Trade-ins prove to be fruitful avenue for dealers, consumers
Three-quarters of consumers in a July seller survey said having a trade-in they could apply towards their next purchase was “very or extremely important,” CarGurus said in its 2022 Consumer Insights Report.
And these days, those customers are fetching a pretty penny for their old rides.
In the company’s latest auto sales forecast, Thomas King, president of the data and analytics division at J.D. Power, said consumers will likely have an average equity of $9,297 in their trade-ins this month, a 7% or $598 year-over-year increase.
While that’s $820 softer than June’s peak, King says October’s number would be over twice as high as average trade-in equity before the pandemic.
Of course, consumers’ motivation for trading in their car goes beyond the money they can generate.
According to the Consumers Insights Report from CarGurus, 78% of buyers at dealerships traded their previous vehicle in, 6% sold their old ride on a website and 16% went private-party to dispose of the vehicle.
“Trade-ins are the most popular sale option for those who need to both buy and sell a car. Why? Customers believe working with the same dealership for both transactions is fast and easy, and for now, they still like the idea of getting credit at the dealership,” CarGurus said in the report. “However, a large number considered selling online as an alternative.”
When asked why they chose the trade-in method, 47% of respondents in the July seller survey said it was because they were buying from the same dealership, 37% cited the ease of it and 31% pointed to the speed.
Regarding CarGurus’ point about using online sales as an alternative, 38% of consumers using the trade-in method said selling online was on the table.
Dealers also appear to be doing a fair job at making the trade-in process a smooth one for consumers.
According to the Ease of Purchase Scorecard, a new monthly report from CDK Global, 53% of surveyed customers said agreeing on a trade-in value was “easy” at the dealership, with 27% remaining “neutral” on the matter. Just 10% said it was difficult.