Certified Pre-Owned

VW dealer discusses educating consumers new to CPO

CARY, N.C. - 

As used-car inventories increase, so does the opportunity for dealers to educate car buyers about the benefits of certified pre-owned vehicles and drive them to consider a CPO purchase they wouldn't have sought on their own.

As part of our Best CPO Dealers issue of Auto Remarketing, we looked into how dealers might educate a customer who perhaps isn’t aware or familiar with CPO about its benefit.

“Very informative salespeople would be the first step for explanations,” Steve Hendricks, who is the general manager at Luther Westside Volkswagen, said via email. “All of our VW inventory that can be Certified is Certified so when explaining to our guests no matter which VW they prefer it will come with an impressive peace of mind warranty Factory Warranty not too much different from a new VW.”

Hendricks suggests highlighting CPO program offerings customers find attractive and desire.  

“We also show them the CPO certification check-out sheet and of course present the vehicle itself pointing out perhaps the brand new tires, new brakes and of course our show quality finish on the outside and the like new appearance on the inside,” he added. “An almost new VW for less!” 

Luther Westside Volkswagen of St. Louis Park, Minn. ranked No. 1 on Volkswagen’s CPO list with 1,009 certified sales in 2016.

See all automaker CPO rankings in the Feb. 15 issue of Auto Remarketing.

The complete top 10 CPO dealers for Volkswagen is below, with 2016 sales included:

  1. Luther West Side Volkswagen: 1009

  2. Gunther Volkswagen of Coconut Creek: 729

  3. Volkswagen Santa Monica: 646

  4. South Bay Volkswagen: 596

  5. Lokey Volkswagen: 498

  6. Volkswagen of South Charlotte: 487

  7. Brandon Volkswagen: 464

  8. Pacific Volkswagen: 450

  9. Volkswagen North Scottsdale: 447

  10. Burnsville Volkswagen, Inc.: 431

Top-selling Nissan CPO dealer shares inventory-sourcing strategy

CARY, N.C. - 

With used-car supply increasing in recent years, having the right inventory in stock at the right time for certified pre-owned buyers depends on dealers keeping current consumer demand in mind when purchasing inventory.

As part of our Best CPO Dealers issue of Auto Remarketing, we asked top-selling dealers in the Nissan CPO program how CPO sourcing strategy has changed with used-car supply increasing in recent years.

“Increasing used-car supply has made it more important than ever to stock low saturation, fast turning models and trim levels,” Eric Shoemaker, who is the pre-owned sales director at Trophy Nissan, said via email.

When purchasing inventory, he suggests taking additional steps to optimize supply.

“Utilizing closed factory sales in multiple markets, the manufacturers direct purchasing platform and targeting our own customers for trades has allowed us to acquire these units as we need them versus carrying large inventories,” Shoemaker added.

“Market changes are drastic and often, so a tight day supply is crucial.”

Trophy Nissan of Mesquite, Texas ranked No. 1 on Nissan’s CPO list with 2,345 certified sales in 2016.

See all automaker CPO rankings in the Feb. 15 issue of Auto Remarketing.

The complete top 10 CPO dealers for Nissan is below, with 2016 sales included:

  1. Trophy Nissan: 2,345

  2. Nissan of McKinney: 1,051

  3. Nissan of Richmond: 912

  4. Baker Nissan North: 881

  5. Pinnacle Nissan: 872

  6. Mossy Nissan: 866

  7. Clay Cooley Nissan: 862

  8. Universal City Nissan: 853

  9. Teddy Nissan: 847

  10. Middletown Nissan: 811

CPO dealers share the value of 'like-new' service

CARY, N.C. - 

An exceptional CPO buying experience could just be what some consumers need to seriously consider the new option next time around.

For our Best CPO Dealers issue, Auto Remarketing asked some of the top Kia dealers in the CPO space how they provide a “like-new” experience to certified pre-owned customers.

