With supply issues and the cost of living crisis, are refurbished cars the way ahead?

Some carmakers are seeing an opportunity in manufacturer refurbishment programmes. A consumer survey has found one in two car buyers would choose a factory-reconditioned used car over current approved used vehicles.

Some brands, such as Toyota, have already outlined long-term plans for ‘remanufactured’ cars. These are used cars that the manufacturer takes back at the end of a lease period to factory recondition. Certain components are replaced and elements upgraded, before reselling the cars.

Following trends

This process is already common in the consumer electrical product industry. Laptops and smartphones are a prime example.

Earlier this year Toyota GB managing director Agustin Martin this is already part of the business plan. He told Autocar that in order to extend its contact time with customers “at least to 10 years”, Toyota will take vehicles back to the factory after their first use cycle and refurbish them “to the best standard” to ensure the second user has as new a vehicle as possible.

This same process could also be deployed before the third use cycle, says Martin. He adds that after this, Toyota will focus its efforts on recycling the vehicles as efficiently as possible.

However carmakers might have to pile on extra perceived value if they expect their own refurbished cars to earn a premium over others already in the market at their franchised dealers.

A willing public

What Car? carried out a survey on the subject. It found that  44% “would be prepared to pay the same amount” for a refurbished model compared to an approved-used. Only 19% said they would pay more, yet this could improve depending on guarantees and servicing programmes.

One in three said they would be tempted to keep their current car for longer if they knew they could have it refurbished by the manufacturer.

The survey revealed that OEMs launching such a service would need to put considerable marketing might behind it. Just 17% of respondents stated they had heard about factory refurbished programmes.

Changing priorities

OEMs currently spend just a fraction of their annual marketing budget on their existing approved used car programmes. The priority remains fixed on finding buyers for new cars.

Refurbishing used cars for approved used programme is done by franchised dealer networks and re-marketing partners.

However, carmakers increasingly desire a closer relationship with drivers, whether first, second or third owners of the car. Brand allegiance and loyalty longevity is seen as key as environmental  preferences take a higher profile with consumers.

Steve Huntingford, Editor, What Car?, says: “Manufacturer refurbished programmes are a new concept in the industry, but something we’re likely to see a lot more in the coming years as sustainability and recycling become increasingly important agendas for buyers and brands.

“The concept offers a lot of benefits to buyers, as they’ll know they’ll be getting a factory-standard vehicle for less than the price of a new model, and our initial research shows there’s plenty of appetite for it in the industry.”