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Used Cars and Light Trucks - US - June 2011

The deep recession experienced in the U.S. from late 2007 to 2009 had a profound impact on the automotive industry, causing a multibillion-dollar government bailout of the automotive industry that included a massive restructuring. Used car and truck sales did not decline as precipitously, due to much lower price points than new cars that made used cars a low-cost alternative for consumers trading down from new cars. However, the recession also caused jittery and budget-constrained consumers to forgo major purchases of all types and drive their currently owned cars for longer.

This report explores the market in the US for used automobiles, including both cars and light trucks. It includes discussion of both person-to-person and dealer/retail sales. Extended warranties, car rentals, car repairs, and automotive accessories are not included in market sale estimates, nor are new car sales and leases (although these may be discussed as competitors).

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Used cars begin to rebound from a recessionary decline
                        • Reinvigorated new car sector increases the pressure
                          • Prices on the rise for used cars
                            • Market favors smaller cars
                              • High level of fragmentation in used car sales
                                • Sales start online, end on the lot
                                  • Half of households purchased a used car in past three years
                                    • Post-sale customer relationship management crucial to future sales
                                      • Mid-size sweet spot in market, but families seek SUVs/minivans
                                        • Average spend varies depending on source of data
                                          • Place of purchase determined by demographic features
                                            • Research process driven by spend on vehicle
                                              • Decision process complicated by importance of numerous factors
                                                • Trends across other demos replicated among blacks
                                                • Insights and Opportunities

                                                    • From rent to sell, at record speed
                                                      • Putting “mobile” into automobile sales
                                                      • Inspire Insights

                                                          • Trend—“Boomerang Generation”
                                                          • Market Size and Forecast

                                                            • Key points
                                                              • Returning to growth after a steep decline
                                                                • High prices make used cars less competitive
                                                                  • Figure 1: Total U.S. sales and forecast for used cars and trucks, at current prices, 2005-15
                                                                  • Figure 2: Total U.S. sales and forecast for used cars and trucks, at inflation-adjusted prices, 2005-15
                                                                  • Figure 3: Total U.S. unit sales for used cars and trucks, 2005-10
                                                              • Market Drivers

                                                                • Key points
                                                                  • A difficult economy drives new interest—and scarcity—for used cars
                                                                    • Figure 4: U.S. new and used vehicle unit sales, 2005-10
                                                                  • Additional factors drive increased prices
                                                                    • Figure 5: Manheim used car price index, 2005-11
                                                                  • High fuel prices limit appeal of some used cars
                                                                    • Figure 6: Average U.S. gas prices, 2005-11
                                                                  • Financing issues can increase sales hurdles
                                                                  • Competitive Context

                                                                    • Key points
                                                                      • Mind the (pricing) gap
                                                                        • Factors in the choice between used and new
                                                                          • Figure 7: Number of new and used vehicles sold, 2005-10
                                                                      • Segment Performance

                                                                        • Key points
                                                                          • Fuel costs, poor economy drive changes in consumer tastes
                                                                            • Fuel-efficient cars will continue to dominate
                                                                              • Figure 8: Used car and truck unit sales by segment, 2007-09
                                                                          • Retail Channels

                                                                            • Key points
                                                                              • Overview
                                                                                • The web emerges as a critical channel
                                                                                  • The dealership closes the deal
                                                                                  • Leading Used Car Retailers

                                                                                    • Key points
                                                                                      • Overview
                                                                                        • AutoNation
                                                                                          • AutoTrader.com
                                                                                            • CarMax
                                                                                              • eBay
                                                                                              • Leading Information Service Companies

                                                                                                • Key points
                                                                                                  • Overview
                                                                                                    • Pricing guides
                                                                                                      • Print publications
                                                                                                        • Online-only informational sites
                                                                                                          • Vehicle condition report services
                                                                                                          • Innovation and Innovators

                                                                                                            • Key points
                                                                                                              • CarMax
                                                                                                                • CarWoo
                                                                                                                • Marketing Strategies

