Car Dealer and Car Buyer Report2023

How did consumers engage with offers to trade or sell their car to the dealership, the payments on dealer websites and advertising, and in dealership lead response.  FRIKINtech hunted for the right customers in the right cars for our dealers utilizing the SERVICEiQ and EQUITYiQ products to deliver trade-up or “sell your car to the dealership” offers.

1,934,815

Service Repair Orders Processed for Equity

1,145,786

Past Sold Loans Processed for Equity

43,553

Expiring Leases Processed for New Offers

98,813

Past Sold “Cash/Credit Union” Deals Processed for Equity

How much equity did consumers have?2023

While new car inventories were constrained across the United States, used car values peaked.

Used car values fluctuated in 2023 as certain vehicle models became available as new cars again.  At this time, the first wave of pre-owned EVs hit the market in large quantities, and we saw a new phenomenon where a single manufacturer (Tesla, in this case) could shape the values of an entire segment of vehicles.

FRIKINtech works with no Tesla stores.  Our clients are franchised and independent car dealerships whose main inventories consist of Internally Combustible Engined (ICE) vehicles.  Electric motor Vehicles (EVs) were not a major factor in any numbers shown in this study.

Also of note is the customization capabilities within FRIKINtech products.  Both SERVICEiQ and EQUITYiQ allow dealers to determine the equity thresholds, vehicle age, make, models, and miles they wish to target.  In most cases, cars older than 10 years in age or with over 100,000 miles were not dealer targets.  The bulk of this study is built on vehicles dealers wanted.

Most Traded
Most Traded

2020

Most traded Model Year

Equity
Equity

$9,387

Average Equity Seen

Paid Trade
Paid Trade

44.5%

Conquested customers who changed their payoff to $0

Sold Customers
Sold Customers

17,481

Average number of customers in a dealer's database

Opportunity
Opportunity

69.4%

Amount of a dealer's past sold customers who are in equity

How people financed cars2023

Average Loan Term
Average Lease Term
Lease Penetration Rate
Loan Rate
Lease to loan ratio
Cash Deal to loan ratio
Average Front Gross
Average Back Gross
All Deals
72 months
36 months
6.1%
73.8%
For every 12.1 loans there was a lease
For every 3.7 loans there was a cash deal
$1,167
$1,623
FRIKINtech Attributed Deals
72 months
36 months
10.8%
85.4%
For every 7.9 loans there was a lease
For every 9.8 loans there was a cash deal
$1,691
$2,063

EQUITYiQ focuses on past sold and current lease customers whose leases are coming due.  SERVICEiQ uses inception to help service customers realize they can trade or sell their current car now.

In all cases, a consistent process is performed to touch customers without the need for dealership staff to do anything.

We believe the higher leasing and loan rates are due to informing the customer of their equity capabilites.  Many customers were excited to learn they could do something and did not take the time to research with their credit unions, save up to pay cash, or they decided to lease again.

%

Of total gross was on the resale of acquired vehicles

Buying cars from customers

  • Percent of Service deals that were straight vehicle acquisitions 29.3% 29.3%
  • Percent of past sold & lease deals that were straight vehicle acquisitions 11.4% 11.4%

How much people paid for service2023

$513

Average Repair Order paid. 

$564

Average Repair Order paid before trading or selling car to dealer.

8%

Amount of Repair Orders paid over $1,500.

The average age of a vehicle on the road was 12.4 years old in 2023.  This is a record in the United States and the trend looks to continue into 2024.  People are seeing larger service bills than they have seen before.

Motor vehicle repair prices have jumped a staggering 23% over the last year, an inflation rate nearly four times higher than overall price increases…

ABC News

May, 2023

New quarter, new record:

Average monthly payment in Q4 hit $739 — a new all-time high.

Surprising?

Car Dealership Guy

January, 2024

When repair orders and car payments meet, what kind of psychological effect does that have on a customer?

“If I’m going to pay this much to maintain this old thing, I might as well pay a little more to drive a new one.”

Dealership retention rates2023

85% of customers bought a different model car than they traded

19.3% of total sales were to customers with prior sold history

63% of serviced vehicles were not bought from that store

We are curious why our competition focuses customers on the newer version of the car they’re already driving when so few buy the same car again.

SERVICEiQ is the only product allowing you to consistently conquest service customers through automation and needs no sold history.

Customer Engagement with Automated Offers2023

44%

Email Open Rate

13%

Click Thru Rate

Dealership email marketing historically sees a 20% open rate with a 3% click thru rate.

1,000,000+

Texts Sent

11%

Opt-in Rate

Texting was particularly strong with service customers.  This makes sense because they were just in the dealership and may have been texting with their service writer.

4%

Mail Conversion Rate

Dealership mailers historically convert at 0.05% and usually require a phone call to get rates higher than half a percent.

83%

Mobile Visits

36%

Return Visits

11

Clicks/taps per Visit

Dealership Return on Investment2023

Average Advertising Cost per New Car Sale

$692

As of June 2023 in NADA’s 2023 Midyear Report

$77.39

Cost per sale with FRIKINtech products to past sold and service customers of the dealership

Avg Leads/mo. per store
75
Avg Sales/mo. per store
10
Avg Closing Ratio
13%
Avg ROI
38X

Where our data came from2023

  • Dealer’s DMS historical sold data
  • Dealer’s DMS historical service history
  • Dealer’s DMS daily deal data
  • Dealer’s DMS daily service repair order data
  • Dealer targeting customization for equity threshold, vehicle age, vehicle mileage, make, and model
  • Dealership websites with WEBSITEiQ installed
  • Dealership CRM lead response with SALESiQ installed
  • Insurance carrier & agency offers via dealer CRM and DMS data
  • Delivery of text, email, and mail messages
  • Response and engagement of customers within illumiQUOTE app