Certified Pre-Owned

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

JM&A exec: 'Main exposure' to CPO happens online

NEW ORLEANS - 

Success in certified pre-owned can help dealers generate additional new-car sales, retain service customers and manage excess off-lease inventory, JM&A Group’s Brian Walwyn says in an interview here at the NADA Convention & Expo.

And that, he said, more than makes up for the additional monetary investment dealers have to make in certifying the cars.

But dealers have to get Web traffic viewing their CPO inventory. After all, the “main exposure” to CPO for consumers will happen online, he said.

That’s part of the mission for JM&A Group, where Walwyn is vice president of sales and operations.

The company partners with Kia Motors America on CPO and helped to build its certified pre-owned program; JM&A Group is also the administrator for the Toyota Certified Used Vehicles program at Southeast Toyota Distributors.

JM&A Group also has a relationship with Volvo Car USA. In October, it announced an agreement with Volvo to provide more than 300 Volvo dealers across the US with branded F&I products on new and used cars. 

In a news release, JM&A said: “Through Volvo’s branded F&I program known as Volvo Increased Protection (VIP) Plans, JM&A will administer its top-rated F&I products. These will include Vehicle Service Contracts, Prepaid Maintenance, Tire & Wheel Protection and Certified Pre-Owned (CPO) Service Contract.” 

Off-lease & additional warranty opportunities

When asked where he sees the biggest opportunities for the company in CPO, Walwyn points to the off-lease inventory expected to hit the market. The 2017 Manheim Used Car Market Report released during NADA projects a record 3.6 million units coming off lease this year, with 4 million-plus expected for 2018.

“What’s great about that is that is, it’s opportunities for CPO,” Walwyn said. “And we know that with all these vehicles coming off lease, the values of the used vehicles tend to go down. So when you actually certify a vehicle … the dealers are making more money on it, $500 to $1,000 more.”

And often, that CPO buyer will make a new-car purchase next time he or she is in market.

Walwyn said close to two-thirds of Kia CPO buyers, for example, will end up buying a new Kia for their next purchase.

He also emphasized the opportunity around wrap service contacts and maintenance plans.  The CPO wrap often isn’t necessarily a hard sell. Walwyn said.

“In Kia’s case, we have a 10-year/100,000-mile powertrain warranty. And we can wrap that. So, after you’re covering the powertrain, the additional wrap is not that excessive as far as price,” he said.

Records & top rankings

It was a big year for CPO in 2016 — the sixth straight year of record sales, according to Autodata Corp. — and a big year for JM&A Group’s work in certified.

Southeast Toyota had more than 64,000 CPO sales, making it the No. 1 region for TCUV, Walwyn said.

Southeast Toyota has also notched seven years of growth, with last year being its best year ever for TCUV.

Meanwhile, Kia sold 76,224 certified vehicles in 2016, its best-ever sum, according to Autodata.

Maria Williams, Kia's senior CPO retail support manager, said Kia's certified sales have climbed each year since the program was launched in 2008, and the program is targeting another growth year in 2017.

 

Editor's note: Story has been updated to include further CPO details for Kia and Southeast Toyota, and updated/corrected further to clarify JM&A relationship with Volvo Car USA. 

 

Autotrader taps 20 ‘Must-Shop’ CPOs

ATLANTA - 

Autotrader recently named its "Must-Shop CPO Cars," a list of the 10 top luxury and 10 non-luxury certified pre-owned vehicles shoppers should consider if looking to purchase a CPO this year.

Autotrader said nearly one in four car shoppers are considering purchasing a CPO vehicle, according to its 2016 CPO study.

"With a certified pre-owned vehicle, consumers get great value in a gently used vehicle that has been heavily evaluated by a manufacturer-specific checklist," Autotrader executive editor Brian Moody said in a news release.

"Also, many CPO programs offer new-car perks like special financing, roadside assistance and rental car coverage. Buying a CPO vehicle gives you the feeling of a brand new car without spending every dollar you have."

Autotrader said the criteria used for selecting its list of top luxury CPO vehicles included a retail price of $65,000 or less, a manufacturer-backed certified warranty with a minimum of six years or 100,000 miles of total powertrain coverage included in the purchase price.

