Certified Pre-Owned

Kia adds second straight J.D. Power initial quality honor as CPO sales soar

COSTA MESA and IRVINE, Calif. - 

Kia Motors America leadership understood that the automaker surprised the industry last year when it topped the J.D. Power U.S. Initial Quality Study (IQS).

As the 2017 study showed new-vehicle quality is at its highest level ever — improving 8 percent from a year ago — Kia celebrated again on Wednesday by taking the title as being ranked highest in overall initial quality for a second consecutive year.

This J.D. Power accolade arrives as Kia said last week it now has gone 16 straight months of certified pre-owned sales records.

Kia moved 7,008 CPO units last month, which beat year-ago figures by 10.2 percent and was its best May ever, according to Autodata Corp. Through five months of the year, there have been 33,414 Kia certified sales, good for a 13.2-percent increase.

And perhaps Kia can leverage this J.D. Power honor into even more CPO turns.

“When Kia beat out the entire industry in last year’s J.D. Power Initial Quality Study many people wondered if we could maintain such a lofty position. Today, the answer is loud and clear as Kia owns the top spot for the second straight year with more 2017 segment award winners than any other nameplate,” said Michael Sprague, Kia’s chief operating officer and executive vice president.

“Our back-to-back chart-topping IQS performances reconfirm Kia’s status as today’s world-class automaker and reflect the exacting standards and craftsmanship our team members instill into every car, crossover and SUV Kia builds.”

Initial quality in this J.D. Power study is measured by the number of problems experienced per 100 vehicles (PP100) during the first 90 days of ownership, with a lower score reflecting higher quality. In this year's study, quality improves across seven of the eight categories measured, with 27 of the 33 brands in the study improving their quality compared with 2016.

“Automotive manufacturers are responding to consumer feedback and producing vehicles of the highest quality,” said Dave Sargent, vice president, global automotive at J.D. Power. “The industry has improved significantly in each of the past three years. Today's vehicles have more things that could go wrong but fewer things that actually do go wrong."

J.D. Power noted that Kia led the way with a score of 72 PP100. Kia collected five segment awards — the most of any nameplate — for the Soul (compact multi-purpose vehicle), Forte (compact car), Cadenza (large car), Niro (small SUV) and Sorento (midsize SUV).

J.D. Power officials indicated Genesis (77 PP100) ranked second overall followed by Porsche (78 PP100). Ford and Ram (86 PP100) tie for fourth.

Mini is the most improved brand, with owners reporting 33 PP100 fewer problems than in 2016. Other brands with strong improvement include Ram (28 PP100 improvement), Acura (19), Volvo (18) and Ford (16).

General Motors models that ranked highest in its segments were the Chevrolet Silverado; Chevrolet Silverado HD; Chevrolet Sonic; and GMC Terrain.

BMW models that rank highest in their segments are the BMW 2 Series; BMW 4 Series; BMW X6; and Mini Cooper.

Other models that rank highest in their respective segments are the Chrysler Pacifica; Ford Expedition; Ford Mustang; Infiniti QX80; Lexus GS; Mercedes-Benz GLA; Nissan Frontier; Porsche 911; Porsche Macan; and Toyota Camry.

Three other major findings

J.D. Power mentioned a trio of other key findings from the 2017 study, including:

—Technology improving but still problematic: Audio/communication/entertainment/navigation (ACEN) remains the area where new-vehicle owners experience the most problems. However, this category showed the most improvement since 2016 with a score of 22.8 PP100, or 2.7 PP100 better than last year.

—Early warning bells for autonomous technology: The only category to worsen this year is features, controls and displays. The largest increases in problems are for cruise control (primarily adaptive cruise); lane departure warning; collision avoidance/alert systems; and blind spot warning. These features comprise some of the building blocks of autonomous vehicles, and an increasing number of consumer-reported problems sounds warning bells for automakers and suppliers. Consumers will need to be convinced that these systems are foolproof before they will give up driving control to autonomous vehicles.

—Domestic brands continue to show improvement: The "Detroit Three" outperform import brands for the second year in a row but for only the third time since the study was first published in 1987. In 2017, domestic brands receive a score of 93 PP100 compared with 99 PP100 for import brands. Last year, domestic brands also had fewer problems (103 PP100) compared with import brands (106 PP100).

“The Initial Quality Study continues to demonstrate the critical importance of automakers responding to consumer feedback regarding vehicle quality,” Sargent said.

“Any automaker that stands still will quickly start to fall behind. For consumers, the great news is that significant improvements are occurring in all model segments, meaning that you don't have to spend a lot of money to get a quality vehicle,” he continued.

