HERNDON, Va. -
Like many others in the industry, the leadership at Volkswagen Group of America recognizes the increasingly important — and profitable — role that the certified pre-owned segment plays in today’s auto market.
And as many in the industry can attest, there are certainly benefits to ramping up things on the certified side, such as fostering greater customer loyalty.
As such, the automaker is pushing its dealer body to maximize this advantageous sales avenue and make it a more integral part of their operations.
In other words, VW wants its dealers to get more use out of the CPO opportunities.
So, early last year, Volkswagen began a series of measures to help lift its dealer body’s “engagement” in certified pre-owned sales, and while these efforts have already started to pay off, the automaker is not done yet.
“What we’re trying to do is increase dealer engagement,” Chris Hoehner, general manager of fleet and certified pre-owned sales at VW Group of America, told Auto Remarketing.
“Certainly we’d like to see that number increase, and in fact, it has in the last 12 months,” he said during the December interview. “We’ve got a lot more dealers contributing to our (CPO) sales base as we move through 2010.”
In January 2010, 195 dealers composed 80 percent of VW’s certified sales, Hoehner noted. In November, 242 dealers contributed to 80 percent of the CPO sales.
Furthermore, in January 2010, there were 414 VW dealers who sold at least one certified vehicle that month. During October, 515 VW dealers had moved at least one CPO model.
So, in the span of nine months, VW decreased the proportion of its dealer body that did not sell any CPO vehicles for that respective month from about 30 percent to about 10 percent.
While acknowledging that he’s not yet satisfied with that number (pointing to the 10 percent of dealers who didn’t sell at least one CPO model), Hoehner said that “we’ve certainly had a lot of progress in that regard.”
The campaign to stimulate that progress began in the first quarter of last year.
VW offered used-vehicle training to its entire dealer network, which focused on all used-car activities with emphasis on CPO.
The automaker trained 318 dealerships, and then conducted in-dealership follow-up visits at 180 stores, Hoehner said.
“That was a huge educational process for our dealers that definitely opened some eyes as far as the used-car side of our business,” Hoehner noted.
He said VW will conduct training again in 2011 and will also continue to do regional training, among other measures.
However, there is more to expanding CPO engagement that just education, Hoehner emphasized.
The company hired four regional used-car sales managers to “provide additional support in regions.”
And in July, it began offering a variable bonus to dealers.
“It’s a combination of things. It’s training. It’s resources. It’s the bonus,” Hoehner stated.
Furthermore, VW overhauled the “creative” aspect of its CPO program and revamped it. The automaker also put forth more media dollars into its CPO efforts.
“We want to keep it fresh and keep it current,” he shared.
Benefits of CPO
Continuing on, Hoehner offered more details in to how bolstering the CPO side of things can prove to be beneficial for VW’s dealers.
For example, the loyalty factor. Citing analysis from J.D. Power and Associates, Hoehner asserted that VW CPO customers are more likely to buy from Volkswagen again.
In fact, third-quarter data indicates that 37 percent of VW certified customers came back to buy new, CPO or used from the automaker’s dealers. Only 26 percent of VW used-car buyers did the same.
Not only that, but the certified program “keeps the customer tied to the service department.”
“That’s a sales and profit opportunity for dealers,” he stressed.
Moreover, CPO vehicles has a quicker turn rate than used models and have a modestly stronger gross, Hoehner pointed out.
“We know there are a lot of benefits to selling certified cars,” Hoehner stated. And he and the team at VW are working to promote these benefits to dealers.