Half Million Recent New Car Shoppers Steered to Used Cars, Edmunds.com Reports

SANTA MONICA, Calif.--(BUSINESS WIRE)--At a time when automakers are desperate for every sale, a remarkable number of shoppers are drifting out of the new car market and purchasing a used car instead. Edmunds.com has determined that approximately 511,000 used cars sold in the past three months would have been new car sales in a more normal economy. Projecting ahead, this could represent a seasonally adjusted annual rate (SAAR) of more than two million vehicles, which equates to more than 15 percent of total new car sales. In manufacturing terms, that amounts to about two assembly plants’ new car production, reported Edmunds’ AutoObserver.com.

“So it is really no surprise to learn that salespeople are directing some car buyers toward used cars, which have historically delivered a much higher profit margin to the dealer.”

“It is safe to assume that many shoppers who normally would be tempted by ‘new car smell’ and the latest automotive technology made a more cost-conscious decision because of economic pressures,” surmised Edmunds.com Senior Analyst David Tompkins, PhD, whose team studied historical ratios of online research and actual sales of new cars versus used cars.

According to Dr. Tompkins, about two-thirds of incremental used car sales, about 343,000 cars, were sold to consumers who, in a normal market, would have considered a new car but instead began their shopping process with a used car focus. The remaining one-third, about 167,000 vehicles, were bought by people who demonstrated purchase intent for new vehicles, but, at some point in the buying process, switched to used cars.

“Right now, dealers need to maximize their short-term profitability more than ever,” observed Edmunds.com CEO Jeremy Anwyl. “So it is really no surprise to learn that salespeople are directing some car buyers toward used cars, which have historically delivered a much higher profit margin to the dealer.”

Edmunds.com’s research shows that recent model year used vehicles have been sold at a faster rate by franchise dealerships lately; in the past, vehicles that were one model year old made up about 11 percent of all dealership sales, but lately they have jumped to 16 percent.

What does this mean for the car buyer?

"Deciding whether to buy a new or used car is something that should be done after careful consideration, not while you are on your feet at the car lot," said Senior Consumer Advice Editor Philip Reed. "It requires more research to successfully choose, negotiate and buy a used car. But it also offers significant savings for the savvy shopper."

Here are a few bullet points for car buyers:

• Buy a vehicle history report such as those offered by Carfax. Review the vehicle history report before going to inspect the car.
• Get an independent inspection on any used car you’re considering.
• Consider buying a certified pre-owned (CPO) vehicle, which comes with an extended factory warranty.
• Evaluate cars from smaller manufacturers, since they offer surprising utility at a much lower cost than some of the bigger brands.
• Note the difference between shopping for used car at a new car dealership, an independent used car lot or from a private party.
• Read Edmunds.com’s "10 Steps to Buying a Used Car" for a complete guide to the used car shopping process.

Available spokespeople include:

• Jeremy Anwyl, Edmunds.com CEO (Los Angeles)
• Michelle Krebs, Edmunds’ AutoObserver.com Senior Editor (Detroit)
• Kevin Smith, Edmunds.com Editorial Director (Los Angeles)
• Karl Brauer, Edmunds.com Editor In Chief (Los Angeles)
• Jesse Toprak, Edmunds.com Senior Industry Analyst (Los Angeles)
• Jessica Caldwell, Edmunds.com Analyst (Los Angeles)
• Philip Reed, Edmunds.com Senior Consumer Advice Editor (Los Angeles)

Edmunds.com spokespeople are available for interviews using Edmunds’ television studios in its Santa Monica headquarters or a studio of your choice in the Detroit area.

About Edmunds Inc. (http://www.edmunds.com/help/about/index.html)

Edmunds Inc. publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive consumer information, launched in 1995 as the first automotive information Web site. Its most popular feature, the Edmunds.com True Market Value®, is relied upon by millions of people seeking current transaction prices for new and used vehicles. Edmunds.com was named "Best Car Research Site" by Forbes ASAP, has been selected by consumers as the "Most Useful Web Site" according to every J.D. Power and Associates New Autoshopper.com Study(SM), was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal and was rated "#1" in Keynote's study of third-party automotive Web sites. Inside Line launched in 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in 2006 and is an automotive social networking Web site and home to the oldest and most established automotive community. AutoObserver.com launched in 2008 and provides insightful automotive industry commentary and analysis. Edmunds Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.