Plant awards & other study notes

J.D. Power highlighted Toyota Motor Corp.’s Kyushu 2 plant in Japan, which produces the Lexus ES and Lexus RX, received the Platinum Plant Quality Award for producing models with the fewest defects or malfunctions.

Plant quality awards are based solely on defects and malfunctions, and exclude design-related problems.

GM’s Fort Wayne, Ind., plant, which produces the Chevrolet Silverado and GMC Sierra, receives the Gold Plant Quality Award for the Americas region, while Porsche's Leipzig plant, which produces the Porsche Cayenne and Macan, receives the Gold Plant Quality Award for the Europe/Africa region.

Four other items worth mentioning:

—In 1987, when the IQS was first published, Mercedes-Benz ranked highest as a nameplate while the Toyota Cressida was the highest-ranked model.

—Domestic brands have scored better than imports in only three years (2010, 2016 and 2017).

—Mass market brands have scored better than premium brands in only three years (2006, 2016 and 2017).

—There have been four generations of the study (IQS1: 1987-1997; IQS2: 1998-2005; IQS3: 2006-2012; IQS4: 2013-present). The industry has shown significant improvement in each iteration, with the best IQS scores occurring in the most recent year for each generation.

The U.S. Initial Quality Study is based on responses from nearly 80,000 purchasers and lessees of new 2017 model-year vehicles who were surveyed after 90 days of ownership. The study is based on a 233-question battery organized into eight problem categories designed to provide manufacturers with information to facilitate the identification of problems and drive product improvement.

The study was fielded from February through May.

The complete 2017 study can be found here.

Honda revamps CPO website to showcase inventory

TORRANCE, Calif. - 

Honda’s certified pre-owned vehicle website (HondaCertified.com) has been completely redesigned to provide a more focused shopping experience, the company said Monday.

The automaker has implemented a vehicle compare feature, a vehicle recommendations tool and an interactive payment calculator to help car shoppers find vehicles within their budget.

On the new site, the primary focal point for shoppers is inventory. The automaker has included a new inventory alert feature that can provide the most up-to-date vehicle availability information. 

Key features of the revamped Honda CPO site include the following:

  • Inventory Alerts: Once a shopper creates an alert, Honda will notify that customer when the vehicle they’re looking for is available
  • Similar Vehicle Comparison: Visitors can view and compare suggestions for other Honda CPOs they may be interested in
  • Favorite Vehicle Shareability: Users can share the vehicles they're considering with friends and family
  • Vehicle Comparability: Shoppers can compare different Honda models
  • Device-Agnostic Design: New website design provides a seamless user experience across all platforms

"Driven by a great deal of research and customer feedback, Honda's new destination for certified pre-owned vehicles brings inventory front and center," said Dan Rodriguez, manager of auto remarketing and certified pre-owned at American Honda. "With the booming growth in our certified pre-owned sales, we've engineered our new Honda site to make comparisons simple, while providing an online shopping experience that makes finding a vehicle fun and easy."

Honda’s CPOs have experienced 6.8-percent sales growth this year, "outpacing the performance of the non-luxury certified pre-owned auto market,” the automaker added.

Kia notches another CPO record

IRVINE, Calif. - 

Kia Motors America has now gone 16 straight months of certified pre-owned sales records, the company said Wednesday.

Kia moved 7,008 CPO units last month, which beat year-ago figures by 10.2 percent and was its best May ever, according to Autodata Corp. 

Through five months of the year, there have been 33,414 Kia certified sales, good for a 13.2-percent increase.

“Certified pre-owned programs offer new-car like peace of mind to a wider spectrum of vehicle shoppers,” Karl Brauer — who is executive publisher of Autotrader, Dealer.com and Kelley Blue Book — said in a news release.

“While nearly every manufacturer has increased its CPO coverage in recent years, Kia’s program is clearly resonating with buyers who recognize the brand’s superb value equation,” he said.

Kia sold 76,224 certified vehicles in 2016, its best-ever sum, according to Autodata.

Maria Williams, Kia's senior CPO retail support manager, said earlier this year that Kia's certified sales have climbed each year since the program was launched in 2008, and the program is targeting another growth year in 2017.

As for May, the Kia models generating the most CPO sales were the Optima and (1,657) and Sorento (1,486), according to the automaker. 

CPO sessions at NIADA Convention


In addition to sessions on financing, regulatory moves, industry disruption and more, the NIADA Convention & Expo this week will include a host of certified pre-owned-related sessions.

The event, which began Monday and runs through Thursday, is being held at The Mirage in Las Vegas.

