CARFAX Canada Driving Insights

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Why did that customer turn down your trade-in offer?

by Drew Harden, Fri, Mar 15, 2019

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If you want to win more trades, you need to know exactly what makes a buyer reject or accept a deal. Today’s used car buyers are hard to impress; 45% of them that go through the trade-in process will turn down one or more offers. So why did your last offer get turned down, and how can you turn it around on the next deal?

Driving Insights - Why Did That Customer Turn Down Your Offer - Video

 

What drives a buyer to reject your offer?

The top reasons to turn down a trade shouldn’t be a big surprise, but stay with us, there’s a lot more to the story. Among used car buyers, 50% of trades are rejected because the offer was lower than they expected, followed by 23% of used car buyers receiving a better offer elsewhere, and 18% believing the offer was not well thought out or justified.

 
 

Then why do they accept?

Where the story does get surprising is when we asked the opposite - what made a customer accept a trade in offer? It turns out that, while a low trade-in value can lead to rejection, just simply offering a higher price isn’t the path to winning the trade. For used car customers who accepted a trade, 52% said they did so because the dealer had the vehicle they wanted to buy. After that, 34% said the offer matched how much they expected, and finally, 25% said they trusted the information the sales person gave to them.
Graphic 3An offer that is below expectations can kill a trade, but winning a trade is more about the customer getting the used vehicle they want and feeling as though the price and trade process were acceptable.

 
 

How can this help you?

Winning a trade, and likely the sale that goes with it, isn’t about pumping up a trade-in value so the customer thinks you’re giving them a fortune. The first step towards winning the trade is ensuring the customer has their heart set on the vehicle you’re selling. In the used market, if the customer understands the reasons why your vehicle is unique, and they won’t find a better one anywhere else, you’re already half-way to winning the trade.

“The first step towards winning a trade is ensuring the customer has their heart set on the vehicle you’re selling.”

With the customer sold on their next car, you then need to create a trade-in process that manages their price expectations in a trustworthy manner. We already know how to do this because we know how used car buyers prepare for the trade in process. This effect is so strong that 43% of used car buyers will accept a trade in value that is lower than expected because they fell in love with the car. Winning trades in the used car business is about helping buyers arrive at an agreeable trade-in number so they can forget their old car and get into their next one.

Explore how our research can be applied at your dealership to help you win more business - request a consultation with a CARFAX Canada Rep:

Driving Insights
Driving Insights is an information series designed to help used car dealers better understand the motives and behaviours of Canadian used car buyers. The research, designed by CARFAX Canada and executed by Dynata, is based on the most pressing questions of dealership management and staff across Canada, answered through a national survey of 1,000 Canadians who recently bought a used car from a dealership. If there’s a question you’d like us to address, email insights@carfax.ca and we’ll get you some answers!

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