions...we are humans. Fits your parameters, meets your expectations, and your budget.
From the right dealer, that gives you confidence, assists you in arriving at a decision, makes the transaction "feel right", and gives you a strong sense of actually caring about your interests.
You are seeking the "value package" that appeals to you with the least compromises, from the dealer that will provide you an "automotive experience" with enthusiasm, and passion.
You will quickly realise when all the elements are there, and it feels right, that is the deal you want to do.
The saying regarding pre owned is that no two vehicles are exactly the same, and no two prices will be the same. Another wise saying "You get what you pay for".
Its easy, fast, efficient to get a clear idea of what you should be paying, a bit of due diligence will quickly give you guidelines. As a reminder the Value Finder is the "go to" resource.
Vehicles with a good, clean history as we have mentioned, demand, and get a good price. Vehicles with histories that have a few "issues" are less money.
If you want to pay the highest price: The same marque CPO vehicles from a franchised dealers will fulfill this desire.
If you want to pay a reasonable price: A comparable to a CPO various marque vehicle from an independent dealer will fulfill this need.
If you are motivated to pay the lowest price: There are dealers, with specific vehicles that will gladly fill this need for you.
Don't be a "price buyer". Although price is important, and needs to fit your budget. Paying too little (getting the incredible deal) is often the worst mistake that you can make. Buying solely on price means that you are compromising on quality and desirability.
You want to buy on "value" not price.
At Strada we care about the value you receive, when you do business with us.