                                                                                                                  • Key points
                                                                                                                    • Overview
                                                                                                                      • Figure 9: Advertising spend by used car dealerships and related brands, 2008-09
                                                                                                                    • Promotions help drive interest
                                                                                                                      • Print advertising stays part of the mix
                                                                                                                        • TV advertising
                                                                                                                          • BMW promotes CPOs as good as new
                                                                                                                            • Figure 10: BMW CPO ad, 2011
                                                                                                                          • CARFAX aims to be ubiquitous
                                                                                                                            • Figure 11: CARFAX ad, 2011
                                                                                                                          • CarMax emphasizes choice and service
                                                                                                                            • Figure 12: CarMax ad, 2011
                                                                                                                          • Toyota covers the basics
                                                                                                                            • Figure 13: Toyota CPO ad, 2011
                                                                                                                        • Purchase of a Used Car

                                                                                                                          • Key points
                                                                                                                            • More than half of households purchased used car in past three years
                                                                                                                              • Figure 14: Purchase of used vehicle in past three years, March 2011
                                                                                                                            • Households with 18-34s prime buyers of used cars
                                                                                                                              • Figure 15: Purchased used vehicle in the past three years, by age, March 2011
                                                                                                                              • Figure 16: Purchased used vehicle in the past three years, by household income, March 2011
                                                                                                                            • Plans to purchase used on the rise
                                                                                                                              • Figure 17: Next vehicle purchase, new vs. used, 2006-10
                                                                                                                              • Figure 18: Most recent vehicle purchase, used vs. new, 2006-10
                                                                                                                          • Type of Car Replaced

                                                                                                                            • Key points
                                                                                                                              • Repeat sales critical with most buyers repeatedly purchasing used
                                                                                                                                • Figure 19: Type of car replaced with used car, by age, March 2011
                                                                                                                              • Upper-income households more likely to be replacing a new car
                                                                                                                                • Figure 20: Type of car replaced with used car, by household income, March 2011
                                                                                                                              • Married households more likely to be replacing new vehicle
                                                                                                                                • Figure 21: Type of car replaced with used car, by marital status, March 2011
                                                                                                                            • Type of Car Purchased

                                                                                                                              • Key points
                                                                                                                                • Mid-size sedans most popular
                                                                                                                                  • Figure 22: Type of used car purchased, March 2011
                                                                                                                                • 18-24s seek small cars, 25-44s want SUVs
                                                                                                                                  • Figure 23: Type of used car purchased, by age, March 2011
                                                                                                                                • Income drives type of car purchased
                                                                                                                                  • Figure 24: Type of used car purchased, by household income, March 2011
                                                                                                                                • Households with 2+ children key buyers of used SUVs and minivans
                                                                                                                                  • Figure 25: Type of used car purchased, by children in hh, March 2011
                                                                                                                              • Used Car Spend

                                                                                                                                • Key points
                                                                                                                                  • Income is core driver of spend
                                                                                                                                    • Figure 26: Spend on most recently purchased used car, by age, gender, and income, March 2011
                                                                                                                                    • Figure 27: Spend on most recently purchased used car, by marital status, presence of children, and size of household, March 2011
                                                                                                                                • Place of Purchase

                                                                                                                                  • Key points
                                                                                                                                    • Company dealerships leading retail channel
                                                                                                                                      • Figure 28: Place of purchase, by age, March 2011
                                                                                                                                    • Lower-income households turn to smaller dealers and private sellers
                                                                                                                                      • Figure 29: Place of purchase, by household income, March 2011
                                                                                                                                    • Married households more likely to turn to exclusive brand dealerships
                                                                                                                                      • Figure 30: Place of purchase, by marital status, March 2011
                                                                                                                                  • Research Prior to Purchase

