ATLANTA – Sloan and Tyler are sitting with the salesperson at the dealership contemplating whether to buy that 2012 Scion.
While Tyler is ready to agree to the terms, Sloan is worried about what’ll happen if the vehicle breaks down suddenly and she is stuck on the side of the highway. They both work and are making ends meet, but barely.
This is a big purchase and a big decision. With so many “what ifs,” Sloan needs reassurances of the vehicle’s safety and reliability as well as assurances that they can afford to maintain their current lifestyle in the case of unexpected mechanical breakdown.
The salesperson tells the couple about the certification on the vehicle and the details of the warranty that is included, and that it has been through a rigorous inspection and has passed on all points. Sloan agrees and the couple happily drive off in their new purchase. Sloan and Tyler are typical of today’s auto buyer.
By now, most dealerships know the “whats” about certified pre-owned (CPO) programs. Today, we’ll talk about the psychology behind why consumers consider and buy CPO vehicles.
Understanding the psychology behind consumer decision-making allows you to have the ability to predict and solve problems early and reliably. It allows you to create a strategy for your business that sets you apart from your competitors.
Before we get into the psychology of the CPO buyer, let’s take a quick look at the basics behind CPO and the attached warranty.
If a company is selling an extended warranty on a vehicle for $500, then that means the company is betting that over an extended period of time and considering the law of big numbers (thousands of consumers), that it will pay out less than $500 per repair expense. There may be some repair bills that cost more than $500, or even several thousand dollars, but on average, the repair bills will be less than $500 per car.
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