Among the CPO sessions are:

  • "Winning the CPO Retail Battle vs. OEM Programs," featuring Joe Schumacher of CARFAX and Bill Carr of Warrantech (4:15 p.m. PT breakout session on Tuesday).
  • "Success Tips of Independent Dealer CPO Pros." Panel moderated by Natalie Suarez of Warrantech; featuring panelists Frank Fuzy of Century Motors of South Florida, Todd Hoagey of Auction Direct USA, Billy Threadgill of Van’s Auto Sales and James Santistaven of Zia Motors. (9:45 a.m. breakout session on Wednesday)
  • "State of the CPO Market Today and Tomorrow," with Tyson Jominy of J.D. Power (3:15 p.m. breakout session Wednesday.)
  • "Millennials and Their Digital Tools: The Next Big CPO Market," featuring Marcus Dame of Cox Automotive and Roy Daves of eBay Motors (4:15 p.m. breakout session on Wednesday).

For a complete agenda, visit www.niadaconvention.com.

And be sure to catch members of the Used Car Week and Auto Remarketing team this week at booth #1825



Autotrader names top CPO deals for June


This month, automakers' certified pre-owned programs carry a number of attractive and competitive deals, including some Autotrader says are traditionally offered solely to new car buyers.

"If you're shopping on a budget, there are some great deals to be had among the many certified pre-owned offerings this month," Autotrader executive editor Brian Moody said in a news release. "When purchasing a CPO vehicle that has passed a strict inspection by the original manufacturer, you've made a smart decision on a vehicle with many trouble-free miles ahead."

Autotrader Editors' Top Picks for Certified Pre-Owned Deals for June

— Acura's certified pre-owned program touts excellent coverage this month, according to Autotrader. The brand offers 7 years or 100,000 miles of powertrain protection from the car's original sale date and an added year of comprehensive coverage. Also in June, qualified shoppers can get a certified pre-owned TLX, ILX or TL sedan with 1.49 percent interest for up to 36 months.

— Buick's certified pre-owned program offers both a "strong" incentive and a good deal typically only applied to new vehicles through the end of the month, the third-party car shopping site said. Qualified shoppers can get 1.9 percent interest for up to 36 months on any certified pre-owned Buick Enclave, Encore or LaCrosse — a good deal that typically only applies to new vehicles.

— This month, Chevrolet's certified pre-owned is offering qualified buyers interested in financing 1.9 percent interest for up to 36 months on any certified pre-owned Cruze, Equinox, Malibu, Silverado or Traverse models.

— Ford's certified pre-owned program offers qualified shoppers 1.9 percent interest for up to 66 months on certified pre-owned models of the Fusion midsize sedan, Escape compact crossover and Focus compact car through the end of the month. "That's a good rate over an unusually long period, especially for a used model," Autotrader said.

— Infiniti's certified pre-owned program offers coverage for up to 6 years on a number of models. The automaker is also offering one of the best CPO incentives currently available, according to Autotrader: Qualified shoppers can get 0.99 percent interest for up to 36 months on all certified pre-owned Infiniti models.

— Kia's certified pre-owned program is a favorite of Autotrader this month. In June, the automaker offers powertrain protection for up to 10 years or 100,000 and 1.9 percent interest for up to 36 months to qualified buyers on all certified pre-owned Kia models. "That's a great deal — and one you'd typically expect to only find on a new car," the car shopping site said.

— Subaru’s certified pre-owned program has introduced two notable benefits this month — no deductible, and full transferability to future owners. Also this month, the automaker is offering qualified buyers 1.49 percent interest for up to 36 months on all certified pre-owned models.

— Through the end of the month, Toyota's certified pre-owned program offers up to 7 years of powertrain protection from the original sale date, as well as an added year of bumper-to-bumper coverage. Qualified shoppers interested in a CPO RAV4 can get up to 1.9 percent interest for up to 60 months. This is a better deal than most other Toyota models, Autotrader said.

For additional information about the CPO programs named, visit http://www.autotrader.com/car-deals/cpo-deals-june-2017-266390.

Why alternative powertrains might be tough to turn

McLEAN, Va. - 

If you have certified pre-owned units with alternative powertrains, the spring issue of Perspective from J.D. Power Valuation Services (formerly NADA Used Car Guide) offered some insight into why it might be difficult to turn that vehicle.

Before it became that CPO model, J.D. Power analysts explained that alternative segments generally have weaker demand and higher incentives than their gasoline-powered counterparts on the new side of the market.

“These two hindrances carry over directly to the used market, which means prices of used alternative powertrain models fall at much higher rates than for their gasoline counterparts,” analysts said in the report.

