AUTO MARKETING: USED-CAR BUYERS GENERALLY HAPPY WITH PURCHASE: SURVEY FINDINGS CHALLENGE M.O. OF SUPERSTORES; 70% OF HAGGLERS LIKE DOING SO; CONSUMER ATTITUDES: THE SUPERSTORE CONCEPT IS BASED ON THE BELIEF THAT THERE'S A BETTER WAY TO SHOP FOR USED VEHICLES. YET AN EXCLUSIVE SURVEY DONE FOR AUTOMOTIVE NEWS AND ADVERTISING AGE HINTS THAT RECENT BUYERS WERE PLEASED WITH THEIR EXPERIENCE AT THE DEALER.

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Consumers don't mind haggling over price for used cars. They don't think they are going to get stuck with a lemon of a car. And in general, their used-car buying experiences with traditional dealers have been good.

These findings, gleaned from a recent survey of 824 consumers who have bought a used car in the past year, contradict the raison d'etre of the emerging used-car retailers.

The survey, commissioned by Automotive News and Advertising Age and conducted by America's Research Group, polled randomly selected consumers who live in a market where there's a superstore: Dallas, Fort Lauderdale, Fla., Raleigh, N.C., or Atlanta.

FILLING MARKET VOID?

Superstores such as Circuit City's CarMax and Republic Industries' AutoNation USA have ignited a revolution in the used-car retailing industry. These stores offer a wide selection of products, service and warranty features and, in most cases, no haggling over price.

Although the great majority of the used-car buyers contacted for this survey made their purchases at traditional dealers, their opinions don't fully support the belief that these maverick retailers are filling a marketplace void.

Some 71.7% of respondents said the experience of buying this car was more pleasant than previous ones. When respondents were asked to cite what they liked least about this experience, the answer given most often, at 36%, was nothing at all.

Although the stereotype of used-car dealers holds that they won't service what they sell, survey respondents gave good marks to their dealers' service reputations. Some 43.9% of respondents said the reputation of the dealer's service department was a definite reason for buying from that dealer, and 47.2% said the warranty offered was a big plus. In addition, only 39.4% of respondents feared their dealers wouldn't service their used car, while 60.6% felt their dealers would support their vehicles.

EVOLUTION NEEDED

"The message from the superstores that the consumer doesn't have to haggle is not going to be successful on its own," says Britt Beemer, chairman of America's Research Group, which has conducted several auto surveys over the past decade. "The used-car superstore will have to go through some evolution before consumers buy it as a concept."

Indeed, survey results showed that only 11.8% of respondents visited a superstore. And 37.9% of respondents said the biggest weakness of superstores is that they were perceived as too impersonal.

Survey results concerning trust are important, says Scott Anderson, president of auto consultancy Scott Anderson Group, because the importance of purchasing a car is second only to buying a house.

"All other things being equal-service, selection and price-trust is a very important issue," says Mr. Anderson.

In fact, the survey found that only 23.5% of respondents felt their salespeople were dishonest, and that about one-third-34.3%-believed their salespeople were too pushy. Furthermore, an over-whelming majority of respond-ents-89.7%-believed their sales-person was truly interested in helping them.

And although the used-car retailer stereotype portrays these sales outlets as purveyors of clunkers, only 30.3% said their buying experience made them agree with the belief that used cars are of questionable quality.

Mr. Anderson says there's a gap between perception and reality in the used-car industry. However, he notes, "these survey results begin to show a positive shift toward closing that gap between perception and reality."

"This is not a surprise," says George E. Hoffer, a professor of economics at Virginia Com-monwealth University who studies the automotive industry. "All of this panic a year ago that the superstore would drive the independent dealer out of business was just panic."

CUT A DEAL

Overwhelmingly, respondents said that price counts and they are looking to cut a deal.

With new cars averaging $20,000, respondents cited lower price most often-62.3%-as the main reason they bought a used car instead of a new one. Also, 63.6% described lower price as being a major advantage that used cars had over new cars; another 30.5% said the lower price was of some advantage.

A no-haggle policy wasn't a big selling point. More than two-thirds of those who said they haggled over price-69.7%-said they enjoyed doing so.

"Most of research we've seen agrees that people think price is important," Mr. Anderson says. "What surprises me is how pleased people are with the transaction experience and people don't mind haggling."

Location also played a major role in buying habits. Some 43.2% of respondents looked at one dealer before purchasing, and 49.6% of shoppers made only one trip before deciding to buy. Since location is an important factor in buying a used car, superstores-which are counting on a bigger trading area than traditional used-car retailers-may not be able to dominate markets with only one or two showrooms, Mr. Beemer says.

"Bigger is not always better," Mr. Beemer says. "It's not enough to get people to drive past seven or eight other dealers to get to a superstore."

ROOM FOR IMPROVEMENT

Although the study showed that traditional used-car dealers still have a firm hold on their markets, there is room for improvement-especially in advertising.

Most buyers said that advertising wasn't a significant factor in influencing their buying decisions. Results show that only 26.3% of consumers even remembered any ads or commercials from the dealership where they purchased their used cars.

"Now more than ever there is a need for car dealerships to make themselves stand out," Mr. Anderson says. "Advertising agencies and advertisers of new cars need to take heed."

Instead, Mr. Beemer says store appearance is the dominant mar-keting tool for dealerships.

"Our research shows that how the dealership looks on the outside is 40% of the marketing [in consumers' minds]," Mr. Beemer says.

Industry consultants agree the survey results and their own observations mean that used-car superstore chains have some retooling to do before they will be able to sell their concepts to the general public.

"What this research shows is that if the superstores are going to maintain one location in each marketplace, the marketplace can support more than one [brand of] superstore," Mr. Beemer says. "The next question is which retailer is going to lock up the marketplace first."

CONSIDERATIONS

Although the results of this survey appear to repudiate the selling points of superstores, there are several factors that must be considered when interpreting these data.

For starters, although survey respondents live in areas where there's a superstore, few of them actually visited such an outlet. In addition, superstores have appeared only recently in select parts of the nation, such as the Sunbelt states. Furthermore, the emergence of these new competitors may have affected how used-car departments at franchised dealers and traditional independent used-car dealers do business.

Superstore representatives acknowledge they need to educate consumers about what their outlets represent. But these executives believe people will like what they see.

"It's like the first time people walked into a Wal-Mart. It can be a little intimidating," says Ryan DeVoe, VP-development at J.D.*Byrider Systems, about the new retail experience. "But superstores will find the comfort level of consumers."

BIG TEST COMING

The next three years-when superstores will continue to roll out dealerships in most major markets across the country-will prove who will win the drag race to consumer pocketbooks.

"The superstore may at sometime become a power player," Mr. Beemer says, "but at present time they are not yet there."

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