1996 National Study Supplement
Management White Paper

Used Car Superstores

April, 1996

Contents

• Introduction
• Methodology
• New vs. Used Vehicles
• Awareness of the Used Car Superstore
• Desirability of Used Car Superstores
• Factors Influencing Buyers to Shop
  or Not to Shop the Used Car Superstore

Introduction  Top

This 1996 Management White Paper is being provided by The Dohring Company as a supplement to our 1996 National Automotive Consumer Study.

The national study, provided as a service to the automotive industry, focused on the most topical issues of the day including:

• Consumer attitudes and perceptions of franchised car dealerships
• One-price selling versus negotiating the purchase
• Purchasing new vehicles versus late model used vehicles
• Used car superstores

This white paper is intended to provide in-depth answers to help you better understand the consumer perspective on specific issues.

The national study has not been funded by any outside source and is strictly provided as a service. The design intention was to address several primary areas of importance to our automotive, OEM supplier and dealer client base.

The Dohring Company is North America's largest provider of custom market research to the retail automotive community. We have conducted more that 3,000 automotive market research studies for dealers, dealer associations, advertising agencies, manufacturers and suppliers in North America and internationally. The company, based in Glendale, California, employs over 100 full time staff and has conducted over 300,000 interviews with vehicle buyers in 1995 alone, and over one million in the past ten years.

Additionally, we are proud to have been designated Marketing Research Supplier to the 1996 Atlanta Olympic Games.

The Dohring Company is a full-service provider of marketing research and the developer of TrendTrak®, our exclusive on-site survey polling device. For additional information, please contact us at 1-800-242-8022.

Methodology  Top

A total of 1,253 respondents were surveyed from across the 50 United States in proportion to their household populations. All respondents were surveyed by telephone during December 1995, and were qualified as intending to purchase a new or used vehicle in the future from a new car dealership. The study has a standard error of ± 2.8%.

New vs. Used Vehicles  Top

Information from this national automotive consumer study regarding purchasing new vs. used vehicles and factors influencing the decision to purchase used vehicles is available in a separate Management White Paper entitled: "New vs. Used Vehicles", available through The Dohring Company.

Awareness of the Used Car Superstore  Top

All respondents in this study were asked if they were familiar with the concept of a "used car superstore", and only 14.6%, nationally, had heard of used car superstores. Thus the used car superstore concept is relatively unknown among automotive consumers, nationally.

Are you familiar with the concept of a "Used Car Superstore"?

Desirability of Used Car Superstores  Top

Respondents were read the following statement describing a used car superstore:

"A 'used car superstore' is a large used car facility which specializes in selling only late-model used vehicles, all less than 5 years old with a warranty. A 'superstore' would have an inventory of hundreds to a thousand or more late-model used vehicles."

Following this, respondents were asked if they would consider buying a used vehicle from a used car superstore. About half (48%) said they would "definitely" or "probably" consider buying a used vehicle from a used car superstore, thus the used car superstore concept has instant retail credibility with automotive consumers, despite the low level of current awareness.

Would you consider buying a Used vehicle from a Used Car Superstore?

Further, the used car superstore has broad appeal across nearly all age, gender and income categories.

Would you consider buying a Used vehicle from a Used Car Superstore:

Would you consider buying a Used vehicle from a Used Car Superstore:

More respondents in the Southwest and West would consider buying a used vehicle from a used car superstore than other regions of the country.

Would you consider buying a Used vehicle from a Used Car Superstore:

Factors Influencing Buyers to Shop or Not to Shop the Used Car Superstore  Top

Those who would consider shopping and purchasing from a used car superstore were asked why they would consider buying from a used car superstore. The top responses were: "Larger selection" (45%) and "Lower prices" (41%). It is important to note here that the description above did not mention pricing of the vehicles at the superstore; yet, from the brief description, consumers' immediately perceive that the superstore would have low prices, and this benefit would certainly accrue to the used car superstores.

Why would you consider buying a Used vehicle from a Used Car Superstore?

Those who said they probably would not or definitely would not shop a used car superstore were asked "Why?" The top response was that they felt the experience would be impersonal. This perception can be easily handled through how the used car superstores advertise and position themselves in the consumer's mind by providing the cues that would indicate higher levels of customer service and attention.

Why wouldn't you consider buying a Used vehicle from a Used Car Superstore?

Overall, while still in its infancy and yet relatively unknown, the used car superstore concept has instant retail credibility, distinct perceptual advantages over traditional car dealerships' used car lots and a high level of appeal to automotive consumers. With these attributes, well run used car superstores will very likely have a strong influence in changing the nature of automotive retailing, as we know it, over the next few years.