FRIKINtech 84% of buyers don't buy the same model

[Alex Snyder]

We dove into sold data from today to 2014 for hundreds of dealerships, wondering, "why do equity mining tools like Auto Alert and Mastermind only focus on the same model the customer is driving now?"

And we discovered that 84% of people do not trade the same model car for the same one they're buying. That leaves 16% who do. And it somewhat proves my wise old Used Car Manager from the 90s was right when he said, "80% of people don't buy the same car they set out to buy."

Can we say Auto Alert and Mastermind are 80% wrong? #shotsfired

 

[Alex Snyder]

How is FRIKINtech right? It is sooooo FRIKIN simple.

We focus on digital delivery first (text and email) with mail as a backup to transition the customer into a dynamic experience they can interact with. In a dynamic experience, the first things the customer can do are:

• Say they no longer own the car
• Change the trade entirely
• Change the trade payoff
• Change the miles
• Even say how much they want for their trade

Then they see their equity applied to every car a dealer has to sell. Used cars too!

If you start with mail, there are only two outcomes: engage with the mailer through a different medium (Autotrader, for example) or throw it in the trash because you're not in the market or angered by how inaccurate the data is.

 

[Ryan Everson]

The thought process of a customer upgrading to a newer version of the same model will only become more flawed in the coming years.

Customers weren't buying cars based on what they wanted but instead were buying the cars they could actually get their hands on (due to inventory shortages) and/or afford (due to inflation and over-MSRP pricing).

 

[Alex Snyder]

The thought process of a customer upgrading to a newer version of the same model will only become more flawed in the coming years.

Customers weren't buying cars based on what they wanted but instead were buying the cars they could actually get their hands on (due to inventory shortages) and/or afford (due to inflation and over-MSRP pricing).

Why we went back to 2014

 

[Ryan Everson]

Why we went back to 2014

What will the 84% increase to in 2024 and 2025 once more covid buyers start coming back into the market? Not to mention all of the new EV models coming out, which will only further drive the percentage up...

 

[Alex Snyder]

What will the 84% increase to in 2024 and 2025 once more covid buyers start coming back into the market? Not to mention all of the new EV models coming out, which will only further drive the percentage up...

Yup - you are correct.

The average age of cars on the road was 12.3 years as of Q3 of 2022. It is the oldest cars have ever been in American history, and I suspect it will take a while before that changes. People will have to do something as it gets too expensive to maintain these vehicles. Ryan - I also suspect you're going to proven right.

More reason to ensure you're not sticking your customers into an unappealing path.

 

[joe.pistell]

The average age of cars on the road was 12.3 years as of Q3 of 2022. It is the oldest cars have ever been in American history

Cars made today last significantly longer than cars made 12 years ago, and that cars made 12 years ago were built significantly better than cars made 12 years before that model year.


The average length of ownership for both new and used cars is longer than the average length of a car loan, indicating that Americans are increasingly holding onto their cars beyond the length of their loans.

1. The average length of ownership for:
   1. new car was 8.4 years in 2021, up from 6.5 years in 2006. (source: IHS Markit)
   2. used car was 66.5 months in 2020, up from 63.7 months in 2015. (source: Edmunds)
2. A record high of 26.8% of new car buyers traded in a car that was 10 years or older in 2021. (source: Cox Automotive)

Length of Loans:

• 10 years ago (Q2 2012):**
  • Average length of a new car loan: 64 months
  • Average length of a used car loan: 59 months
• 20 years ago (Q2 2002):***
  • Average length of a new car loan: 60 months
  • Average length of a used car loan: 54 months
• Current (Q2 2021):*
  • Average length of a new car loan: 69.4 months
  • Average length of a used car loan: 64.8 months

*https://www.experian.com/content/da...-of-the-automotive-finance-market-q2-2021.pdf
**https://www.experian.com/content/da...-of-the-automotive-finance-market-q2-2012.pdf
***Finance Rate on Consumer Installment Loans at Commercial Banks, New Autos 48 Month Loan

p.s. this is a ChatGPT rabbit hole post (took 1hr to compile this query)