IRVINE, Calif. -
The certified pre-owned market continues to see strong year-over-year gains, with automakers improving results by 8 percent in April and pushing their year-to-date sales up 12 percent, according to Autodata Corp.
 
However, since inventory sourcing continues to be a big challenge for many dealers, Auto Remarketing sought out some of the best advice to offer our dealer readers.
 
Given already restricted used-vehicle supply, rising wholesale prices and the impact of leasing cutbacks in the recent past, finding innovative ways to source high-quality used inventory has become a necessity for dealers.

One way that some dealers have responded to relatively short CPO-worthy supply is through existing customers who bring their late-model vehicles into a dealer service shop.

It appears to be an effective method for several dealers in the CPO market, where sales — according to Autodata Corp. — reached 155,675 units in April and eclipsed 575,000 through the year’s first four months.

For instance, at Kia — which is in its fourth  year of reporting CPO sales data — director of fleet and remarketing David Carp has found that dealership service shops are an effective avenue for generating CPO inventory. The automaker’s April CPO sales fell 6.6 percent to 639 units, but its year-to-date sales have improved 18.6 percent to 2,652 certified units.

When asked if the service shop is a good avenue for finding CPO-worthy cars, Carp responded: “Yes, especially when the customer waits for the particular vehicle to be fixed, or if we can provide a new Kia vehicle to use while their current vehicle is being repaired.”

Continuing on, with auction prices so high these days and a limited pool of Mazda vehicles from which to choose, John Hine — owner of two Mazda dealerships in California — discovered that utilizing the service lane as a CPO sourcing channel has been effective, as is contacting consumers directly.

Through vAuto, Hine, whose John Hine Mazda store in San Diego Mazda  ranks as the automaker’s ninth store for certified sales in the U.S., is able to cobble together lists from AutoTrader.com of private-party sellers looking to move their Mazdas.

 

These lists are then printed and doled out to Hine’s sales staff. The team calls the sellers of the vehicles that are most likely certification eligible and arranges appointments to have these vehicles appraised. The appraisal is good for seven days.

“Usually, a private-party vehicle is one of the nicer vehicles you can find,” Hine pointed out.

“We emphasize the benefit of selling to us,” explained Dave Miller, general manager and vice president at John Hine Mazda. “We can make their payoff, give them a check for the car right away and eliminate a lot of the risk and frustration of trying to sell it on their own. It’s a win-win for everyone, especially right now in this market.”

Turning to the service shop as a CPO inventory source has also been touted as an effective strategy North of the border.

At this spring’s Auto Remarketing Canada 2011 conference, Doug McDougall, of Don Valley North Toyota in Markham, Ontario, found that it makes sense to turn to existing customers in the service shop for sourcing.

“It makes sense to pay our own customers,” McDougall explained to attendees.

More importantly, he added, "We get the story.”

In other words, by acquiring inventory from existing customers in the service lane, dealers can get a more accurate picture of a vehicle’s history and condition since the unit is already in the system.

Some Import Dealers Turn to CPO as Production is Reduced

Another concern for the overall auto industry is the the supply challenges stemming from the aftermath of the Japanese disasters.

Japanese automakers have been especially affected by the fallout, and a few certified executives shared their thoughts with Auto Remarketing as to how dealers are facing these challenges.

“With the interruption of new-car production in Japan and the U.S., the dealers are placing higher emphasis on CPO vehicles,” stressed Honda national remarketing manager Dan Crowe. “Both Acura and Honda dealers have increased their CPO inventory by 15 percent and have experienced a substantial increase in CPO sales.”

He added: “We continue to support the CPO program with special APRs on certain Honda and Acura models.”

So far, the ramp up in certified inventory appears to be working, he noted. Honda moved 20,361 CPO vehicles during the month, an improvement of 23 percent year-over-year. Through April, its yearly sales have reached 74,368 units, a 23.2-percent hike.

Meanwhile, Acura’s certified sales improved 21 percent to 4,444 vehicles for the month, and its year-to-date sales stand at 17,215 units (up 33 percent).

Mazda is another OEM that has seen significant CPO growth, as April sales climbed 212 percent to 1,558 certified vehicles and year-to-date sales are at 5,907 units after fourth months (up 230 percent).

