What Do Longer Ownerships of New Cars Mean For Your Shop?
Some of us enjoy keeping up with the times and current fashions, without getting overly attached to what’s currently in style. Out with the old, in with the new. Others among us stick with whatever’s available and practical, until it eventually needs to be replaced?
Our habits manifest themselves in different ways. Let’s talk shoes; do you keep track of the next release of Air Jordans or Pradas, so you can be among the first to grab a brand-new pair? Or have you been wearing the same pair of shoes for a year already, simply waiting until they crumble under your feet to shop for new ones?
Here’s another way to tell; what kind of car are you driving right now?
If you care to know this writer’s answers, I’ve had my current pair of go-to sneakers for over a year, and I intend on driving my trusty 2009 Toyota Tacoma until it simply can’t take it anymore. Once I’m eventually forced to hunt for a replacement, reliability will be my #1 criterion in finding another car. For the money and effort that car shopping requires, I expect a long-term relationship out of it!
As stubbornly frugal as I am in many ways, I do have an appreciation for those who have the energy and enthusiasm for exploring new automotive trends, and their willingness to make big changes spontaneously. The numbers available to us definitely support the notion that people can, and do, switch vehicles relatively often. As research from Lang Marketing illustrates, back in 2010, a new car buyer held onto his or her vehicle for, on average, only five years before looking to replace it with another.
It made sense when new car financing terms are considered; many buyers secure a financing plan for their new cars that span three to five years. Once the old one is paid for, many people might just see that as time to sell the current car and upgrade to something new.
Warranty plans are another factor to consider. Some manufacturers have offered warranties that last as little as one year, some as long as ten. Yet, think of the middle range; five years from date of purchase, or 60,000 miles, whichever comes first. Was it simply the case back then that many new car buyers (including those able to pay for their cars in cash up-front) were simply keeping their cars until the warranty ran out, after which they’d just replace it with another to enjoy warranted repairs?
In any event, times change, and so do circumstances.
As Lang’s research further demonstrates, in 2019, the average new car buyer would keep a newly-purchased vehicle for eight years, more than a 60% increase from 2010. One particular reason for such a significant increase may be the rise in long-term financing plans over the past decade. Experian estimates that seven-year car loans have more than tripled in their prevalence over the past decade, currently making up more than 30% of all new car loans issued. While drivers enjoy newer cars with more bells and whistles included, they’re drawn in by the appeal of low monthly payments over a longer financing period. These extended terms often increase the total expense over time that drivers pay for their cars, given the increase in paid interest that such long financing periods often tack on. As such, new car owners may delay the decision to shop for a new car even further until after they have recovered from that extended period of payments and interest.
The details of car ownership will always be dictated by economic conditions, both in the United States and in the world at large. Currently, in the midst of the 2020 COVID-19 pandemic, new car dealerships have experienced an approximately 35% decrease in sales, as consumers reckon with record unemployment and lessened need and opportunity for travel amid quarantine protocol.
Lang’s research predicts that car dealerships will seek to make up for that loss by aggressively marketing towards owners of older vehicles of various makes and models to bring their cars into their facilities for service and maintenance, potentially drawing business away from independent repair shops.
Are non-dealer repair shops in a position to put up a fight against manufacturers and dealerships, as they make a fierce push to drive the public into its maintenance bays? We don’t think so, we know so.
Our ShopCure platform serves as a one-to-one referral source for your automotive repair shop. After joining, you can soon except new customers matched directly to your shop, because yours is best for their cars’ needs. Once that customer delivers his or her car over to you, the ShopCure app allows the communication of your diagnosis and estimate, customer approval, and payment to all happen remotely and quickly, giving you and your techs the freedom to swiftly handle an influx of new business, all in a manner that’s helpful in adapting to changing public health realities.
With the resulting decrease in time spent negotiating and haggling with fickle customers, you can both focus your attention on the repairs at hand, and keep cars cycling through your bays more quickly, with the increased efficiency that ShopCure provides.
While the dealerships are out there worrying about bringing in the customers, let ShopCure help you stay focused on the repairs!
The Lang Aftermarket iReport
June 3, 2020. Email.
National Public Radio
All Things Considered: “The 7-Year Car Loan: Watch Your Wallet”
October 31, 2019. Web.