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There is certainly a caveat to the inroads the certified pre-owned world has made with new-car shoppers, but that Catch 22  leaves room for growth.

Consider these findings from the AutoTrader.com 2013 Certified Pre-Owned Study.

Although CPO consideration has increased among new-car shoppers, their overall familiarity with specific details of CPO program has shown a tremendous drop — and, perhaps more importantly, the percentage willing to shell out a premium for a certified car has declined.

But this is where there is the potential for growth.

The study, which was conducted by Morpace, found that when shoppers are exposed to more information about CPO, they are more willing to consider buying certified.

“While it is good to see that consideration for CPO vehicles is strong, there is still a lot of confusion about what CPO actually means,” said Rick Wainschel, vice president of customer insights at AutoTrader.com.

“The more shoppers know about CPO, the more willing they are to consider the vehicles.”

Here are the statistics from the study backing up those assertions:

In 2013, 55 percent of new-car shoppers were likely to consider a certified vehicle. A year earlier, only 43 percent were likely to do the same.

As such, the gap between CPO consideration in the new-car market and CPO consideration in the used-car market has narrowed.

This year, 60 percent of used-car shoppers were likely to consider going certified, compared to 61 percent a year ago.

Going back to Wainschel’s point about the benefit of educating consumers, AutoTrader pointed out that when new-car shoppers are educated about the definition of CPO, their CPO consideration goes up to 69 percent. For used-car shoppers, it goes up to 66 percent.

AutoTrader also provided further detail on the willingness of buyers to pay a premium on CPO over a used, non-certified car.

Thirty-four percent of used-car shoppers were willing to shell out the premium this year, down from 51 percent two year ago. Meanwhile, 62 percent of new-car shoppers were willing to do so in 2013, compared to 67 percent in 2011.

“But the good news is that both groups indicated that the amount they would be willing to pay increased significantly.  In just two years, the premium used-car shoppers are willing to pay increased 67 percent from $1,292 in 2011 to $2,163 in 2013,” AutoTrader indicated.

“The premium new-car shoppers are willing to pay more than doubled in that timeframe, from $1,245 in 2011 to $2,940 in 2013.”

Wainschel also emphasized how extremely vital CPO programs are to both dealers and automakers.  On the dealer side, it gives them a tool to set themselves apart from competitors in their market while also building customer relationships that last via increased service and loyalty.

As for automakers, CPO can be an early-entry point for some consumers. Additionally, the certified program can have a “trickledown effect” in the form of stronger off-lease management and residual value protection.  And that can help the OEM bolster its lease offerings and utilize stronger trade-in values to spur new-car sales.

“CPO programs are incredibly important to both dealers and OEMs, and both sides need to ensure that they are doing everything they can — from certifying the right amount of their eligible inventory to educating shoppers on what CPO means and merchandising CPO vehicles effectively — to turn shoppers into CPO owners. Doing so can have a lasting, positive impact on both the brand and the dealership,” Wainschel continued.

Sharing some loyalty numbers, the study found that 70 percent of CPO owners show loyalty in the service lane, versus 61 percent of people who never had owned a certified car.

Additionally, 60 percent of CPO owners return to the same store for their next purchase against 47 percent of those who haven’t owned a CPO.

And among current owners of CPO vehicles who are looking to buy another certified ride, 92 percent are likely to stay with that brand.
 

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