For non-luxury CPO vehicles, Autotrader considered those with a retail price of $40,000 or less, a manufacturer-backed certified warranty with a minimum of five years or 100,000 miles of total powertrain coverage included in the purchase price and an overall federal government safety rating of at least four out of five stars.

Autotrader editors' list of "Must-Shop CPO Cars"

CPO Luxury Vehicles

2014-2016 Acura MDX

2012-2016 Audi A6

2013-2016 BMW 3 Series

2014-2016 Infiniti Q50

2014-2016 Jaguar F-Type

2013-2016 Lexus ES

2015-2016 Lincoln MKC

2015-2016 Porsche Cayenne

2012-2016 Range Rover Evoque

2012-2016 Volvo XC60

CPO Non-Luxury Vehicles

2015-2016 Chevrolet Tahoe

2015-2016 Ford F-150

2015-2016 GMC Yukon

2013-2016 Honda Accord

2015-2016 Hyundai Sonata

2014-2016 Kia Soul

2014-2016 Mazda3

2015-2016 Nissan Murano

2015-2016 Subaru Outback

2015-2016 Toyota Camry

The vehicles are listed in alphabetical order.

6 reasons why increasing CPO sales should be your 2017 resolution

ATLANTA - 

As we flipped the calendar into 2017 this month, it was time for New Year’s resolutions once again. Maybe this year you’re planning to finally buy that gym membership or cut out fatty foods. Or maybe you’ve resolved to step up your game at work and improve your close percentage.

These are all noble goals … but I bet that in a couple of months, most of us will have slid back into our old habits.

However, there’s one resolution you can make this year that will be easy to stick to.

That’s because making this change will drive results that are too good to pass up. And that change is to increase your certified pre-owned sales in 2017.

CPO sales soared to another record high in 2016, and dealers at every level can find ways to get their numbers even higher this year. If you haven’t embraced a CPO strategy yet, now’s the time to get started.

If your CPO sales are sluggish or labor-intensive, now’s the time to get your program off the ground. If you’re already in the running for CPO Dealer of the Year, now’s the time to take your business to the next level.

But why CPO — and why now? The benefits of resolving to increase CPO sales are too numerous to list, but here are six to start.

1. CPO builds consumer trust

Consumers know that when they choose CPO, they’re choosing a vehicle they can rely on. That’s because CPO vehicles are held to a much higher standard than typical used vehicles. They’re inspected and repaired until they’re brought to like-new condition. And by completing and documenting the repairs, you can dramatically improve customers’ perception of your dealership.

When consumers see you’re willing to put in the time and effort to care for these vehicles, they’ll know you put their needs first — which increases trust and transactional satisfaction.

2. CPO provides peace-of-mind

For an overwhelming majority of consumers, CPO vehicles are an attractive option. According to a recent Autotrader consumer survey, 82 percent of used-vehicle shoppers felt favorably about CPO.

The reason? Today’s shoppers are risk-averse. They don’t want to purchase a vehicle they can’t rely on, or one that might break down at any moment. Choosing a CPO vehicle helps consumers avoid that risk.

No surprise, then, that 64 percent of CPO consumers list peace-of-mind among their top deciding factors. What might surprise you, though, is that shoppers are willing to pay a sizable premium for that peace of mind. $2,714 more per vehicle, to be exact!

3. CPO ensures financial security

Although no one wants to think about the worst-case scenario with their vehicles, today’s consumers could be one catastrophic incident away from financial hardship. According to a recent survey from Bankrate.com, 63 percent of Americans don’t have enough savings to pay for a $500 or $1,000 emergency. In other words, if the average American experiences car failure, paying for repairs will be a major challenge.

Consumers are looking for ways to stay financially secure in case of an emergency. And CPO vehicles’ extended service coverage delivers that security — a major selling point.

4. CPO directly affects consumer loyalty

Want to increase repeat sales and consumer loyalty? The key is improving how consumers feel about your dealership. And offering CPO vehicles is one of the best ways to improve their perception. Cox Automotive’s 2016 CPO Study reports that 93 percent of CPO consumers were very or extremely satisfied with their vehicle.

And that level of satisfaction translated into increased loyalty. Seventy-eight percent were likely to repurchase from the same brand, and 69 percent were likely to repurchase from the same dealership. CPO vehicles won’t just help you close the sale today — they’ll help you earn repeat sales tomorrow, too.

