Experian’s latest State of Auto Finance Market Report made headlines, painting a rosy picture for the used-vehicle market. Overall, pre-owned vehicles accounted for 55.61 percent of all financing in the second quarter of 2016.

Consumers across all credit tiers are flocking to pre-owned vehicles, with super-prime and prime consumers accounting for 44.95 percent of all pre-owned loans — a 2.6 percent year-over-year increase.

Dealers have ample opportunity to capitalize on this market dynamic with certified pre-owned programs and F&I products tailored to the pre-owned market.

Remember, the one hurdle pre-owned vehicles have always had to overcome is vehicle reliability. Even in this current market, you can bet vehicle reliability is still a hot button.

In addition, those prime and super-prime consumers are used to another level of sophistication when it comes to customer service and they will expect no less when shopping for pre-owned vehicles. This combination makes strong CPO programs market differentiators.

According to research from EFG Companies, 71 percent of consumers expect a CPO program to consist of:

— Thoroughly checked vehicles that are in working order

— Additional coverage

— Roadside assistance

Evaluate your CPO program based on this criteria. To be certified, your pre-owned vehicles need to pass a stringent inspection and repair process. Some dealers may be tempted to consider the inspection enough for a CPO sticker. However, by doing so they are leaving significant money on the table. Now, I know what you’re thinking: “providing complimentary coverage is an extra cost to me, what benefit do I get by giving away coverage and roadside assistance?”

To answer this question I ask that you go to your top-producing F&I manager and ask, “Which is easier to sell F&I products on: a car that comes with a warranty or coverage of some sort, or a car with no coverage whatsoever?”

I’m willing to bet your F&I manager will say they get the best penetration rates and the highest margins on vehicles that have a warranty or coverage built in.

Why, you ask? Because with those “built-in” products, your F&I manager has the opportunity to create a need by specifying where and how the coverage ends. Once they create the need, they then discuss the benefits of purchasing additional coverage to fill that need.

When a vehicle doesn’t come with a warranty or any type of complimentary coverage, F&I managers are often left floundering, trying to discover where to start the product presentation. This makes their jobs that much harder.

So yes, providing complimentary coverage is an added cost, but when weighed against the benefits of increased F&I product penetration and back-end margin, that cost turns into another area to generate revenue.

Of course, the complimentary coverage can’t be just any F&I product. Good CPO programs come with some form of limited powertrain coverage with roadside assistance, and possibly a short-term maintenance plan. With limited powertrain coverage, F&I managers have the potential to upgrade customers to a full vehicle service contract with nationwide roadside assistance.

With a short-term maintenance plan, your managers in finance and in the service drive will have ample opportunity to upgrade customers to longer-term and/or more comprehensive maintenance plans. In addition, these products offer good spring-boards into discussions around interior and exterior protection products.

John Stephens is executive vice president at EFG Companies. Other commentaries from EFG can be found at efgintelligence.com/dealershipcorridor.