“The higher rate of depreciation means electric vehicles, plug-in hybrid and traditional hybrid retained value is frequently inferior to competitive gas models,” they continued.

Looking at the most recent 3-year-old retention figures by powertrain type (3-month average from March to May of this year), analysts noticed gasoline equipped models have retained at a rate of 52.1 percent, followed by hybrids at 46.4 percent.

Trailing much further behind, J.D. Power found that plugin hybrid and electric vehicle value retention reached 36.9 percent and 26.9 percent, respectively.

“Looking back, 2016 and 2015 retention results for the same period were similar. However, electric vehicle retention was more volatile because of new models being added,” analysts said in the report, which can be downloaded here.

Impact of fuel prices

J.D. Power also mentioned that what consumers are paying at the pump isn’t giving them much of an incentive to take that CPO unit off your store’s hands.

Analysis cited the forecast from the U.S. Energy Information Administration (EIA) that predicted fuel prices are expected to grow from roughly $2.30 per gallon in February to $2.51 per gallon in July before falling to $2.24 per gallon by December. Looking further out, the EIA expects prices to average $2.40 per gallon in 2018 and $2.44 per gallon in 2018.

“With average regular grade gas prices expected to remain around or under $2.50 per gallon in the U.S. over the short-term, there is little reason to believe that buyers who are sensitive to high gasoline expenses will be inclined to choose an alternative powertrain vehicle over a traditional gas-powered automobile due to the cost of fuel,” J.D. Power said in the report.

“However, it’s entirely possible that even with low gas prices expected in the coming years, some environmentally conscious consumers will continue to actively purchase electrics or plug-in hybrids,” analysts added.

Certified used-car sales up 7% for May


Certified pre-owned sales climbed 7 percent last month and three brands reported best-ever sales, according to Autodata Corp.

The firm, which released industry-wide CPO numbers Friday morning, said in its report there were 237,445 certified sales in May, beating the 221,936 sales a year ago by 7 percent.

Through five months of the year, there have been 1.12 million CPO sales, up 1.6 percent year-over-year.

Cadillac, Mitsubishi and Subaru each posted their best-ever month for certified sales, according to Autodata.

Cadillac sold 4,205 CPO vehicles for a 48.6-percent year-over-year gain, Mitsubishi moved 144 certified units (up 132.3 percent) and Subaru had 6,450 CPO sales (up 22.9 percent).

Domestic brands combined to sell 83,272 certified vehicles for the month (up 10.4 percent). Through May, they have sold 383,688 units, which is down 3.1 percent from the prior-year period.

Asian brands were up 4.3 percent in May with 113,455 CPO sales, and they have sold 546,477 certified vehicles through five months (up 3.7 percent).

European brands sold 40,718 CPO units for the month (up 7.7 percent).

They have sold 189,207 year-to-date (up 6 percent). 

Millennials have less connection to first car than boomers


A new survey from CarGurus reveals that the first car buying experience of millennials starkly differs from that of previous generations.

Compared to millennials, baby boomers were not only found to have been more involved when selecting their first car, but were also far more likely to have contributed to the purchase cost, the online automotive shopping platform said.

While only 37 percent of millennials surveyed said they contributed to the cost of their first car, 65 percent of baby boomers told CarGurus they paid for some or all of their first car, according to the survey. And 53 percent of Gen Xers contributed to the cost of their first car.

“Our data shows a clear generational shift in the dynamics of first car purchase,” said Sarah Welch, senior vice president of consumer marketing, said in a news release. “Given the rise of autonomous vehicles, ride sharing and sweeping urbanization, it will be interesting to see if future generations show the same trend in parents controlling the first car purchase or if we’ll see a drop-off in dependents needing a car at a younger age.”

Twenty-three percent of millennials’ first cars were hand-me-downs, while only 10 percent of baby boomers were, according to the survey.

The survey also found that millennials were more likely to receive their first car from a family member, and were just as likely to not have a choice. Thirty-four percent of the millennials surveyed said they were given their first car for either school, a job or extracurricular activity.

Thirty-three percent of millennials did not have a say in their first car, as opposed to 24 percent of baby boomers.

Although the survey shows clear differences in first car buying experiences between generations, it presents a few similarities, as well.

The survey found that 83 percent of all first cars were either bought or given used and 55 percent of drivers got their first car between the ages of 16 and 18.

Additionally, the survey also asked participants to name their favorite car brands. Chevrolet is the only brand to top each generation’s list of favorite brands. The overall most popular brands amongst all the drivers surveyed are Ford, Chevrolet, Toyota, Honda and Dodge, respectively.

