CARY, N.C. -

For some automakers, finding certified pre-owned vehicle buyers is similar to, well, a fishing trip at the lake.

Dan Rodriguez says Honda does most of its marketing digitally for its certified pre-owned vehicle program, and the millennial customer is the target of most of that digital marketing.

“I like to say they’re a digital warrior,” said Rodriguez, who is manager of auto remarketing and certified pre-owned for American Honda.

Rodriguez wants to ease the process for those “warriors” to find what they need.

“They’re very comfortable with the Internet,” he said. “They go out and do a lot of research, so we know that’s kind of where the fish are. We want to make it real easy for them to be able to find that information.”

Fiat Chrysler Automobiles head of certified pre-owned vehicles Eric Swanson has a similar view on attracting those fish, figuratively speaking saying his company works to put itself in places where used-car shoppers will be when they shop online.

“There’s something to be said about just sort of going out in the middle of the lake and then dropping your line and hoping the fish comes along,” Swanson said.

He continued, “You have to hunt around for the fish.”

Based on last year’s numbers, Fiat Chrysler and other automakers had a lot of good days at the lake. Nissan and Honda reported record years in CPO sales, and 2019 was Honda’s sixth consecutive year of growth for CPO sales.

Raising awareness an ongoing challenge

But even with that good news, challenges remain. Consumers have been bombarded with information and data on CPO, said Rodriguez of American Honda.

“There is a little bit of a feeling that the programs are ubiquitous, you know, all alike,” Rodriguez said.

To help distinguish itself, Honda announced last year it has upgraded its CPO program, marketing it as HondaTrue Certified and HondaTrue Certified+ for 2018 and newer vehicles. 

He added, “So, for us, it’s really showcasing what the Honda advantages are, providing that transparency and what’s done to make it worthy of being HondaTrue Certified and making it easy for them to find the information they’re looking for.”

Honda seemed to succeed in that area last year, reporting all-time record sales of approximately 288,000 CPO Hondas, which was an 8.6% year-over-year increase.

Mazda has seen that customer awareness of CPO “has increased exponentially,” said Mazda North American Operations program manager, certified pre-owned Preston Hammontree in a written response to questions from Auto Remarketing.

“Customers are actively seeking out CPO vehicles, where before it was usually something the retailer educated the consumer on prior to purchase,” Hammontree said.

Swanson at FCA also had some positive thoughts about consumer attitudes toward CPO. He noted that FCA ended 2019 at 294,266 certified pre-owned vehicle sales, which was a 10% increase year over year.

He has seen surveys showing that once customers learn about what CPO is, they like it and are willing to pay more for it.

“They want peace-of-mind, they want a warranty, but they don’t necessarily know about CPO,” Swanson said.

He said the majority of customers only find out about CPO after they come in to the dealership. OEMs should work to do a better job in that area, he added.

“It’s tough because of budgets and everything else to figure out a way to move us out of the very low part of the purchase funnel and start moving us up in the funnel,” Swanson said.

He added, “I don’t think we’re ever going to get to an awareness-creating campaign where we’re running TV commercials during … the NFL season or on big sporting events. We have to kind of figure out and pick our spots.”

Swanson said FCA has experimented over the past year with Facebook campaigns and YouTube videos to find clever methods of getting FCA dealers’ inventory in front of active shoppers for used cars.

“We need to start going out and tapping customers on the shoulder and telling them, ‘Hey why don’t you look over here, here’s what certified is,’ and kind of continue that education,” he said.

At Nissan, the company has reported consistent CPO overall volume from 2006 to 2019, and Nissan certified pre-owned senior manager Michael Verpoort reported a record year with 2019 Nissan brand CPO sales at 217,601.

To improve the program, the company has focused on “first and foremost, building awareness of our CPO program,” Verpoort said.

Second, he continued, is to support the program in areas such as captive cash, “making sure we’re leveraging our captive provider and APR support.”

“And I think the biggest thing is a few years ago we worked on dealership consulting and working with our dealers on engagement,” Verpoort said. “So those have been kind of the cornerstones of what we’ve been working on to really build our certified pre-owned brand for our dealers and for Nissan.”

Is consumer awareness of CPO where it needs to be? Verpoort noted a recent focus group his company conducted showing that consumers are still somewhat unaware that certified pre-owned exists, and they were also unaware of what the program offers for them.

But similar to what Swanson at FCA said earlier, Verpoort said Nissan found that consumers are willing to invest in CPO when they understand what the program means.

“So I think awareness from a consumer standpoint is a big opportunity for the industry,” Verpoort said.

How do brands stand out from the pack? Not much, some argue

One issue that Verpoort sees as affecting awareness: Manufacturers for the most part provide very similar offerings when it comes to certification. If you ask him what makes Nissan stand out against other mass market mainstream CPO programs, he answers that the automakers “don’t necessarily compete with each other when you look at CPO.”

“It’s really trying to leverage our brand or off-lease portfolio, those types of things, and really work on dealer engagement,” Verpoort said.