“For us providing a like new experience for our CPO customers starts with the initial meet-and-greet when they get to the store,” said Patterson Kia of Arlington’s Joe Johnson.

“At that time, a manager introduction is initiated and we begin to share with them what we call the 'Patterson Difference’— outlining who we are, how we conduct business, and communicating their options for purchasing a vehicle from us sets the stage for consideration of a CPO vehicle, as well as a new one.”

Johnson’s store ranked No. 5 among Kia dealers for CPO sales in 2016, selling 670 certified units, according to Kia Motors America.

“Whether that family or individual has come in with an expectation to purchase a new vehicle or a pre-owned vehicle, we want them to have the information necessary to consider all their options with us. By presenting these options, we establish ourselves as the professionals charged with leading them to a decision that ultimately makes the most sense for them. In many cases the CPO is that conclusion,” Johnson said.

In Cerritos, Calif. the Kia of Cerritos store ranked No. 6 with a total of 665 CPO sales in 2016.

Used-car director Mark Near defined via email how his store provides a high-quality CPO experience.

“We understand that in today’s market, the consumer has many choices and we are grateful for every opportunity whether they purchase from us or not,” Near explained.

“After a customer purchases a Kia certified vehicle, just like the purchase of a new vehicle, our product specialist will go over and demonstrate all of the features and benefits of the vehicle. It is our goal to that each customer is completely comfortable with their new vehicle and has a full understanding of how everything functions,” he said.

"In addition each specialist willfully explain Kia’s 10-year/100,000 mile certified warranty details, maintenance schedule and roadside assistance benefits which are also included with the purchase of a certified vehicle,” Near continued.

“Finally, in a few days a follow-up call will be made to each customer to be sure they are enjoying their new certified Kia.We want to be sure everything is working okay and ensure he or she is completely satisfied. We invite everyone to visit us for a free no obligation test drive anytime. We are confident that Kia of Cerritos’ commitment to our customers will provide a superior-car buying experience and will go a long way to earning business.”

The complete top 10 CPO dealers for Kia is below, with 2016 sales included:

  1. Kia of Irvine: 1,130

  2. Garden Grove Kia: 1,071

  3. Shawnee Mission Kia: 692

  4. Cherry Hill Kia: 684

  5. Patterson Kia of Arlington: 670

  6. Kia of Cerritos: 665

  7. Luther Kia of Bloomington: 662

  8. Courtesy Kia of Brandon: 622

  9. Cobb County Kia: 584

  10. Halleen Kia: 573

See all automaker CPO rankings in the Feb. 15 issue of Auto Remarketing.

How off-lease drives CPO sales for BMW stores

CARY, N.C. - 

There was more than 3.1 million off-lease units hitting the market last year, according to Manheim, and that number is only expected to rise in coming years. 

With certified pre-owned being a popular channel for these off-lease units to call home — and with leasing being especially popular with luxury brands — Auto Remarketing asked top BMW CPO dealers how the increase in off-lease supply has impacted their CPO operations.

This was part of our Feb. 15 publication, which recognizes the Best CPO Dealers in the USA

Victor Sousa at United BMW of Roswell called it a “great opportunity” to push certifed volumes. 

“With a greater supply we can offer a larger variety of vehicles to our customers,” Sousa said via email.

“The additional inventory has created opportunities to attract new customers and generated additional reconditioning business in our fixed operations department while forcing our team to be more diligent with our sales turn and placing a greater emphasis on expediting our time to market,” he said. “Through these efforts we have improved our online marketing capabilities and our interactions with BMW and BMW Financial Services.”

(According to BMW, United BMW is “one store with two locations.” The Roswell, Ga., store is a satellite location, BMW said).

Over at Vista Motor Co., Michael Perrault said off-lease gains have been a plus.

“The increase in off lease supply has had a positive impact on our CPO operation in a couple of ways. The first one is the increase in inventory, which turns into sales. The more vehicles you have the more you sell,” he said. “The second is the factory supports us with good programs as well as additional advertising to help drive the customers into the stores.”

