DETROIT - J.D. Power and Associates has a message for automotive brand managers: Don't ignore used vehicles because they quickly are becoming the entry-level vehicles of the next century.
Used-vehicle sales in the United States continue to grow while sales of traditional entry-level vehicles - new compact cars and new low-end mid-sized cars - continue to fall, according to the Agoura Hills, Calif., consulting firm.
'If that's the case, you have to wow and delight on (the used-vehicle) end of the equation as well,' said Paul Ballew, chief economist for J.D. Power.
During a Dec. 9 meeting in Troy, Mich., with auto industry representatives, Ballew discussed the results of J.D. Power's second annual study of the used-vehicle market, to be released this week. For the study, the consulting firm surveyed more than 3,600 people who had bought used 1994-through 1997-model vehicles in 1998.
Ballew said used vehicles are becoming particularly important to luxury brands because consumers increasingly are buying used luxury vehicles instead of comparably priced new vehicles. For example, J.D. Power found that 41 percent of the used Acura buyers it surveyed had 'seriously' considered buying or leasing a new vehicle.
And luxury automakers are building brand loyalty through those used-vehicle sales. More than 80 percent of the people who bought used Mercedes-Benz, BMW, Volvo or Lexus vehicles said they 'probably will' or 'definitely will' buy the same make again, according to the J.D. Power study.
Said Ballew: 'This again reinforces to us the overall importance of brand management, used and new.'
J.D. Power forecasts moderate growth for the used-vehicle market into the next century while the new-vehicle market remains flat. More consumers are buying used vehicles instead of new vehicles because of improving quality and durability, Ballew said.
He added: 'And this year we're seeing statistically an increased jump in the number of people talking about the fact that new vehicles just depreciate too much.'