When asked what advice he’d give to dealers, Mazda’s group manager of remarketing and CPO Eric Watson noted: “The value of used cars have increased significantly in the past year. Dealers should actively prospect their owner to source vehicles for the CPO program.”

Mazda has been helping its dealers by rolling out aggressive financing and CPO advertising, Watson added.

“In May, Mazda launched an aggressive CPO APR program to provide customers with a strong CPO value proposition. We also increased our CPO advertising to drive more customers to our dealers’ showrooms,” he shared.

Automakers Post CPO Gains

Moving along, other automakers shared their monthly certified sales results, many of which were quite strong.

Lexus, for instance, posted its best-ever April with sales of 6,507 certified vehicles. This edged last year’s record by 1 percent. Through April, Lexus has moved 23,831 CPO vehicles in 2011, an 11.6-percent gain from last year’s pace.

Volkswagen also achieved record sales, moving 7,486 CPO units, which was up 61.1 percent over April 2010. Year-to-date sales reached 23,612 units, a 58.9-percent improvement.

Audi’s CPO sales came in at 3,609 vehicles, up from 2,285 in the year-ago period. Through the first four months of the year, Audi sold 11,736 CPO vehicles, compared to 8,320 units during the same period of 2010.

Moving over to the Big 3 automakers, Ford moved 12,228 CPO rides during the month, an increase of more than 3 percent year-over-year. So far in 2011, its CPO sales have hit 41,146 units through four months, down almost 10 percent.

The Ford division was up 2.8 percent for April sales, while the Lincoln/Mercury division climbed 7 percent during the month.

Next up, General Motors’ certified brands combined to sell 26,627 units in April, marking a 5.8-percent hike. Through April, they have moved 104,834 units, an 8-percent hike.

GM Certified Used Vehicles moved 24,624 vehicles in April, up 8.1 percent from last year. Year-to-date sales have hit 96,948 units for a 10.4-percent gain.

Over at Chrysler, its dealers moved 10,254 certified vehicles last month. This marks a 6.4-percent increase. Through April, CPO sales for the automaker  came in at 38,152 units, a 12.3-percent hike.

By brand, Dodge led the way with 3,712 CPO sales (down 3.7 percent), Jeep sold 3,401 certified vehicles (up 7.3 percent), and the Chrysler brand saw CPO sales climb 20.3 percent and reach 3,141 units.

Moving on, Toyota recorded CPO sales of 30,124 units, which is down 3.1 percent from April 2010. Through four months, its CPO sales have hit 111,294 vehicles, an increase of 16.7 percent.

Meanwhile, Nissan sold 7,805 certified vehicles last month, marking a 23.2-percent increase. For the year, it has sold 27,661 CPO vehicles, a 7.4-percent lift.
Infiniti’s CPO sales came in at 1,136 certified units for the month, up from 918 units a year ago. Year-to-date sales reached 4,071 units, up 9.9 percent.

Hyundai moved 3,268 CPO vehicles during April, an increase of 106.6 percent. Its year-to-date tally is up 119.5 percent at 12,193 CPO units sold.

Mercedes-Benz recorded certified sales of 7,093 units, down 8.5 percent year-over-over year. It has sold 26,632 CPO vehicles in four months of 2011, compared to 38,188 units in the same frame of 2010.

BMW posted April CPO sales of 8,147 units, down 23.3 percent year-over-year. Year-to-date sales were at 31,104 units, down 18.6 percent from the first four months of 2010.

Over at Subaru, its dealers moved 2,012 CPO vehicles for a 28.2-percent hike. Year-to-date sales have climbed 40.3 percent to 8,074 units.

Volvo’s dealer body sold 1,173 certified vehicles in April, representing a 23.2-percent drop. Through April, yearly sales have hit 4,066 units, a decrease of 31.4 percent.

Among other automakers, Porsche reached CPO sales of 776 units, up 9 percent from April 2010.

Jaguar sold 297 CPO rides, down from 377 units a year ago. Land Rover saw its CPO sales fall 12.1 percent to 196 units.

Mini moved 194 certified vehicles, compared to 212 in April 2010.

Saab sold 82 certified units, down from 266 last April.

And finally, Maserati increased its CPO numbers from 23 sales to 40 units sold. Mitsubishi recorded 38 CPO sales, compared to 54 in April 2010, and Bentley was estimated to have sold 30 certified vehicles.