The following is the complete list of top 10 CPO stores for BMW, based on 2016 sales: 

1. United BMW of Gwinnett Place (3,318)
2. Stevens Creek BMW (1,796)
3. Chapman BMW (1,695)
4. Beverly Hills BMW (1,679)
5. Vista Motor Co. (1,622)
6. Hendrick BMW (1,426)
7. BMW of Monrovia (1,327)
8. Lauderdale BMW (1,299)
9. Schomp BMW (1,210)
10. Braman Motorcars (1,208)

Infiniti dealer says CPO is vital for retention

CARY, N.C. - 

A certified pre-owned vehicle purchase can be the first luxury buy many consumers make who’d like to test the waters before buying new.

As part of our Best CPO Dealers issue of Auto Remarketing — we asked top-selling dealers in the Infiniti CPO program how certified pre-owned has helped them get aspirational luxury buyers into new cars at their stores.

“It is the entry point to the brand’s new-vehicle offerings,” Mike Korallus general manager at Infiniti of Naperville said via email.

He suggests that satisfied consumers will likely be interested in the brand-new model.

“It is a natural progression and is crucial for retention as well,” he added.

“[CPO] combines luxury affordability, with the reliability and peace of mind that comes with a factory-backed pre-owned certified vehicle.”

Infiniti of Naperville ranked No. 6 on Infiniti’s CPO list with 500 certified sales in 2016.

See all automaker CPO rankings in the Feb. 15 issue of Auto Remarketing.

The complete top 10 CPO dealers for Audi is below, with 2016 sales included:

  1. Sewell Infiniti: 786

  2. Sewell Infiniti of N. Houston: 710

  3. Infiniti of Gwinnett: 687

  4. Roswell Infiniti: 646

  5. Grubbs Infiniti: 628

  6. Infiniti of Naperville: 500

  7. Southwest Infiniti: 491

  8. Infiniti of Clarendon Hills: 445

  9. Austin Infiniti: 424

  10. Crest Infiniti: 407

Top Buick-GMC stores share CPO customer experience tips

CARY, N.C. - 

One of the perks that might entice a shopper to buy a certified pre-owned vehicle over a non-certified used car is that the ride — and the experience of buying that car — is “like-new.”

With that in mind — and as part of our Best CPO Dealers issue — Auto Remarketing asked some of the top Buick-GMC dealers in the CPO space how they provide a “like-new” experience to certified pre-owned customers.

“At Serra Pre-Owned, we treat every customer like they are buying a brand new vehicle,” Bob Davidson, who is the used sales manager at Serra Buick GMC Cadillac, said via email.

His store ranked second among Buick-GMC dealers for CPO sales in 2016, selling 726 certified units, according to General Motors.

“We pride our self in the reconditioning of our CPO vehicles, trying to make them look as close to showroom new as we can, so the customer feels like they are getting a brand new car,” Davidson said.

“Then we make sure before every customer leaves that they completely understand the benefits of the CPO vehicle from the warranty, maintenance package, OnStar, and XM radio,” he said. “Then we offer every CPO customer a 30 day exchange on top of the 3 day money back guarantee so every customer has peace-of-mind that they have gotten the perfect vehicle for them.”

Over at Bob King Buick-GMC in Wilmington, N.C. — which ranked 10th with 564 CPO sales in 2016 — Shawn Cottingham outlined via email the measures his store takes to ensure a high-quality CPO experience.

“When you purchase a certified pre-owned vehicle from Bob King, you can expect a top-shelf experience. For beginners, we have been in business for 46 years and know what it takes to deliver a first-rate experience. We have the luxury of a 12,000-square-foot showroom dedicated to certified pre-owned vehicles,” said Cottingham, who is pre-owned sales manager at Bob King AutoMall.