5. CPO warranties are difference-makers

One of the biggest differentiators of CPO vehicles is the addition of a warranty. These warranties give consumers peace-of-mind that a repair facility or licensed mechanic has inspected the vehicle and brought it up to minimum standards. This improves consumers’ confidence in their vehicle purchase.

That’s why, after make and model, the warranty is the most important feature for today’s consumers. Fifty-seven of used-vehicle shoppers end up choosing a CPO vehicle because of its warranty. So use this key differentiator to your full advantage!

6. CPO is where your consumers are!

The CPO market is big, and it’s getting bigger every day. It’s estimated that 3 million consumers are currently interested in CPO. And with around 3 million more vehicles coming off-lease in 2016, the CPO market could be as large as 5.2 million consumers by 2020. That’s 5.2 million reasons CPO should be a cornerstone of your dealership’s strategy.

Because consumer demand for CPO vehicles is so high, it creates a major opportunity for you to increase your profit margin on used vehicles — all while improving consumer satisfaction and loyalty.

There are countless reasons why stepping up your dealership’s CPO focus in 2017 is a smart idea. CPO vehicles offer unique value to consumers, and overall demand has never been higher. Making these compelling vehicles a bigger part of your overall strategy will help you deliver more value to consumers, while improving your profit margin on every vehicle.

So resolve to boost your CPO sales numbers in 2017 — because this resolution is worth sticking to!  

Rob Christman is a 15-year veteran of the auto industry and has worked for top brands such as Autotrader and Kelley Blue Book in both corporate product development and field sales positions. Rob has presented at many industry conferences, most recently at the 2016 Used Car Week CPO Forum.

Meet new CPO & remarketing leader at Mercedes

ATLANTA - 

Al Katz has been with Mercedes-Benz USA for 18 years and served in various managerial roles throughout his nearly two decades with the company.

And on Jan. 1, he became the new general manager of pre-owned, remarketing & fleet operations for Mercedes.  

That includes the popular certified pre-owned segment, and in an emailed Q&A, Katz shared some of his targets for CPO.

“Our primary goal is to deliver an exceptional customer experience by providing the industry leading CPO program for the No. 1 luxury import brand in the U.S,” Katz said.

“We want to grow Mercedes-Benz share of voice in an extremely competitive pre-owned marketplace to increase awareness of the value and affordability of Mercedes-Benz and the benefits of certified pre-owned, including a comprehensive inspection by factory trained technicians, genuine Mercedes-Benz parts and our industry-first unlimited mileage warranty,” he said.

“If the customer is thrilled with their ownership experience, loves their car and recognizes the value in Mercedes-Benz products, the likelihood of brand retention increases. By achieving these goals, we optimize residual values, which aids in the success of selling new Mercedes-Benz vehicles.”

During his time with MBUSA, Katz has been a market manager, a region aftersales manager for five years, a region pre-owned manager for two years and area manager for five years. For all of those posts, he was based out of the Central Region in Chicago.

For the past year-and-a-half, Katz has been the department manager of retail vehicle distribution at the Atlanta headquarters.

He enters his new position following Mercedes’ best-ever year in the CPO segment, according to Autodata Corp. The company sold 123,134 certified vehicles last year, a 2.3-percent improvement.

“We are constantly reviewing ways to enhance our CPO offerings — and making sure our dealers are in position to ensure retail success. Our greatest opportunity is creating awareness to inform prospective clients of the value proposition that Mercedes-Benz vehicles offer, being affordable to own and operate,” Katz said.

“We are creating this awareness with our comprehensive media plan which covers traditional mediums and is expanding into more contemporary communications channels. Additionally, we offer ongoing training for our dealerships on the benefits of CPO for both dealers and customers,” he said.

“In summary, Mercedes-Benz certified pre-owned is in an excellent position for continued success in this competitive marketplace,” Katz said. “The momentum driving this legendary brand is three-fold: sensational products, professional and engaged dealer partners, and a CPO warranty that provides unlimited mileage and unlimited confidence to our customers.”

 

Autotrader's top CPO deals for January

ATLANTA - 

Autotrader has come out with its top picks for certified pre-owned deals in January.

