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Vehicle History Reports Becoming Essential for Used Car Buyers

More Consumers Looking at Used Hybrids

May 14, 2006

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As last year's hurricanes cause concern about flood-damaged vehicles potentially appearing on the market, vehicle history reports are becoming an increasingly important tool among used-vehicle buyers, according to the J.D. Power and Associates 2006 Used Vehicle Sales and Certification (UVSC) Study.

The study, now in its fifth year, finds that 34 percent of used-vehicle buyers report getting a vehicle history report (VHR) before buying their vehicle -- up from 30 percent in 2005.

Additionally, 57 percent of respondents say they would refuse to purchase a used vehicle without a history -- up from 53 percent in 2005.

"Vehicle history reports are an inexpensive way to ease the concerns of consumers about potentially buying a vehicle that may have been heavily damaged in a hurricane or other natural disaster," said Jane Crane, director of automotive retail research at J.D. Power and Associates.

"Approximately 30 percent of manufacturer franchise dealers are opting to provide vehicle history reports to potential buyers at no charge. This gesture of goodwill can go far in earning the buyer's trust by showing that the dealer has nothing to hide," Crane added.

Another way consumers often alleviate the fears associated with buying a used vehicle is by purchasing a manufacturer-sponsored certified pre-owned (CPO) vehicle. Consumers typically pay an average premium of $1,680 for CPO vehicles, which have passed through extensive inspections and often include extended warranties.

However, the study finds that certified used-vehicle buyers are less satisfied compared to 2005 with the price paid for the vehicle.

"In light of the large incentives many manufacturers were offering buyers of new vehicles in 2005, it may have been harder to convince used-vehicle buyers that this premium was worth it," said Crane.

"Dealerships have to work hard to communicate the value of certification to their customers and have strong policies in place to follow through on CPO warranties. This can go far in keeping customers satisfied, which increases the likelihood of the customer recommending the dealer to others and returning to the dealership for future vehicle service," noted Crane.

Used Hybrids

With fuel prices continuing to rise and sales of new hybrid-electric vehicles increasing every year, many consumers are turning their attention to used hybrid vehicles. The study finds that 44 percent of late-model used-vehicle buyers are willing to consider a used hybrid-electric vehicle rather than a traditional gasoline-powered vehicle, even at an additional cost.

Major concerns that used-vehicle buyers have with considering used hybrid-electric vehicles are the estimated higher maintenance costs, reliability, and the life span of the vehicle's battery pack.

"Previously owned hybrids are perfect candidates for certification programs, where in-depth inspections and longer warranties help alleviate the concerns of buyers about purchasing used hybrids," said Crane.

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