Supply of Used & CPO Cars — How It Relates to Incentives

In discussing potential automaker incentive spending amid forecasted slower new-car sales growth in 2015, AutoTrader.com senior analyst Michelle Krebs — who said this year will be a “true test of the discipline in the auto industry” — added this “twist” involving the used-car market.

“Not only are new-car sales not going to increase at the rates that we’ve seen, but we’re also going to see a surge in used cars and specifically, certified pre-owned vehicles, come on to the market,” Krebs said during a conference call with the media on Monday.

“And one of the things that I’m going to be watching carefully is who does a good job of either moving people who are buying used cars into new cars, and who’s going to keep people in their fold of certified pre-owned cars,” she added. “We call it the ‘defending the castle’ kind of thinking. 

“We’ve seen the new-car market expand; we’ve seen the used-car market expand because there’s been such a shortage. Well, now, we’re going to have a lot of supply.”

So, the manner in which automakers respond to that increased supply will go a long way in determining the “winner” of who keeps buyers “in the fold,” be it new or used, Krebs added.

Krebs and Alec Gutierrez, a senior analyst with Kelley Blue Book, were presenting during their monthly sales conference call and fielding questions from media.  They both pointed toward a likely measured, targeted approach to incentives by automakers in 2015.