2009 CIAS: Are used cars the new new cars?
Oh sure, there was some news about Chrysler’s ongoing sustainability plan.
The Detroit automaker will start nickel-and-diming their dealer network by cutting dealer profits on vehicles and forcing them to fill up the gas tanks of Chryslers when they arrive from the factory. Oh, and dealers will be charged $1 (yes one loonie) everytime they access the company’s internal inventory system (like when they’re looking for a vehicle for a customer from another dealer.)
Other than that, the reality of a long new car sales downturn as highlighted by January’s big drop is starting to permeate with most Canadian retailers.
In the U.S., predictions of what the 2009 annual new vehicle sales run rate range from as low as 8.5 to 11.5 million units. Take the usual U.S. to Canada sales ratio of 10 to 1, and most in the biz know that 2008’s 1,635,986 units sold last year in this country are now officially nostalgia.
Behind the optimistic media presentations, here at what is usually the kickoff to the spring sales season here at CIAS, off the record, several Canadian auto exes are concerned new car sales could get much worse before they get better.
The first threat is that cars have become too reliable, durable and feature filled. The scenario goes something like this.
You own a four-year old Blah-de-blah 5000. Your lifestyle hasn’t changed (that’s fancy marketer talk for you haven’t added any offspring to the house, and for the foreseeable future you’re going to hang on to your job.)
Your 5000 isn’t rusty, it’s been reliable, fuel efficient enough for your budget—and maybe most importantly—you’ve managed to pay it off.
So, if you’re like most Canadians girding for the recession, why would you buy a new car?
The second threat new car retailers are facing is the lesser of two evils—the glut of low-mileage used cars.
According to analysts at DesRosiers & Associates, off fleet and off lease vehicles will reach record levels this year in Canada and “provide a serious downside threat to the new vehicle market.”
In other words, those buyers who absolutely, positively have to get a new car will have more choice than ever before to NOT buy new.
One auto executive told me they’ll be implementing a certified pre-owned program as soon as possible. And for the first time, BMW Canada is running national TV advertising for its CPO program.
How real do you think either of these threats are to new car sales are?
If you’re in the market to get a car new, will you buy new, slightly used, or stay put with old reliable?
[Source: DesRosiers & Associates]