When it comes to vehicle values and automotive expenses, there’s a lot Canadians don’t know. That’s where dealers can step in.
Never assume your customer knows everything about their vehicle.
In fact, despite available online resources, it appears Canadians feel ill-informed about the value of their vehicle when they go to trade it in at a dealership.
In a recent poll, vehicle value provider Canadian Black Book found almost one in five — 17 per cent — of the more than 1,000 Canadians surveyed said they didn’t know what their current car was worth, even though most said getting the maximum trade-in was extremely important when buying a vehicle.
For 82 per cent of Canadians, trade-in info was not readily available and was kept proprietary to dealers. That sentiment was higher among drivers aged 35-54 and those from British Columbia.
Consequently, about a third of older car buyers don’t think dealers have their backs, and therefore, are unlikely to trust their offer for a trade, according to the study.
Brian Murphy, Vice-President of Research and Editorial for Canadian Black Book
Brian Murphy, Vice-President of Research and Editorial for Canadian Black Book isn’t surprised.
“You have an expectation when you go into the dealership. If you don’t do research, you might come in with an expectation that your car is worth more and that sets up an awkward conversation [with the dealer],” said Murphy in an interview with Canadian auto dealer.
“That’s one of the last cards that I think consumers perceive that dealers are holding close to their chests,” Murphy added.
“The poll findings point to a perceived information gap, magnified by a decision-making process where most buyers seem to be making the wrong assumptions on the types of expenses that most impact the cost of owning a vehicle.”
SURPRISING STATISTICS
The Ipsos Reid poll dubbed “Drivers of Automotive Values” was commissioned by Canadian Black Book in January 2016.
Canadians across regions and demographics were asked to answer questions about their intent to purchase, sell or trade-in their vehicles over the next 18 months, their knowledge of vehicle values and their thoughts on top automotive expenses.
Brad Rome, President of Canadian Black Book
In an interview with Canadian auto dealer, Brad Rome, President of Canadian Black Book, said the idea behind the poll was to help consumers make informed purchase decisions and determine some of the biggest pain points in the sales process.
“As Canadian Black Book, we want Canadians to make a smart and informed purchase decision,” said Rome.
One of the biggest information gaps — and the one Murphy and his team said they found most surprising— is what Canadians think is the highest cost of ownership.
While depreciation is the single greatest cost, 90 per cent of Canadians — and zero per cent of millennials — failed to identify this, with most citing gas/fuel and insurance instead.
Murphy said depreciation even ranked less important than the fee to renew a licence plate sticker.
“People don’t think about it until they go and buy their next car,” said Murphy, adding that shows the need for more consumer education.
BUILDING TRUST WITH BUYERS
Rome and Murphy said it’s in a dealer’s interest to help educate customers about the value of their trade-in, as many deals go sour when consumers overestimate what they think their vehicle is worth.
“Dealers want to make sure they make the buying process as easy and as pain-free as possible. There’s a lot of information there that dealers can pay attention to to help consumers feel that much more comfortable when they are at the dealership level making that decision,” said Rome.
“If they come in there educated, it helps the dealer too and it helps the process from a sales perspective.”
Because Rome said buyers are so far down the purchase funnel when they arrive at a dealership, he acknowledges that there’s really not a lot of opportunity for dealers to educate them like they once could. “To try and back a consumer up at that point, it’s not the easiest thing to do,” said Rome.
But there are tools available, like the free online value calculators available on Canadian Black Book.com, that both dealers and consumers can use, said Rome.
Online value calculators are the go-to source for six in 10 Canadians to maximize dealer trade-in value, yet the poll shows many Canadians are either not aware of the tools or are not taking advantage of them.
To help educate consumers about their trade-in, dealers could even pull up the calculator on their screens and walk consumers through the evaluation, said Rome.
“That way it’s the third party — Canadian Black Book — breaking the news, good or bad, to the consumer and they’re not seen as the bad guy. It helps with the whole negotiation process,” said Rome.
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