Certified used vehicle sales will decline in 2023, their prices will remain elevated but come down from historical highs and leasing is poised to grow, predict industry analysts.
Cox Automotive data shows that CPO sales in 2022 totaled nearly 2.47 million units, a decline of nearly 280,000 units or 10.2% lower than sales in 2021. The company predicts that CPO sales in 2023 will slide another 11% to 2.2 million units, the segment’s lowest volume in 10 years.
That said, CPO sales got off to a strong start this year.
The industry sold 202,074 CPO units in January, up 21.5% when compared to sales in January 2022, but down 10% compared to December 2022, according to Cox Automotive. The company also said January CPO sales typically show a decline month over month.
The big reason CPO sales are forecasted to stall this year is …
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Last month marked the first year-over-year rise in certified pre-owned sales since September 2021, according to a Cox Automotive Data Point report Tuesday and month-by-month data the company previously sent Auto Remarketing.
Beyond snapping a 14-month streak of year-over-year declines, the CPO market also has this positive sign as year-end draws near: annual sales are likely to meet and potentially exceed Cox Automotive’s projection of 2.4 million units.
Citing Motor Intelligence data, Cox said there were …
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Jay Maxwell of the Costco Auto Program returns to the Auto Remarketing Podcast this week
In this episode, we talk about the program's latest certified pre-owned incentives, the importance of partnerships between dealers, automakers and third parties in CPO, plus much more.
To listen to the conversation, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
Editor's note: To clarify, the correct amount on a Chevrolet Bolt incentive mentioned in this podcast is $500.
The jury is still out on how November fared in the overall used-car and certified pre-owned markets, but recent industry analyses paint a clear picture of how the fourth quarter has started.
Beginning with CPO, there have been 2.04 million certified pre-owned vehicle sales through 10 months of the year, according to an analysis of Motor Intelligence data in the latest Kontos Kommentary from ADESA chief economist Tom Kontos.
That’s a …
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While certified pre-owned (CPO) programs appear to be more important than ever for executives of mass market and premium brands given production disruptions that have limited supply of new vehicles, two distinct narratives are playing out, according to a recent Voice of the Experts (VoE) report from the J.D. Power Valuation Services group.
Most premium manufacturers are doubling down on their CPO strategies, working more closely with their dealership communities to aggressively promote their programs. It is seen as an essential effort to ensure high-quality vehicles are available in showrooms to provide good options for prospective buyers who are not finding what they are looking for — at prices they are willing to pay — in their “new-vehicle” inventory.
On the mass market front, the picture is mixed. While some brands have focused on maintaining the standards that have clearly separated CPO from regular used-vehicle stock, others are expanding their programs by extending qualification requirements to include older vehicles with higher mileage. Enhancing conventional CPO programs with these new certified tiers are helping to increase the number of vehicles that are eligible in a market continually faced with inventory constraints.
The study was based on in-person interviews with CPO executives across 11 brands, with premium segment executives representing 45% of respondents and the mass market segment accounting for 55% of respondents.
Despite the current business environment, 64% of all executives surveyed characterized the CPO market as being in a “healthy or very healthy” state. However, a closer look reveals important differences between premium and mass market brands. Half of the mass market executives interviewed found the CPO environment to be in an “unhealthy” state, with no one in the premium category agreeing with this negative assessment.
Interestingly, the availability of CPO-eligible vehicles was not the cause of negative sentiment. This was true even among the mass market brands. More than 90% of all respondents said they had no problems finding eligible inventory for their initiatives.
The main concern expressed revolved around dealership engagement. Two-thirds (67%) of mass market respondents pointed to challenges with securing committed participation in CPO programs. During the conversational portions of the interviews, executives for mass market brands indicated that many dealerships were so busy filling demand backlogs for regular used vehicles that they were not taking the time to go through the certification process.
The opposite view was held by nearly all premium brand executives. In this segment, 80% stated that delivering on the brand promise of their offerings — especially when positioning CPO as an alternative to a new-vehicle purchase — was a priority shared with their top dealerships.
It is a point that manifested itself on questions about how well dealerships are converting used-vehicle inventory for the CPO market. While 33% of executives for mass market brands stated that dealerships were doing a good job of harvesting CPO-eligible inventory, the number almost doubled (60%) among executives of premium brands.
Looking forward
With regards to the future, 60% of executives for premium brands say they intend to stay the course with current standards and procedures. Among those who stated plans to adjust their strategy, those changes primarily focused on enhancing promotion and advertising initiatives to raise awareness of their CPO programs.
By contrast, every executive for mass market brands said that significant changes to programs were underway to optimize and expand CPO-eligible inventory utilization through the rest of 2022 and beyond. A whopping 80% of these executives said they plan to supplement current CPO offerings with programs that expand beyond traditionally eligible vehicles.