                                                                                                                                    • Key points
                                                                                                                                      • Three-quarters undertake research
                                                                                                                                        • Figure 31: Research prior to purchase, by age, March 2011
                                                                                                                                      • Upper-income households undertake the most research
                                                                                                                                        • Figure 32: Research prior to purchase, by household income, March 2011
                                                                                                                                      • Those with 2+ children undertake more research
                                                                                                                                        • Figure 33: Research prior to purchase, by children in hh, March 2011
                                                                                                                                      • Married households undertake more research
                                                                                                                                        • Figure 34: Research prior to purchase, by marital status, March 2011
                                                                                                                                    • The Decision Process

                                                                                                                                      • Key points
                                                                                                                                        • Features
                                                                                                                                          • Fuel economy and roominess top factors taken into consideration
                                                                                                                                            • Figure 35: Role of features, by household income, March 2011
                                                                                                                                          • Those ages 25-34 seek most qualities in their used car
                                                                                                                                            • Figure 36: Role of features, by age, March 2011
                                                                                                                                            • Figure 37: Role of features, by presence of children in hh, March 2011
                                                                                                                                          • Wear and tear
                                                                                                                                            • Body condition and mileage are key measures of wear and tear
                                                                                                                                              • Figure 38: Role of wear and tear, by household income, March 2011
                                                                                                                                            • Price, financing, and warranties
                                                                                                                                              • Women place higher value on warranties and certification programs
                                                                                                                                                • Figure 39: Financial factors, by gender, March 2011
                                                                                                                                              • Those ages 18-34 seek financing; 25-34s value warranties, certification
                                                                                                                                                • Figure 40: Financial factors, by age, March 2011
                                                                                                                                              • Households with 2+ children seek warranties, CPOs, special financing
                                                                                                                                                • Figure 41: Financial factors, by presence of children in the household, March 2011
                                                                                                                                            • Cluster Analysis

                                                                                                                                                • I Need a Car!
                                                                                                                                                  • Characteristics
                                                                                                                                                    • Demographics
                                                                                                                                                      • Opportunities
                                                                                                                                                        • Quick Deciders
                                                                                                                                                          • Characteristics
                                                                                                                                                            • Demographics
                                                                                                                                                              • Opportunities
                                                                                                                                                                • Bang for Bucks
                                                                                                                                                                  • Characteristics
                                                                                                                                                                    • Demographics
                                                                                                                                                                      • Opportunities
                                                                                                                                                                        • Characteristic tables
                                                                                                                                                                          • Figure 42: Used car clusters, March 2011
                                                                                                                                                                          • Figure 43: Participation in used vehicle purchase, by used car clusters, March 2011
                                                                                                                                                                          • Figure 44: Spend on most recent purchase of a used car, by used car clusters, March 2011
                                                                                                                                                                          • Figure 45: Research accomplished, by used car clusters, March 2011
                                                                                                                                                                          • Figure 46: Features impacting purchase decision, by used car clusters, March 2011
                                                                                                                                                                          • Figure 47: Type of vehicle purchased, by used car clusters, March 2011
                                                                                                                                                                          • Figure 48: Place of purchase, by used car clusters, Month 2009
                                                                                                                                                                        • Demographic tables
                                                                                                                                                                          • Figure 49: Used car clusters, by gender, March 2011
                                                                                                                                                                          • Figure 50: Used car clusters, by age, March 2011
                                                                                                                                                                          • Figure 51: Used car clusters, by household income, March 2011
                                                                                                                                                                          • Figure 52: Used car clusters, by race, March 2011
                                                                                                                                                                          • Figure 53: Used car clusters, by Hispanic origin, March 2011
                                                                                                                                                                          • Figure 54: Used car clusters, by marital status, March 2011
                                                                                                                                                                          • Figure 55: Used car clusters, by children under 18 in household, March 2011
                                                                                                                                                                          • Figure 56: Used car clusters, by household size, March 2011
                                                                                                                                                                        • Cluster methodology
                                                                                                                                                                        • Race/Hispanic Origin