The following are lists of the top five brands for each generation.

Baby boomers: Most popular first-car brands

  1. Ford
  2. Chevrolet
  3. Volkswagen
  4. Plymouth
  5. Toyota

Generation X: Most popular first-car brands

  1. Ford
  2. Chevrolet
  3. Toyota
  4. Dodge
  5. Pontiac

Millennials: Most popular-first car brands

  1. Chevrolet
  2. Honda
  3. Toyota
  4. Ford
  5. Nissan

CarGurus said it conducted the online survey of more than 1,800 randomly selected participants last month. Survey participants included drivers who have owned a car, ranging from 18 years of age to 70.

Millennial car shoppers seek personality fit over other factors

CARY, N.C. - 

While quality and affordability are regarded as key decision factors when purchasing a car, America’s growing group of millennial consumers are most likely to consider brands that fit with their personal image instead, according to Cambridge Analytica, a data analytics and behavioral communications provider 

“Finding brands which fit their personal image was the largest growing factor amongst millennials when compared to older respondents,” Cambridge Analytica Data Scientist Tom Richardson said via email when Auto Remarketing asked about the study’s findings.

Fitting personal image was found to be the largest differentiating factor between the youngest consumers and older car buyers, he said.

Cambridge Analytica found this and several other trends following its study which examined American car buying habits across key demographics.

About a third of millennials surveyed said fitting personal image was “extremely important,” while only a quarter of all respondents said the same, according to the study.

Last summer, Cambridge Analytica asked 3,018 respondents to consider the following set of factors: fits with personal image, affordability, high quality, driven by celebrities, brand reputation, made in the USA and environmentally friendly.

“When dealing with younger customers we might advise dealers to use a sales pitch based on matching an individual’s style and perhaps offer small personifications/bonus extras with the cars,” Richardson explained.

According to the study, Audi is the most desired brand amongst the millennials surveyed and Lexus and Honda ranked the lowest, which suggests the two brands don’t align with a millennial’s personal image.

Car owners vs. non-owners

The study also found that car ownership status rather than age is the best predictor when identifying shoppers who rate environment as important.

While environmental impact was found to be generally less important than both affordability and quality, 10 percent of respondents without a vehicle said they consider environmental factors extremely important.

Those without a car also consider affordability to be extremely important more often than quality. The group is 10 percent less likely to rate quality as extremely important and about 6.5 percent more likely to rate affordability as extremely important, according to the study.

Similarly, respondents who already own a car told Cambridge Analytica they are mostly interested in vehicles that offer higher quality than what they currently own.

Men vs. Women

High quality and affordability were the most important factors for both men and women.

But while a majority of both genders agree that the two factors are extremely important when choosing a new car, about 10 percent more women than men believe affordability, in particular, is extremely important.

Additionally, men are almost two times more likely than women to select BMW as their most desired brand, according to the study.

Other luxury brands such as Mercedes and Lexus were also found to be favorite brands for men.

Women were found to desire Japanese economy brands like Honda and Toyota most, while they significantly favor the Jeep brand more than men. Meanwhile, 7.6 percent of the women surveyed chose the American brand as their favorite compared to just 4.5 percent of men.

Interestingly, Audi was equally as popular with both genders: 7.8 percent of men chose the brand and so did 7.8 percent of women, according to the study.

Cambridge Analytica’s study was conducted online in June 2016, “when most people began talking about 2017 car models,” Richardson added.

Kia Motors boasts best-ever April CPO sales

IRVINE, Calif. - 

Kia Motors America said that last month's certified pre-owned sales marked its best April ever and more than a 5-perecent increase. And this, right after Kia had its best first quarter ever for CPO

Last month, Kia sold a 6,953 vehicles, which was up 5.6 percent year-over-year.  CPO sales have risen 14 percent year-to-date, reaching 26,406 units, according to Autodata Corp.'s April CPO retail sales report.

"Kia's record CPO sales are not surprising when you consider Kia offers the longest powertrain coverage, excellent financing incentives and a strong inspection process," IntelliChoice director of data products Eric Anderson said in a news release. "This is why IntelliChoice awarded Kia the best popular brand CPO program."

Kia’s CPO program only accepts Kia vehicles that are five years old or newer with less than 60,000 miles, according to KMA. Each vehicle also undergoes a 150-point quality assurance inspection by certified technicians.

Additionally, KMA said all Kia CPO purchases come with a 10-year/100,000-mile powertrain limited warranty and 12-month/12,000 mile Platinum Coverage.