The Changing Vehicle Ownership Cycle

The Changing Vehicle Ownership Cycle

Fewer new cars and higher used car prices mean the better option may be for drivers to keep their current vehicle.

You can probably remember the pre-pandemic days when you gave a customer the bad news about their vehicle, and they might have declined repairs and said, “It is time to trade it in.” Today that is becoming a rare scenario. With new cars in short supply and used car prices going through the roof, the better option is often to keep their current vehicle on the road. 

According to a survey from CoPilot Research, the average time a consumer spends looking for a used vehicle is 171 days. This is up from 89 days in March 2021. Even if they could trade in their wounded vehicle, chances are a suitable replacement they can afford might not be sitting on the lot of the new or used car dealer.

Price is becoming another issue. The average price for a gently used three-year-old vehicle is $41,000. Some used models that are in demand can fetch prices that are 14% higher than the new car price. According to a recent survey by CreditKarma, the average new car monthly payment is $644. The average monthly payment for a used car is $488.

You are not doing the customer any favors by not recommending a repair or trying to save the customer a few bucks by not advising them on services that will make the vehicle last. The reality is repairs that would once send the owner running to the new or used car dealer are now acceptable investments for vehicle owners. These high-cost repairs are high-value repairs for the owners.

Keep in mind it is not your vehicle, and your price point pain threshold is not your customer’s price point. Your hesitancy to not advise the customer of the benefits of a repair due to a fear you might be overselling is unfounded. You are advising the customer and not selling. Remember, your price point is not the customer’s price point.

Will these trends continue? It is difficult to say when or if the supply of new and used cars will eventually meet demand, but the new higher prices will probably remain for years to come. 

There has been a lot of talk about parts shortages. It is a genuine concern for shops that want to be productive and keep the bays turning. It has been a perfect storm that has been brewing. During the past decade, many part suppliers started to carry less inventory, and they also stayed away from slow-moving parts. This has been a way to improve their profitability and share prices. Unfortunately, it has been made even worse because a lot of their inventory is sitting in ports that are locked down or stuck in containers waiting to be unloaded.

When will it return to normal? I don’t even know what normal is any more. The past 30 years have seen some of the significant changes to vehicles, consumers and our supply chain. The best advice is to be prepared for the next upheaval in our industry, whatever and whenever that is.

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