Used vehicles aren't as old and are much more expensive than most U.S. adults think they are, posing a challenge to F&I managers looking to help customers purchase affordable vehicles, according to a new study.
Searching for updated content and safety features with their next vehicle, customers with misconceptions about the viability of a used car might opt for a newer model out of their price range. Also, customers hoping for cheaper alternatives in the used-vehicle market might have trouble finding deals.
Commissioned by Ally Financial, one of the largest U.S. auto lenders whose portfolio is about 50 percent used vehicles, the survey found that adults generally thought the average age of a used vehicle was above 6 years, and cost about $9,860. Only one in 10 respondents correctly noted the average purchase price of a used vehicle exceeds $20,000.
Matt Arnold, senior regional vice president of Auto Finance at Ally Financial, said that the onus is on dealerships to educate customers on the age and viability of inventory.
"Used vehicles have a ton of the same tech and safety features that new vehicles have today," Arnold told Automotive News. "It's really about education."
Arnold anticipates the misconceptions on used-vehicle ages and prices will fade, particularly as more shoppers returning to the market experience sticker shock on the new-vehicle side.
The price gap between new and used vehicles is growing, according to analysis from Edmunds. In October, the average amount financed for a new vehicle was $33,238, compared with an average of $22,661 for used. The average transaction price for a new vehicle last month was $37,886.
Dealers, make sure customers know about their vehicle options before visiting the F&I office. Dealers should engage potential buyers online through marketing efforts and online correspondence about used-vehicle options, particularly if the customer is budget-conscious.