The economic recession has generated a “substitution effect” for car buyers, said Santa Monica, Calif.-based Edmunds.com.
Former new-car shoppers are now turning to used cars. Before the recession took hold in 2008, Edmunds.com reports that it was rare for site visitors to view more information on used cars than new cars – and when it did happen, the average difference was a little more than 7%. However, in August of 2008 used-car “page views” outpaced new-car “page views” by 40% and have outpaced them since by an average of 36%.
Even former luxury car buyers are now turning to non-luxury cars. From 2006 to 2009, luxury brands represented 4.6% of the vehicles traded in for a Ford Taurus, for example.
“It’s obvious that many luxury buyers found the new model a suitable substitute for their premium vehicles at a much more recession-friendly price,” said Edmunds.com senior analyst Karl Brauer in a report.
Similarly, luxury brands represented 3.5% of the vehicles traded in for new Hyundai and Kia models in the 2006 model year. Today, those luxury brands represent 6.2% of trade-ins for 2011 model year Hyundai and Kia vehicles.
“Ford, Hyundai and Kia have made a concerted effort to upgrade their vehicles, and it’s working well for them as today’s car shoppers appreciate the opportunity to have a near-luxury experience at a lower price,” Brauer added. “People are now more open to considering a decent product at a bargain rather than buy the traditionally more expensive brand name. The midsize sedan segment now delivers an experience that is satisfying to a more spoiled audience. And, in many cases the new cars are being loaded with features to which the traditional luxury buyer has become accustomed, which means more profit for those automakers and dealers who sell them.”