In yesterday’s car, a driver might have cassettes and CDs in cases littered throughout the vehicle, a state map folded eight times in the glove compartment and coupons to fast-food joints stashed away beneath the visor.

Today, all these amenities — music, navigation and coupons — can be accessed with a digital swipe of the finger on a smartphone, which of course, can often be seamlessly synced or integrated into a car.

Welcome to world of modern in-vehicle technology. Cars can practically park themselves, tell you the quickest route from Billings, Mont., to Beaufort, N.C., and entertain the kids with movies in the headrests.

While many of these perks are still relatively new, some have gained some traction on the used-car side of the market.

It may not yet be at the point where the majority of used-car consumers are coming in to the dealership knowing exactly what technologies they want in their next purchase, but Matt Higgins still sees the influx of in-vehicle technology as a strong selling tool — and a potential retail price premium — in the used market.

The general sales manager of Bettenhausen Automotive — a collection of Chicago-area Chrysler Group stores — was asked whether today’s used-vehicle shopper comes in the dealership knowing exactly what he wants, or whether it’s a matter of the shopper coming in and the dealer using technology as another selling point.

“I don’t think that we’ve seen a long enough cycle to accurately answer that, but I can tell you this: as the years go by, where it’s more common that these vehicles have more and more technology and more and more gadgets in them … a higher percentage of used-car consumers are coming in with specific options in mind,” he told Auto Remarketing.

“But I would still rate it as less than 50-50, where the lower percentage (of used-car shoppers) are coming in knowing exactly what they’re looking for, where the higher percentage are simply considering it an added benefit,” he continued. “Where it helps us as a dealer, is having the ability to have multiple units in our used-car inventory that have a natural equipment walk, if you will.

“Like, ‘Here’s one for X number of dollars, but you can have this one, which has these added-value technological advancements for X number of dollars more.’ And most, if not all, people will choose the higher vehicle when affordability is not the primary concern,” Higgins continued.

Apparently, many others in the used-car market are experiencing much of what Higgins has seen.

Auto Remarketing reached out to wholesale, technology and industry analysts to determine what in-vehicle technologies are hot in the used market, what their impact on pricing has been, as well as how these technologies have affected things on the wholesale side, and more.

What Used Shoppers Want

While the experts Auto Remarketing spoke with offered different takes on exactly what the most sought-after technology in the used market is, it appears that many used-car shoppers — though they may often be bargain-conscious — are looking for that additional technological amenity when they make a purchase.

“In-vehicle technologies — such as navigation, Bluetooth capabilities, satellite radio, etc. — have become more popular over the years and are now becoming the norm, especially with the younger, technologically savvy youth,” said RVI Group’s Wayne Westring. “Yes, used-car shoppers are more bargain-conscious, but manufacturers market technology on their new products much more than in the past, so it is forcing consumers to become more tech-conscious.”

Black Book managing editor Ricky Beggs has found that technology is important for some used-car buyers, but he doesn’t believe the lack of technology would keep a buyer from purchasing a used vehicle. However, he acknowledged that “it’s sure something they want.”

When asked what technologies are most popular among used-car buyers, there was some discrepancy as to the most sought-after, but navigation, connectivity and rear-entertainment were some of the most frequently cited.

As a dealer, Higgins has found that entertainment systems are popular among used shoppers.

“For instance … minivans and SUVs that have the capability of having a DVD player. Obviously, we look for those kinds of vehicles because they are something that today’s consumer is looking for, especially a family that’s looking for a good value on a used vehicle,” he said. “They want to get the most bang for their buck and are, of course, looking for similar options as they can get on a new one.”

He suggested that having navigation is a secondary concern, calling it “another big technology that we like to look for.”

“It’s, again, not as popular as DVD, but it’s certainly something people look for when they’re searching Cars.com, AutoTrader, things of that nature. Any technology package that comes on a used vehicle is an added benefit,” Higgins continued.

Meanwhile, Phil Magney — senior director of automotive infotainment & ADAS with IHS iSuppli Corp. — said probably the hottest technology in used cars right now is hands-free calling.

Basically, the driver can use these Bluetooth modules to control his phone by talking into a microphone. Often, the driver can use phone controls on the steering wheel or the human-machine interface of the vehicle itself, Magney explained.