“This gives our customers the comfort and convenience of being able to shop and take delivery in a climate controlled setting regardless of the weather. We take pride in our CPO program and make sure all of the paperwork, processes and policies are followed to the letter,” he said.

“We make sure all of our CPO vehicles have exceeded the factory specs required for certification and are clean, presentable and ready to drive at all times. Every customer that walks on our property is made to feel welcome, important and comfortable at the same time,” Cottingham continued.

“All customers’ situations are different, but each one is made to feel just as important as the last or next one. Our sales professionals are trained on the new and certified training paths and are kept up to date with the latest offerings via continuing education with GM. It is our duty to make every customer that comes on our lot feel they have our undivided attention and are the most important aspect of our jobs.”

The complete top 10 Buick-GMC dealers for CPO sales is below, with dealership name, city (in parenthesis) and 2016 certified unit sales.

See all automaker CPO rankings in the Feb. 15 issue of Auto Remarketing.

1. Kelley Buick GMC (Fort Wayne, Ind.): 855
2. Serra Buick GMC Cadillac (Washington Township, Mich.): 726
3. Sewell Buick GMC (Dallas): 668
4. Berge’s Buick GMC (Souderton, Pa.): 648
5. Jim Ellis Buick GMC Mall of Georgia (Buford, Ga.): 612
6. Woody Buick-GMC (Naperville, Ill.): 596
7. Beck & Masten Buick GMC (Houston):  577
8. Stoops Buick-GMC (Plainsfield, Ind.): 573
9. Andy Mohr Buick-Pontiac-GMC  (Fishers, Ind.): 570
10. Bob King Buick-GMC (Wilmington, N.C.): 564

How Audi dealers use CPO to connect with aspirational buyers

CARY, N.C. - 

When a shopper buys a certified pre-owned vehicle, particularly if it’s a luxury ride, it’s often seen as a way to get that consumer into the brand and potentially buy a new car down the road.

In other words, a CPO buyer might be a future new-car buyer for that brand.

With that in mind — and as part of our Best CPO Dealers issue of Auto Remarketing — we asked top-selling dealers in the Audi CPO program how certified pre-owned has helped them get aspirational luxury buyers into new cars at their stores.

“Certified pre-owned Audis offer a significant advantage over non-CPO vehicles. The six-year 100,000(-mile) warranty offers peace-of-mind for anyone purchasing a luxury pre-owned Audi vehicle, and the knowledge of understanding that the vehicle has been reconditioned to an extremely high standard,” Jason Mattia, who is general manager at Audi Palo Alto, said via email.

Audi Palo Alto ranked ninth among U.S. Audi dealers with 485 certified sales in 2016.

“We really don’t have to compete with non-Audi dealers with our pre-owned Audis, and don’t have to race to the bottom on pricing. There are also lots of other benefits in the areas of marketing that dealers don’t recognize if they are not certifying all their pre-owned Audis,” Mattia said. “Audi’s CPO program is one of the best in the industry and also provides us a great opportunity to drive UIO’s that come back into our service drive far more frequently than new cars, and non-CPO Audis.”

Dan Flood is general manager at Fletcher Jones Audi, which ranked No. 7 on Audi’s CPO list with 535 certified sales in 2016. CPO is a way for shoppers to “break into the luxury market earlier in their buying cycle,” he says.

“With the reconditioning process being so strong, most people cannot tell it’s pre-owned, so the customer gets the prestige and recognition from their peers of being in a new luxury car at an earlier age,” Flood said in an email. “Not only does it have a manufacturer backed warranty, but in most cases Audi is offering finance rates as low as new cars, leading to the payments to really be within reach.”

The complete top 10 CPO dealers for Audi is below, with 2016 sales included:

1. Audi Atlanta: 800

2. The Audi Exchange: 679

3. Audi Natick: 629

4. Audi Central Houston: 623

5. Rockville Audi: 572

6. Keyes Audi: 542

7. Fletcher Jones Audi: 535

8. Audi Beverly Hills: 526

9. Audi Palo Alto: 485

10. Audi Bellevue: 483

Autotrader names best CPO deals for February

ATLANTA - 

Amid a certified pre-owned market that continues to grow, Autotrader has come out with this month’s list of top picks for certified pre-owned deals and incentive offers in February.

