Just when we thought we’d seen it all, new ramifications from the pandemic are affecting the automotive industry. One clear beneficiary of these changes has been Certified Pre-Owned (CPO) Vehicle sales. While economic factors still cast a long shadow over new-car sales, much of the increased demand for CPO vehicles has been caused by the lack of new-car inventory due to supply chain shortages.
Now, more than ever, new cars are manufactured using microchips or semiconductors. When the pandemic initially shuttered dealerships and caused new car sales to plummet, OEMs began canceling their orders for these microchips. At the same time, demand for consumer electronics like laptops, gaming systems, webcams and TVs skyrocketed. Businesses also scrambled to improve their digital infrastructure in order to move their businesses online. Guess what all these consumer electronics and technological improvements need. You guessed it – microchips!
Chip manufacturers immediately switched their production away from cars to meet the new demand. This was all fine and good until the automotive industry bounced back faster than anyone could have anticipated. Now, automakers can’t meet the rebounded demand for new vehicles because there’s a shortage of these microchips and semiconductors.
While the chip shortage is global, another supply shortage was created stateside. The recent winter storms in Texas caused oil refineries to shut down. As you may know, byproducts from oil refineries are used to make seat foam. Without these raw materials, there’s been a huge disruption in that supply chain as well. Some say that the seat foam shortage could become even more crippling to automotive manufacturing than the microchip shortage.
While the lack of inventory of new cars is a huge driver for sales of CPO and used vehicles, economic factors are still at play. Full economic recovery from the pandemic-caused recession is still uncertain at this point and new-car prices are increasingly out of reach of most consumers. But thanks to the recent passage of the COVID-19 recovery bill, many car shoppers are finding themselves with up to $1,400 in stimulus payments burning holes in their pockets.
This relief money also coincides with the arrival of tax refunds, low interest rates, pent-up demand, optimism over the coronavirus vaccine rollout and the historically busy spring car-buying season; all of which create a perfect storm of reasons why consumers may find themselves in the market for a Certified Pre-Owned Vehicle.
The Cox Automotive CPO sales forecast for 2021 is 2.7 million, up from 2.6 million sold in 2020.1 If you want to target those 2.7 million potential CPO buyers, we can help. Infocore can source both intenders for CPOs as well as intenders for used cars. And, we can help you maximize your conquest opportunities by introducing your brand to shoppers who are looking at competitive vehicles.
More and more, consumers are completing most of the car-buying process online. So why not kickstart their digital journey and meet them where they are? Our highly targeted, data-driven, multi-channel marketing campaigns can reach the 2.7 million consumers who are currently in the market and ready to buy a Certified Pre-Owned Vehicle.
Give us a call today for a free, no-obligation consultation to talk about how we can increase your CPO sales. Those CPO buyers are out there and Infocore knows where to find them. We can’t wait to make an introduction!