Customers trade cars after 2 years

The Trade-In Timing Trend

Recent data indicates that consumers who purchased a vehicle are increasingly looking to trade it in approximately 24 months after their purchase. They casually re-enter the market after making their 18th payment. It takes them up to 6 months to make their next transaction. This trend is particularly pronounced among individuals who financed their vehicles and are now seeking to upgrade or change their vehicle. Additionally, those who have just completed their car payments are showing a tendency to trade in their vehicles around 27 months after the initial purchase. This includes cash buyers and people who pay their vehicle off after making 60 payments.

The Communication Gap

Despite these clear patterns, many car dealers are failing to effectively communicate with these customers. This lack of engagement means that dealerships are missing out on potential sales, as customers may not be aware of their options or the benefits of trading in their vehicle at the right time. Most dealership CRM systems cannot recognize how someone paid for their vehicle, so tuning tasks for these types of communication are impossible. Also, dealership sales turn-over is incredibly high and the chances the original sales person is still there to work with that customer are low.

Implications for Car Dealers

  1. Missed Sales Opportunities: By not reaching out to customers at the optimal time for trade-ins, dealers are losing potential sales that could have been secured through proactive communication.
  2. Customer Retention: Engaging with customers who are ready to trade in their vehicles can foster loyalty and encourage repeat business.
  3. Market Competitiveness: Understanding and acting on these trends can give dealerships a competitive edge in a crowded market.

Recommendations for Dealerships

To capitalize on this trend, car dealerships should consider implementing the following strategies:

  • Targeted Marketing Campaigns: Develop marketing campaigns aimed specifically at customers who are nearing the 24-27 month mark of their vehicle ownership.
  • Automated Customer Outreach Programs: Establish programs to reach out to customers via email, phone, or text to inform them of their trade-in options as they approach the critical timeframes. FRIKINtech’s TRADEiQ platform can help here.
  • Education on Trade-In Benefits: Provide information on the advantages of trading in a vehicle at the right time, including potential savings and better financing options for new purchases. As of this writing, FRIKINtech is less than 60 days away from launching a customer concierge component to help show customers their long-term financial course with their car.
  • Utilize Data Analytics: Leverage data analytics to identify customers who are likely to be in the trade-in window and tailor communications accordingly.

Conclusion

The automotive market is witnessing a clear trend in trade-in timing that car dealers must acknowledge and act upon. One could hypothesize human psyche is wired to want something new every 2 years. By improving communication with customers who are ready to trade in their vehicles, dealerships can not only increase their sales but also enhance customer satisfaction and loyalty. Addressing this gap is essential for staying competitive in the evolving automotive landscape.

Written on January 31, 2025

Written by FRIKIN tech

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