"Not everyone can spend a fortune for a new car, but the potential repair bills from a modern used car can deter shoppers,” Autotrader executive editor Brian Moody said in a news release.

"CPO vehicles strike a good balance between price and peace of mind. They're lightly used, undergo a rigorous inspection and are backed by lengthy manufacturer warranties."

Autotrader’s Top Picks for Certified Pre-Owned Deals for February

—    At Acura, qualified shoppers can get 0.9 percent interest for up to 36 months on all certified pre-owned vehicles, through the end of February. The program also offers seven years or 100,000 miles of powertrain coverage from the original sale date.

—    This month, BMW's CPO program comes with bumper-to-bumper coverage for up to six years or 100,000 miles from the car's original sale date. And qualified buyers can get an attractive low-interest offer of 0.9 percent interest for up to 36 months on certified pre-owned 2013 and 2014 models.

—    Honda's CPO program offers seven years of powertrain coverage as well as to an added year of bumper-to-bumper coverage with the factory warranty.

Additionally, this month, Honda is offering 1.9 percent interest for up to 36 months on all CPO Odyssey, Pilot, Accord and Civic models to qualified shoppers.

—    Autotrader said Jaguar's CPO program is highly impressive; it presents both seven years or 100,000 miles of bumper-to-bumper coverage and 1.9 percent interest for 60 months or 2.9 percent for up to 72 months for qualified shoppers.

—    Lincoln's CPO program offers 6-year or 100,000-mile bumper-to-bumper coverage and a notably low-interest-rate offer of 2.99 percent interest for up to 66 months.

—    Throughout the month, Nissan's CPO program extends seven years or 100,000 miles of powertrain and 1.95 percent interest for up to 36 months or 3.95 percent for up to 72 months.

—    Toyota's CPO program offers seven years or 100,000 miles of powertrain coverage, and once the factory warranty expires an added year or 12,000 miles of bumper-to-bumper coverage.

“In February, qualified shoppers can get an even better offer with 1.9 percent interest for up to 60 months on any CPO vehicle — including the recently released iM hatchback, formerly branded a Scion,” said Autotrader.

—    Along with the brand's original 3-year or 36,000-mile coverage, Volkswagen's CPO program is adding two years or 24,000 miles of bumper-to-bumper coverage and throughout February, car buyers can get 1.49 percent interest for up to 60 months.

For more information on the CPO programs listed, visit http://www.autotrader.com/car-deals/cpo-deals-february-2017-261593.

Unique dynamics of CPO at play

NEW ORLEANS - 

The benefits of certified pre-owned programs are as varied as those of a five-tool baseball player: in addition to the consumer peace-of-mind and brand-building perks, they can help protect residual values and soak up off-lease volume bumps.

But there’s a tricky dynamic, says Anil Goyal of Black Book, who points out that there is a bit of competition between CPO prices and those on new cars.

“I think there’s more room to grow from a CPO (sales) perspective, but it’s not going to save the day, because at the end, it still competes with the new-vehicle sales,” Goyal said during an interview here at the NADA Convention & Expo.

“And as it becomes more and more difficult to make that new sale happen without incentives, you’re competing more with that certified pre-owned … Would I pay $2,000 or $3,000 more just to get into a new vehicle, rather than a certified pre-owned?” he said.

“As that certified pre-owned starts to get closer to the new-vehicle value — because of incentives — it becomes more of a challenge.”

Another interesting dynamic is the relationship between certified sales and off-lease volumes, which the latest Manheim Used Car Market Report called “beneficially linked.”

The report indicates off-lease volume gains create “both the need and ability for further growth” in CPO, a market that Manheim expects to reach a seventh straight year of record sales.

