Vehicle purchase trends: Realistic marketing expectations.

In order to have realistic expectations for your automotive marketing efforts, it’s important to know what the market will bear as well as what your dealership’s capacity and capabilities are.

Some facts to keep in mind.

  • 45% of all vehicles sold in a typical month are sold by franchised dealers
  • 55% of all vehicles sold in a typical month are sold by private parties and Independent dealers.  The split here is somewhere in the neighborhood of 60/40 in favor of the Independents.
  • Each month, 1% to 1.4% of the population buys a vehicle. Average is 1.22%
  • The Franchised Dealer’s ‘buy rate’ for the population is between .5% and .65%. Average is .54%
  • In a population of 800,000, 9,600 vehicles will be purchased in a average month.  4,320 will be sold by Franchised Dealers.
  • In the same population area of 800,000, there will be 128,000 of those people who are somewhere in a buying cycle (1 week to 20 weeks or more).
  • Of those 128,000 people, 7.5% will ‘pull the trigger’ in any given average month.

What this means to a dealership regarding their direct marketing:

  • If a dealer in the market discussed above sells an average of 250 cars a month (new and used), they have a 5.79% of the market for Franchised Dealers.
  • Therefore, if a dealer markets to 80,000 people in their market:
    • That’s marketing to 10% of their market
    • Their ‘expected buy rate’ for the 80,000 marketed to should produce 25 sales in a one month period.  Since people buy on their own schedule, we can expand this out to 6 weeks of measurement and expect this marketing to produce 37.5 vehicles.
  • A strong marketing list using behavioral data or other such metrics should produce a higher number, a poor list should produce the ‘expected buy rate’ or less.

It’s really pretty simple.  Know what the realistic expectations are and measure accordingly.  Don’t fool yourself that event sales and other types of promotions will increase your overall market share over any reasonable time period.  People buy on their schedule when they are ready to buy.  Intelligent marketing is making sure that you catch those at the proper time and get your dealership into the mix…when it’s time to get into the mix!

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About dealerite

National affiliations of professionals who are engaged in changing the culture of the automobile retail business. Key focuses currently include Compliance, Behavioral Marketing and Phone Skills.
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