This Week in Car Buying: Loyalty points are the next big thing; CPO sales surging; GenZ driving used vehicle sales; Mercedes pops-up again
The trend of concierge services ranging from Lincoln’s Black Label to Infiniti’s Personal Assistant is a given among virtually all luxury makes, but what are the factories doing to help buyers of more mainstream vehicles? Rather than try to create mass market personalized services, an emerging trend will be programs that are somewhat akin to airline frequent flier programs.
The difference from those programs or any point-based credit card reward scheme is that these new efforts aimed at building owner loyalty are geared specifically towards the vehicle ownership experience. Earlier this year we reported on the My GM Rewards program which was launched last April to give points to members for buying and servicing their vehicles at participating dealers. These points can be redeemed for additional parts, accessories and services. Enrollment in My GM Rewards has just passed the 1 million mark.
According to Julie Heisel, GM’s director of retail innovation, the My GM Rewards program, unlike some affinity credit cards that charge for the account, is free and you don’t have to own a GM vehicle. You can sign up at myGMRewards.com or through individual divisions, all of which have branded My Rewards programs and smart device apps.
Heisel said that you earn points through various activities ranging from buying or leasing a new vehicle, buying a CPO vehicle, and having your vehicle (no matter where it was purchased) serviced at a participating GM dealer. You can also earn additional points for subscribing to various services including OnStar and Connected Services. Buying or leasing a new car will earn 20,000 points, which works out to $100 that can be used towards parts, service or accessories. A CPO purchase is worth 5,000 points and you get 1,000 points for just enrolling. For every dollar you spend at a participating dealer or service provider you receive six points.
In addition to using points for parts, accessories and service, Heisel said that the program will also be expanded to include special events for members, such as receptions at auto shows and access to races and sporting events. By creating this community, GM is looking to the rewards program as another way to build loyalty beyond just the vehicle ownership experience.
Jeep is also experimenting with a similar loyalty program called Wave in which owners earn “coins” that can be redeemed for short term rentals of other FCA vehicles as well as being used for connected services and getting access to Jeep events and meets. Currently, Wave is being offered to buyers of Jeep Trailhawk and Trackhawk models.
CPO sales surging
Certified pre-owned (CPO) sales hit a new record level during 2018 reaching 2.7 million vehicles, according to Cox Automotive economists. The 2.1 percent gain makes it eight straight years for record CPO sales.
On that note, Kia announced it had retailed a record of 76,895 vehicles through its program last year, a gain of 2 percent that’s in line with industry performance. Bill Peffer, Kia’s vice president of sales operations said “2018 was a standout year for Kia with sales of Sportage and Forte climbing to new heights. Kia’s CPO program continues to give consumers an added piece of mind when purchasing pre-owned.”
GenZ driving used vehicle sales
Costlier new vehicles are driving GenZ buyers to the used vehicle market which is a key driver to the underlying strength in pre-owned sales, according to J.D. Power. Jonathan Banks, vice president of vehicle valuations and analytics for the firm said these younger buyers would rather opt for a larger, better equipped vehicle than a smaller new vehicle with less content.
According to J.D. Power data, this preference for used over new is one of the reasons why sales of new cars costing less than $20,000 dropped 19 percent last year. At the same time, vehicles costing more than $40,000 cars jumped 7.4 percent in volume, helping to drag average new vehicle transaction prices up to $32,500 in 2018, a boost of $800 year-over-year.
Driving home the point of the attractiveness of used vehicles to younger buyers, Banks said, is the fact that used vehicles are 51 percent cheaper on average than new ones and that the monthly payment of used vs. new works out to about 31 percent less.
And while traditional car sales have collapsed in the new market, they remain strong among used vehicles, taking a 34 percent share as opposed to about 27 percent among new vehicles. Banks also noted that used vehicle prices were up 2.9 percent last year. However, prices are expected to moderate as the number of vehicles hitting the pre-owned market is expected to rise in the year ahead in the wake of four record yeas of sales above 17 million units.
Mercedes pops up, again
In its ongoing effort to attract a younger audience with vehicles like its new entry level 2019 Mercedes-Benz A-Class, the German automaker is again opening pop-up brand centers in urban areas, this time at Phipps Plaza in Atlanta.
The display will be open through March 17. While you still have to go to a Mercedes dealership to purchase a vehicle, the brand center offers casual browsers a chance to see vehicles like the new A-Class up through the new Mercedes-AMG GT 63 S 4-Door Coupe in the flesh. Other activities include putting on a headset and taking a “4D” performance drive through downtown Atlanta listening to narration from actor Jon Hamm; shopping Mercedes merchandise and getting facts from product specialists. The pop-up store is adorned with a façade that mimics the new A-Class digital dashboard. Previous brand center stops included Miami, Chicago, Philadelphia and the Lenox Square Mall, also in Atlanta. Mercedes said that referrals from the temporary facilities have resulted in the sale of more than 600 vehicles.
One of the stars of the LA Auto Show last fall was the 2020 Lincoln Aviator. Ford’s luxury division has announced pricing of this new 3-row SUV due later this year.
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As truck popularity hits new highs, the timing is right for Kelley Blue Book’s 2019 Full-Size Pickup Truck Comparison Test. We pit the Ford F-150, Chevrolet Silverado and Ram 1500 against each other.
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