It should be noted, however, that last year was the first time since 2011 that off-lease volume was higher than CPO sales, according to a chart in the report citing Manheim Consulting and Automotive News.

The report projects off-lease volumes reaching a record 3.6 million units this year before passing the 4 million mark next year.

In 2016, there were north of 3.1 million off-lease units, Manheim said, with CPO sales coming at 2.64 million, according to Autodata Corp.

“It wasn’t a channel that absorbed every off-lease (unit),” Goyal said of CPO.

You’re still likely to see growth in certified, but some of the “low-hanging fruit” that boosted the allure of CPO — i.e. more dealer participation — has been picked, Goyal said. So the opportunity may come in other forms.

“I think there will be more opportunities for CPO product from the manufacturers to make it more attractive,” Goyal said. “There are some who are already doing unlimited mileage warranties on CPO … I think more has to be done around the CPO product, both in terms of the marketing of it and making that product better for it to continue to grow.”

Manheim touched on potential certified growth in its report, saying that much of it will come down to automakers giving dealers more room for profitability in CPO.

“It will be a matter of how much marketing muscle the manufacturers want to put behind the programs — and, of course, the dealer’s ability to continue to earn good profits on the sales,” the report said.

“It’s that last fact that restrained the growth of CPO sales in 2016. Lease returns, off-rental volumes, and late-model trade-ins were skewed more toward compact and midsize cars than current customer preferences would desire,” it  said. “As a result, the potential gross profit on the subsequent retail sales of those units was skinny. So skinny that dealers decided the lift from CPOing the unit would be inadequate relative to the associated costs. They retailed the unit without CPOing it.

“Relatedly, manufacturers continued to offer attractive lease deals on new small sedans, which often made the monthly retail payment on a competing CPO unit uncompetitive,” Manheim’s report said. “Some of the pressures above should ease in 2017, and thus, CPO sales will continue to grow.

“It is important, however, that manufacturers design programs that allow dealers to benefit financially.”

CPO sales up 0.8% to start 2017

CARY, N.C. - 

It was a solid start to 2017 for the certified pre-owned vehicle market.

There were 192,586 CPO sales in January, which beats year-ago figures by 0.8 percent, according to Autodata Corp.

Last year was the sixth straight record year for certified pre-owned sales, with dealers moving 2.64 million CPO vehicles for a 3.5-percent increase, Autodata said.

Domestics sold 899,365 certified units in 2016 (down 3 percent), while Asian brands moved 1.3 million units for a 10-percent hike, according to Autodata. European brands were relatively static (down 0.3 percent) with 441,189 certified sales.

In the first month of 2017, Asian brands led the way, selling 98,208 units for a 9.4-percent hike.

Europeans were up 7.1 percent with 34,255 CPO units sold. Domestics sold 60,122 units, down 13.2 percent from January 2016.

In its 2017 Used Car Market Report, Manheim predicts that 2017 will be the seventh straight year of record CPO sales.  Interestingly enough, off-lease volume gains create “both the need and ability for further growth,” the report states.

“There is also the desire to grow CPO sales, since they enable dealers to protect gross margins, improve turn rates, or boost F&I and service income. And, when CPO programs are properly structured and effectively marketed by manufacturers and dealers, the programs can provide all three of those benefits simultaneously,” the report said. 

You’re still likely to see growth in certified, but some of the “low-hanging fruit” that boosted the allure of CPO — i.e. more dealer participation — has been picked, says Anil Goyal of Black Book. So the opportunity may come in other forms.

“I think there will be more opportunities for CPO product from the manufacturers to make it more attractive,” Goyal said in an interview at the NADA Convention & Expo. “There are some who are already doing unlimited mileage warranties on CPO … I think more has to be done around the CPO product, both in terms of the marketing of it and making that product better for it to continue to grow.”

More thoughts from Goyal and Manheim on the potential for CPO in 2017 can be found here