CPO Premiums Approach $2,900 This Month
The used-car retail sales market is looking “tepid” in October, according to CNW Research, but dealers might be able to find some more positive news in what the firm had to say about what has been happening in the certified pre-owned market lately.
Not only are customers willing to shell out the extra money for CPO cars, these models are also moving faster off dealer lots than the same non-certified used vehicles, CNW said.
“While non-CPOs take an average of 40 days to sell — about four days faster than the industry average for all used vehicles — CPOs take slightly less than three weeks,” explained CNW president Art Spinella in the firm’s latest Retail Automotive Summary.
“Add to the faster turnover the premium people are willing to pay for a CPO model and the extra expense of putting a car through the inspection process is well worth the cost,” he added.
CNW found that last month, consumers were willing to pay an additional $2,816 for a certified vehicle over the non-CPO variety. In early October, that premium was trending toward $2,900.
But as Spinella would later point out in the RAS, the overall used retail sales picture is quite the same rosy picture. And the government shutdown, he said, is least part of the problem.
Industry-wide used sales (franchised and independent dealer figures plus private-party sales) are expected to climb 1.5 percent and reach 3.09 million units this month. But nearly all of that increase is due to a big influx of casual sales.
Franchised dealers are expected to see their used sales climb modestly (0.4 percent) from a year ago at 1.19 million, while a 7.7-percent decline is forecasted for independents, which are predicted to move 1.06 million used units.
Meanwhile, CNW is calling for 842,926 casual sales, which would be an 18.2-percent increase.
“The tepid used-car sales data for October can be partially blamed on the government slowdown. How so? Nearly a half million federally owned vehicles were slated for sale which was postponed until the government re-opened,” Spinella noted.
“That put a crimp in the overall used-car market which relied, instead, on a healthy 18-percent gain in private-party sales.”