He also said, “Navigation is on short list of features that a used-car buyer would want,” but he also added a caveat.

“Although, here again, navigation is something that really has grown in popularity … it’s shifted quite a bit from an installed solution to more of an aftermarket play using smartphones or portable navigation devices — but increasingly smartphones, since they can do everything portable navigation can do as well as everything else that a smartphone can do,” Magney added.

He went on to stress the importance of crashworthiness and safety — audio connectivity and “OnStar-type” solutions in the used market.

Westring touched on how used-car buyers are looking for technologies to provide “convenience.”

“Many buyers today like convenience, which is offered in a few different ways,” he noted. “Some that come to mind are navigation systems, Bluetooth technology and iPod/mp3 adaptors. But more specifically on used vehicles today, iPod/mp3 adaptors are the most popular.”

In listing hot used-car technologies, Gutierrez first stressed the desirability of navigation. He then went on to discuss other features, but put more emphasis on the importance of vehicles having smartphone and iPod integration.

“We’re finding that the inclusion of a six-disc CD changer is becoming less and less important, and more so, people just want to be able to take their iPhone or the Android-supported smartphone and be able to plug that phone in and be able to access their at-home library of music and apps, really,” he noted.

“As these phones and these technological devices are providing ever-new avenues of bringing entertainment into a vehicle, I think a vehicle today needs to have the ability to integrate seamlessly and easily with a user’s smartphone,” Gutierrez continued.

Beggs rattled off many of the same amenities mentioned by others and also touched on features like park-assist and adaptive cruise control, as well as back-up and front cameras.

“But what really get the most attention are probably things like navigation and the rear-entertainment systems,” Beggs suggested. “The others are things that are almost expected on certain classes of cars. It’s almost the case of if it’s not there, then it’s more of a deduction in value that it would be an (added value) because it has it.”

Retail Price Lift

The question then for dealers is, are consumers going to be willing to be pay more for technological amenities in the used market?

In some cases, consumers are willing to shell out more for the perks, according to Beggs.

Jie Du, used-vehicle market analyst at J.D Power and Associates, offered a different take, however.

“Several years ago, we did some research on the equipment residualization. The conclusion at that time was that the technology didn’t help the vehicle’s residual value or used-sales price. The systems depreciated faster than a vehicle because of the rapid development on electronics,” Du explained.

“While we don’t know the current situation, as a general rule, a better-equipped used vehicle in good condition will generally garner a better price,” Du added. “But we simply don’t know how much of the price premium is tech-related optional equipment, versus other options such as 4WD, leather seats or turbo.”

Likewise, Westring notes that while technology may lead to a retail price hike, it’s “not as much as you may think,” as many of the amenities like navigation are becoming more standard.

“Also, once the technology hits the used-car market, some of it may be dated already,” Westring added.

Offering the dealer’s perspective, though, Higgins said having some of the top technologies on a used ride can fetch a premium of anywhere from $500 to $2,500 on the retail side, depending on the car.

“It can certainly sway our decision that much, depending on the vehicle and the package that’s on it,” he added. And Higgins has found that the benefit on the retail side is worth the extra dollars he has to shell out when acquiring used vehicles that have these amenities.

Looking at navigation in more detail, Gutierrez said that while the seller would not be able command the full premium for navigation on a used vehicle as the original cost of the system, it does give the vehicle some additional value and helps to turn it quicker.

He points out that “manufacturers tend to charge quite a bit for navigation. They usually make it part of an all-inclusive technology package. You might end having to pay anywhere from $2,000 to $3,000 for a navigation package in a new vehicle from the factory.”

Gutierrez noted that “While we find that in the used-car space, a vehicle with navigation tends to be more desirable than one without; it tends to not retain the entire original cost of that navigation system.

“So, say for instance, a navigation system costs $2,500 or $3,000 new; you might be able to fetch an additional $500 to $1,000 when trying to sell that vehicle used,” he continued. “Now with that being said, it might not retain all of that value, (but) it does tend to make the vehicle a little more desirable and may help with turning that vehicle a little more quickly when you’re trying to list it and sell it.”

As for the value-add on smartphone integration, Gutierrez said it’s a bit tricky to pinpoint the exact number, “because most vehicles either offer smartphone integration or (do) not. It’s not usually something you would pay extra for. It tends to be included the vehicle’s standard radio interface.”