In the final analysis, however, the importance of CPO programs was clear to all but two of the brands that participated in the survey. As the business landscape evolves, with new- and used-vehicle prices moving back from historic highs to more normalized pre-pandemic levels, executives stated that CPO will have an elevated role in the go-to-market strategies of both premium and mass market automotive manufacturers.
Ben Bartosch is manager of CPO solutions at J.D. Power and will be one of the speakers during Used Car Week, which begins on Nov. 14 in San Diego.
Dennis Pennington, used-car director at Andy Mohr Ford, has been in the auto industry for 30 years, the last nine of which he has spent at the Plainfield, Ind., dealership.
He recalls a conversation several years ago with the late Rick Case, the founder of the eponymous dealer group with locations throughout Florida and Georgia.
“He kind of opened me up to the national thinking. Not just local thinking, not just being No. 1 in the region or No. 1 in the state, but being No. 1 in the nation,” Pennington told Auto Remarketing. “And our mindset is that national-level of customer service or that national level of sales. So, it's just kind of thinking big."
Thinking big and thinking national has paid off for Andy Mohr Ford.
The dealership has been Ford’s No. 1 seller of certified pre-owned vehicles for two consecutive years and is on pace to make it three straight.
With these accolades, Andy Mohr Ford is being recognized as Auto Remarketing’s 2022 CPO Dealer of the Year, an award sponsored by KAR Global.
The dealership joins the likes of previous winners Paragon Honda/Paragon Acura, Galpin Ford, Cavender Toyota and many others.
Andy Mohr Ford will be recognized during the Used Car Awards Luncheon on Nov. 15 at Used Car Week, which is being held at the Manchester Grand Hyatt in San Diego. The luncheon is also sponsored by KAR.
Pennington will also be a panelist on “The Best CPO Dealers in the USA: Selling More Used Cars” panel discussion on Nov. 14 at Used Car Week, along with Andrew Ashman of Ford, Mark Gilbert of Automotive Training Network, Danny Papakalos of #1 Cochran and Mark Weida of Street Smart Auto Brokers.
“When I started at the dealership nine years ago, the general manager, Chris Huston, told me that he wanted to focus on the certified pre-owned program. So, our main focus has been that program,” Pennington said. “And then when they revamped it a couple years ago and they encompassed all the other brands, just putting the focus towards that, and making sure the salespeople were trained on it, using that to build the value, (we) use it as our selling tool.”
The expansion Pennington refers to is the Ford Blue Advantage program, which launched in 2021. It includes an expanded level of inventory from what would typically be included in the traditional Ford certified pre-owned program.
Ford dealers can now use two different levels of certification for used vehicles: Gold Certified and Blue Certified.
Gold Certified, which is essentially the standard of the traditional Ford CPO program, includes a 172-point inspection and includes a 12-month/12,000-mile comprehensive limited warranty (whichever comes first) and a seven-year/100,000-mile (whichever comes first) powertrain limited warranty.
These vehicles must be 6 years old or newer and have fewer than 80,000 miles on the odometer.
Meanwhile, the Blue Certified tier expands that eligibility. Those vehicles must be 10 years old or newer and have 120,000 or fewer miles. They undergo a 139-point inspection and include a 90-day/4,000-mile (whichever comes first) comprehensive limited warranty. Additionally, non-Ford vehicles can be certified under the Blue segment.
Pennington said that in a crowded market, “you've got to use whatever little edge you can get to set yourself apart,” and Ford Blue Advantage helps to do that by providing additional peace-of-mind and warranty that other stores may not be able to on older vehicles.
Being able to certify vehicles up to 10 years in age also helps in sourcing CPO inventory, given constrained off-lease volumes amid already tight used-car supply.
It “broadens” the age range of vehicles Andy Mohr Ford looks to acquire, Pennington said.
“When we're looking to trade for some of those vehicles, where these other guys, they may be a little more cautious, we’re able to go a little heavier in some of those cars, because we know that we're going to be able to turn around and sell them,” he said. “A lot of people don’t sell some of that older stuff and they can't back the older stuff, that's why they don't want to sell it. So, for us, it just helps us out.”
To find these vehicles, Pennington said the dealership turns to mining the service department for vehicles as well as searching for customer cars that might be up for sale via private party.
For more best practices in CPO, be sure to catch Pennington’s insights on the ‘Best CPO Dealers’ panel at UCW. More information is available at www.usedcarweek.biz.
The full list of Auto Remarketing’s CPO Dealer of the Year honorees over the years can be found below.
2022: Andy Mohr Ford
2021: Roger Beasley Mazda South
2020: Mullinax Ford
2019: Cavender Toyota
2018: Trophy Nissan
2017: Kia of Irvine
2016: Fletcher Jones Motorcars
2015: Bill Luke Chrysler Jeep Dodge & Ram
2014: Hyundai of New Port Richey
2013: Galpin Ford
2012: Longo Toyota
2011: Karl Chevrolet
2010: Paragon Honda/Paragon Acura