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Blacks most likely to be replacing a used vehicle
                                                                                                                                                                              • Figure 57: Type of car replaced with used car, by race/Hispanic origin, March 2011
                                                                                                                                                                            • Mid-size sedan preferred by minority groups
                                                                                                                                                                              • Figure 58: Size of used car purchased, by race/Hispanic origin, March 2011
                                                                                                                                                                            • White households show highest spend
                                                                                                                                                                              • Figure 59: Type of car replaced with used car, by race/Hispanic origin, March 2011
                                                                                                                                                                            • Black households least likely to research, “other” race the most
                                                                                                                                                                              • Figure 60: Research prior to purchase, by race/Hispanic origin, March 2011
                                                                                                                                                                            • Whites to exclusive brand dealerships, blacks to regional and local ones
                                                                                                                                                                              • Figure 61: Where purchased used car, by race/Hispanic origin, March 2011
                                                                                                                                                                            • Minority groups place importance on greater range of vehicle qualities
                                                                                                                                                                              • Figure 62: Factors of importance related to intrinsic properties of car, by race/Hispanic origin, March 2011
                                                                                                                                                                            • Minority groups value warranties and seek financing
                                                                                                                                                                              • Figure 63: Factors considered important when purchasing used car, by race/Hispanic origin, March 2011
                                                                                                                                                                          • Custom Consumer Groups: Moms

                                                                                                                                                                            • Moms love SUVs
                                                                                                                                                                              • Figure 64: Size of used car purchased, by children in hh, March 2011
                                                                                                                                                                            • Moms turn to dealers where they can browse varied brands
                                                                                                                                                                              • Figure 65: Where moms purchased used car, March 2011
                                                                                                                                                                            • Moms check out Kelley Blue Book and CARFAX/AutoCheck
                                                                                                                                                                              • Figure 66: Research prior to purchase by moms, March 2011
                                                                                                                                                                            • Moms value roominess, storage capacity, and electronic amenities
                                                                                                                                                                              • Figure 67: Factors of importance when purchasing used car, by gender, March 2011
                                                                                                                                                                          • Appendix—Other Useful Consumer Tables

                                                                                                                                                                              • Figure 68: Factors of importance when purchasing used car, by household income, March 2011
                                                                                                                                                                              • Figure 69: Purchased used vehicle in the past three years, by race/Hispanic origin, March 2011
                                                                                                                                                                              • Figure 70: Size of used car purchased, by gender, March 2011
                                                                                                                                                                          • Appendix—Trade Associations

                                                                                                                                                                            Companies Covered

                                                                                                                                                                            • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                                            • Automotive Aftermarket Industry Association
                                                                                                                                                                            • Automotive Industry Action Group (AIAG)
                                                                                                                                                                            • Automotive Trade Association Executives (ATAE)
                                                                                                                                                                            • Avis Budget Group, Inc.
                                                                                                                                                                            • BMW of North America, LLC
                                                                                                                                                                            • CarMax, Inc.
                                                                                                                                                                            • Chrysler LLC
                                                                                                                                                                            • Craigslist
                                                                                                                                                                            • Ford Motor Company (USA)
                                                                                                                                                                            • General Motors Corporation
                                                                                                                                                                            • Honda Motor Co., Ltd
                                                                                                                                                                            • Hyundai Motor America
                                                                                                                                                                            • J.D. Power and Associates
                                                                                                                                                                            • Jaguar Cars North America
                                                                                                                                                                            • Mazda North American Operations
                                                                                                                                                                            • Mercedes-Benz USA
                                                                                                                                                                            • Mitsubishi Motors North America, Inc.
                                                                                                                                                                            • National Association for Stock Car Auto Racing (NASCAR)
                                                                                                                                                                            • National Automobile Dealers Association (NADA)
                                                                                                                                                                            • National Independent Automobile Dealership Association (NIADA)
                                                                                                                                                                            • Nissan North America, Inc.
                                                                                                                                                                            • Porsche Cars North America, Inc.
                                                                                                                                                                            • The Hertz Corporation
                                                                                                                                                                            • Toyota Motor Corporation USA
                                                                                                                                                                            • Volkswagen of America, Inc.

                                                                                                                                                                            Used Cars and Light Trucks - US - June 2011

                                                                                                                                                                            £3,199.84 (Excl.Tax)