CPO to Approach 20 Percent of Franchised Used Sales



CARY, N.C. - 

One segment of the pre-owned market that rose to unprecedented levels in 2013 was certified pre-owned.

With CPO sales representing about 19 percent of all franchised dealers used-vehicle sales as reported in December, according to Edmunds.com, it seems the certified vehicle is becoming a more integral part of a dealership’s used-car department.

What’s more, the record year in 2013 only took 11 months; November’s CPO total had already secured the market’s third straight year of record annual sales, as Autodata Corp. pinpointed the year-to-date sum at 1.94 million units through 11 months of 2013.

By the end of 2013, the certified market had sold 2.11 million units, Autodata indicated. This historic year was the first time annual CPO sales reached 2 million.

And the growth isn’t expected to stop.

Edmunds is predicting CPO sales volume will increase by approximately 5 percent in 2014.

Joe Spina, the company’s director of used-car analysis, explained this projected upswing is primarily due to the increased trades and lease returns which dealers are expected to acquire.

Edmunds.com is also predicting the percentage of total used sales sold at franchised dealerships to increase slightly to about 19.7 percent.

“Going back to pre-recession years such as 2007, dealers sold closer to 14 percent of their used cars as factory certified. Despite the increases we have seen, this data indicates there is an opportunity for dealers to increase customer satisfaction by certifying more of their inventory,” Spina said.

Kelley Blue Book’s Alec Gutierrez explained that off-lease trends will also play a big role in shaping a strong certified market for 2014.

“With late-model inventory increasing for dealers due to a rise in off-lease volume, CPO units should be the primary beneficiary.  We saw record sales in 2013 and expect to see even greater results next year,” Gutierrez explained.

And it seems analysts aren’t the only ones predicting CPO success in 2014; dealers are gearing up for success, as well.

“There is no reason to believe they won’t; in fact, dealers consistently report this expectation,” said Larry Dixon, senior manager, market intelligence at NADA Used Car Guide.

Dixon also said that greater awareness among consumers of the CPO option as well as dealer adoption is pushing sales, too.  

And those tracking the CPO market may want to keep a close eye on new-car sales, as well. The certified market and the new-car market are closely tied, said Juan Flores director of operations for the Trade-In Marketplace at AutoTrader.com.

“Certified pre-owned sales will continue to directly correlate with new vehicle sales. As new vehicles sales continue to strive toward 16 million units (levels not seen since 2007), CPO units will continue to see year-over-year growth,” Flores said. 

“As manufacturers and third-party sites continue to validate the value of a CPO unit (lower APR, and a well maintenance vehicle), consumers will continue to view a CPO unit as a viable option versus a new car’s higher retail price and steeper depreciation rate.”

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