In recent times, incentives to buy a new car has dwindled considerably, this has given way for the used car market as more people from all income brackets are now looking in that direction. When targeting the subprime market, there is need to have an insight into the mindset of these set of people with credit issues and do not have money for a down payment so as to get a new car. By conducting a proper research, targeted promotion, pricing, and consumer education you can market to the subprime market effectively for your business.
You can research the demographics of people living in your area by targeting the zip codes of those within a 20 mile radius of your auto dealership. For instance, if the average age of the people in your area is between 20 and 40 and they make less than $35,000 per year, they may be unable to afford to buy a new car as they can’t meet up with high down payment. These set of people in this demography are more likely to be subprime customers. The demographics of people living in your area can easily be obtained by using the Census Bureau’s free research or by doing a personal tour of the area to understand your market.
There are some financial barriers that are usually encountered by subprime customers, some of which are down payment, cosigner, and more. You can encourage subprime customers to your used car dealership by reducing down payment, not requiring a cosigner or offering incentives such as gift, cards to a local restaurant, gas cards, and special holiday experiences. This may not be feasible if your business is not stable but you can also visit other dealerships to know what your competitions are offering. When you do your break-even analysis, you will be able to know how much must be made from each car sale to make a profit. The price you should settle with will be one that is a balance between understanding what you need from each sale and knowing your competition to operate successfully.
A lot of consumers in the subprime market category do not usually purchase a vehicle in part because they are not aware of their options. This is according to a 2002 report by the Progressive Policy Institute. Your marketing should be centered around letting consumers know that having an income is more important than having credit and that there are some lenders still willing to lend to people with bad credit. You can help them to understand it is possible for them to have a new beginning and build their credit with their car purchase.
There are ways you can target where consumers are more likely to find your used cars and news of your financing options. You can advertise deals on sites such as eBay, Amazon. Craigslist, and Oodle. Also, you can interact with social media sites such as Twitter and Facebook to find those who are talking about buying used cars in your area.