Used-Car Technology in Wholesale Market

Shedding some light on how these technologies have affected premiums in the wholesale market, Beggs looked at the wholesale price impact of a 2009 and 2010 vehicle with navigation.

Having that feature would lift a 2009 model by about $500 and push up the price of a 2010 model by about $600, he said.

“It’s helping,” Beggs said when asked if these technologies were driving up wholesale prices. “The return is probably better now than it was five years ago, because five years ago, that navigation package might have been $2,000 to $3,000 as an option. And now, many of them are down below $1,000 to include that, and a lot of it depends on how they package it. The return now, percentage-wise, is better than it was four or five years ago.

“One of the challenges we face is sometimes this technology and these features don’t necessarily add value to wholesale, but they get it into the retail market, get it into the finance market … and you do see value added to that,” he continued.

But if a vehicle does not have a specific technology, is it a smart idea for a dealer to go out to the aftermarket, have the product installed and then try to sell?
In most cases, Gutierrez doesn’t think so.

He said it typically is not worth it for dealers to go into the aftermarket to install some of these technological amenities, because it will still be pricy to do so and won’t necessarily generate much of a retail price uptick.

“I don’t know that they’re actually going to have much success with going into the aftermarket to add the technological features that consumers are going to want,” Gutierrez shared. “Say for instance, you want to go out and add an in-dash navigation screen and navigation system. Even in the aftermarket, those tend to be pretty pricy, unless you’re talking about a portable unit like a Garmin.

“While a consumer may prefer a vehicle with in-dash navigation feature, they’re not necessarily willing to pay more than $500 or $1,000 at most for a vehicle with that, versus one without,” he noted.

However, it’s a bit different when looking at the rear-entertainment systems for vans and crossovers

“What we’re finding is that if the vehicle doesn’t have a rear entertainment system, it’s a lot less desirable for a family-oriented consumer. Even in wholesale auctions, we’ll find that the your Honda Odysseys, your Toyota Siennas, if they don’t have the rear-entertainment package with the monitors installed in the back of the headrests and the full nine yards, dealers are just not as willing to step up and pay a significant premium,” he shared.

He said KBB has actually talked with dealers who will purchase a base minivan and then turn to the aftermarket to have the rear-seat entertainment systems installed for between $500 and just under $1,000, which is cheaper than trying to have in-dash navigation installed.

“And in those cases, consumers are willing to step and pay for the technology. Not to mention that if the minivan doesn’t have that equipped at auction, usually you’re able to get a pretty good discount on it. So it tends to balance itself out,” Gutierrez added.

“So that’s probably one instance where dealers are willing to step up, go into the aftermarket and get that package installed if it was not made available from the factory,” he continued. “So that’s probably the one exception.”

Delving more into the aftermarket, Magney also noted that “the aftermarket always has the advantage in that they can respond quicker and bring solutions into the market rather quickly.”

Examples of that can be seen in some of the connectivity features, navigation systems and advanced driver assistance systems that are available in the aftermarket, he noted.

Technology for Tomorrow’s Used Car

Looking forward to examine the future of the used-vehicle market, which technologies in today’s new cars are likely to be important in the used market years from now?

Higgins expects to see parking sensors and the self-parking cars offered by some of the higher-end OEMs now to be more commonplace, as well as voice recognition and smartphone integration.

Meanwhile, Magney emphasized connectivity as the “most significant” technology.

“The most significant thing is some type of connectivity, whether it’s embedded through an OnStar system or whether it uses the driver’s smartphone, such as the Ford SYNC system. They’re both pretty important features in the new-car market, and obviously these trickle down into the used-car segment as well, since both of those particular brands of technology product have been in the market now for a while,” he shared.

“Other types of connectivity that are important in the new-car (market) and then they trickle down would be satellite radio … HD radio is getting popular, albeit slowly,” Magney continued.

But what about prices? Will the influx of technology in today’s new vehicles cause a major spike in used-car pricing down the road?

According to Westring, the answer is no. There is likely to be only a modest uptick, he said.

“Prices will only increase slightly because of this technology, because it’s becoming so mainstream, every vehicle will have it and try and use it as a selling point,” Westring said.

And that’s quite a change from the days of cassette decks and the folded maps.