"Shoppers who want to start 2017 off with a smart vehicle purchase can easily do so by choosing any of these CPO offers in January," said Autotrader executive editor Brian Moody. "CPO is a popular category for car buyers on a budget, helping consumers get a high-quality vehicle at a great price."

Autotrader editors' top January CPO deals are as follows: 

— Audi's CPO program provides an exceptional warranty, says Autotrader. It includes up to six years or 100,000 miles of bumper-to-bumper coverage. This month, Audi is also offering qualified shoppers CPO Audi vehicles from model years 2013–2015 at interest rates as low as 1.9 percent for up to 60 months.

— Cadillac's CPO program has bumper-to-bumper coverage for up to six years or 70,000 miles, which includes zero deductible, roadside assistance and full warranty transferability to subsequent owners. In January, qualified shoppers can receive 0.9 percent interest for up to 36 months.

— Hyundai's CPO program’s warranty is the best in the business, according to Autotrader. Hyundai offers five years or 60,000 miles of bumper-to-bumper coverage and 10 years or 100,000 miles of powertrain protection. Also this month, it's extending low interest rates on the Elantra and the Sonata. For up to 48 months qualified shoppers can get 0.9 percent interest.

— Land Rover's CPO program has a warranty encompassing bumper-to-bumper coverage for up to seven years or 100,000 miles. For qualified shoppers, interest rates are as low as 0.9 percent for 24 months, or 1.9 percent for up to 60 months. Additionally, all month Land Rover is offering several low-interest deals in especially on 2013–2015 models, according to Autotrader.

— Kia's CPO program delivers 10 years or 100,000 miles of powertrain protection and an extra year of bumper-to-bumper coverage after the factory warranty expires. January’s qualified buyers purchasing CPO models of the Sorento or Optima receive 0.9 percent interest for up to 36 months.

— Mazda's CPO program offers two compelling warranties, says Autotrader. The first has powertrain protection for up to seven years or 100,000 miles, and the second adds another year to the original bumper-to-bumper warranty. Mazda is also offering qualified shoppers in January, 1.49 percent interest for up to 36 months.

— Toyota's CPO program also offers shoppers two warranties.  The brand’s bumper-to-bumper plan extends the original factory warranty by one year or 12,000 miles. The other warranty provides up to 7 years or 100,000 miles of powertrain coverage. Also, qualified shoppers can receive 1.9 percent interest on CPO Camry models for up to 60 months all month long.

— Volvo's CPO program is among the very best, says Autotrader. Volvo offers seven years or 100,000 miles of bumper-to-bumper coverage. Throughout the month, qualified shoppers can take advantage of a special offer from the brand and receive 0.9 percent interest for up to 24 months.

Auto industry leaders predict 2017 used-car sales

CARY, N.C. - 

Used-car sales are predicted to do well in 2017, following what was a record year for used-car sales, according to two automotive industry leaders. 

In an AIADA AutoTalk webinar in late December,  KAR Auction Services chief economist Tom Kontos and David Lim — vice president and equity analyst at Wells Fargo Securities — discussed last year’s used-car sales and what to expect this year.

“It looks as if the cars that are coming back off lease, as repos, as trade-ins, as off-rental or as off fleet units are all finding a new home in the retail side of the business,” said Kontos. “Used-car sales through November, according to NADA data, for franchise dealers are up 3.6 percent; and for independent dealers, used-car sales are up 6 percent.

“So, the retail sales of used cars, if you combine those, they’re in the 4.2 percent range, which is pretty much exactly the rate of growth in supply (in 2016) at auction.”

Lim also agrees that used vehicles should do well in 2017. He said public auto dealers have been vocal about the opportunity in used vehicles, as many have launched standalone used-car outlets. 

“There’s definitely opportunity where you know these franchise dealers are going to get first dibs and in our view, I think having first dibs is actually a benefit for guys that also have standalone stores where they could feed those stores with the inventory,” he said.

They also touched on the certified pre-owned market.

Autodata Corp. reported that there were 2.64 million CPO sales in 2016, which was the sixth straight best-ever sum for this rapidly expanding market.

Lim said CPO programs are attractive and bring customers into the fold who can’t afford a brand-new luxury vehicle, but can purchase a CPO and maybe someday down the road buy the brand new version of their CPO vehicle.

“The impression that I have is that (2017) could be a pretty good year for used vehicles,” Lim said.

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