Polk: Strong Return to Market Possible Within Year
March 23, 2009
SOUTHFIELD, Mich. — Although drivers are holding on to their vehicles much longer these days, approximately one-third of consumers plan to make a purchase within the next year, and, interestingly enough, more than two-thirds are considering going used instead of new the next time they buy, according to the most recent market study from R.L. Polk and Co.
Specifically, Polk noted that average length of vehicle ownership climbed from 49 months in 2002 to 56.3 months in 2008.
What’s more, only 11 percent of consumers that Polk surveyed claimed the current economic downturn would have no effect on purchasing plans and over half said economic conditions would grow worse.
That said, many trends point toward a brighter future for the industry, officials indicated. “A state of optimism for the economy was also reflected in the study,” explained Lonnie Miller, director of industry analysis for Polk and co-author of the study. “Nearly one-third of respondents plan to purchase a vehicle within 12 months.”
And the used-vehicle market presents a more affordable alternative for many of these consumers, as 70 percent of respondents said they were at least somewhat likely to consider buying a used model instead of a new one.
“Reports of growing used vehicle prices and demand for vehicles at auto auction centers reinforce this mindset,” analysts pointed out.
On the new side, the market is likely to return to the 14.2 million unit mark by 2012, Polk projected.
What could help the new-vehicle industry’s future is the fact that that many manufacturers have formed loyalty teams in order to retain their current customers who may return to market once their buying power and consumer confidence improves.
“It’s important that these teams remain focused on future business even if marketing budgets are tight,” suggested Bruce Giffin, corporate market research manager at Polk and co-author of the study.
Another positive sign for the industry — at least for the Big 3 — is that 72 percent of consumers said they would consider buying domestic units when they return market in order to help spark the U.S. economy and support domestic automakers, according to the study.
In the meantime, many automakers have put a greater emphasis on their parts and service operations in order to offset declines while new-vehicle sales are slow.
According to Polk, this strategy can be advantageous to OEMs, especially when sales are short and the length of vehicle ownership increases.
“As consumers are holding on to their vehicles longer, now is the time for OEMs and dealers to foster new and even more relevant relationships with existing customers for potential business,” officials stressed.
In conclusion, Giffin offered one possible suggestion for how OEMs can plan for the future and boost sales down the road.
“Product development for future models needs to factor in and recognize a heightened level of consumer anxiety,” Giffin shared.
“OEMs should not emphasize consumers’ current economic views too much, but instead focus on accurately mapping out the volume of cars and trucks that will meet future demand,” he added.
For more information, visit www.polk.com.
This article is courtesy of AutoRemarketing