He continued, “I think that’s the biggest area of opportunity we have. As far as differentiating, the purpose of certified is really just that, it’s to bring confidence in the customers, that they’re purchasing a vehicle that they know is backed by the manufacturer. I struggle when I look at competition. The competition is really among ourselves.”

Jim Muller, who leads Ford’s CPO program, agreed on differentiation between OEMs’ programs.

“They’re all pretty similar, surprisingly,” he said.

Any differences at all between Ford’s program and others? “We have a broader dealer network, so we’re in every town in the U.S. with a very comprehensive CPO program,” Muller said.

He added, “We have a very strong warranty program. Our base CPO warranties are a little bit longer than some of the competitors.”

The Hyundai CPO program, according to Hyundai senior group manager, retail operations Tom Love, “is as it’s been almost since inception.” Hyundai reported 81,397 total CPO RDR (retail delivery record) Hyundai units sold for 2019, and 294 Genesis CPO RDR vehicles.

“I think how we’re trying to improve the program is trying to educate the dealers more and more on the program,” Love said.

He continued, “I think we’re trying to train the dealers on the value of the program. We’re trying to work with our dealers to say, this is a viable alternative, almost like a second brand to Hyundai.”

Helping dealers maximize eligible inventory

Swanson of FCA said the automaker employs a field team of dedicated Chrysler personnel that is “100% dedicated to certified pre-owned.”

“It’s nice because we obviously have new car field reps, but we also have CPO field reps that go out and talk to the dealer about their used-car business, and especially about CPO, obviously,” Swanson said.

The field reps review information such as dealers’ current inventories and how many eligible vehicles are being certified.

Although FCA’s CPO business has grown over approximately the past eight years, the company always has room to grow in areas such as working to get new dealers on the program, Swanson said. The company can grow in areas such as working with dealers that are not currently selling certified pre-owned, or working with dealers that are doing a good job at selling CPO but could do more.

“For whatever reason, they’re not quite maximizing out everything in their inventory that’s eligible,” Swanson said.

He added, “So it’s just pointing out those opportunities and sitting down with the dealers and having those types of discussions and looking at their inventory. And talking about where they acquire their vehicles is going to be especially important with all these lease returns that probably a lot of the OEMs have coming back.

“A lot of discussions need to be around making sure your inventory has got the right cars in it, and that they’re from the right resources, because obviously with all of those lease returns, we want the dealers to keep as many of those as they possibly can and sell them as certified.”

Marketing: Experimentation could be necessary

“Everything is online now,” Ford’s Muller said about how Ford is working to market CPO on a national level.

“No more TV. No more newspaper,” he added.

Swanson at FCA said the company realizes that customers are using technology such as paid search, Facebook, Snapchat and Twitter. In those areas, FCA essentially has its bases covered, he said.

“Now it’s time to start venturing out into more experimental things and start trying to reach out, and like I said, tap the customers on the shoulder and try to get them to look,” Swanson said.

“We market CPO on a national level digitally,” said Love of Hyundai.

Love added, “We also do a lot of work with looking more and more to get on the social media bandwagon.”

Selling points attract fish to CPO bait

When communicating through all those channels, what do automakers list as selling points that make CPO valuable to customers?

“The biggest selling point is peace-of-mind,” said Verpoort of Nissan.

Nissan tells prospective customers that a CPO vehicle has gone through a series of inspections and more importantly, Verpoort said, it’s backed by the manufacturer.

“So, you have that trust built in to that purchase,” he said.

He added, “It lets you know that the manufacturer is there to support you. And it lets you have access to dealers across the nation to be able to support that purchase, as well.”

Muller of Ford agreed with part of a recent Auto Remarketing article that discussed how the CPO vehicle of today is different than CPO vehicles of a few years ago. Today’s CPO vehicles are more likely to feature technological bells and whistles such as Bluetooth, navigation and backup cameras.

“I think five years ago, there was a pretty big gap between a new vehicle and a 3-year-old, 4-year-old, 5-year-old vehicle on technology,” Muller said.

“And I think that gap’s narrowed,” he said. “A 3-year-old car today isn’t missing a huge amount of features compared to a couple years ago.”

Automakers are also coming out with new services in the area of CPO, and as examples FCA and Honda mentioned digital inspection programs they recently released. FCA dealers can download an app and perform inspections with their phones. Honda customers can visit the Honda site, click on a car and see the actual inspection checklist that took place on that vehicle.

Where dealers source CPO vehicles

In addition to lease returns, where else are dealers sourcing their CPO-worthy inventory? Verpoort of Nissan said lease returns are clearly the best source of vehicles. The next source comes from auctions. After that would be trades.

Verpoort also said that even though off-lease volumes could taper off, Nissan has a vision of 100% of its used Nissans to be certified within its dealer network.

“In addition, even though we may see off-lease drop, we still have the traditional trade opportunities,” Verpoort said.

He continued, “But most importantly, the service opportunities. Those are great sourcing for used vehicles for our dealers. So, I don’t anticipate having an issue with sourcing used vehicles. I think the opportunity when it comes down to it is dealers becoming more and more engaged on certified pre- owned.”