The 678,169 certified pre-owned sales in the second quarter represents a best-ever sum, says Autodata Corp.
Releasing CPO results on Tuesday afternoon, Autodata said there were 223,560 certified sales in June, which beats year-ago figures by 5 percent.
The daily sales rate was 8,598, compared to 8,519 in June 2015.
This completes the first half of 2016, in which dealers sold 1.32 million certified vehicles; this beats year-ago figures by 3.8 percent.
As for Q2, that record sum represents a 2.7-percent year-over-year improvement and is 4.9 percent stronger than the first quarter.
Kia had its best month ever, as did Land Rover, according to Autodata.
Kia sold 7,403 CPO units in June (up 21 percent). Land Rover sold 1,675 certified vehicles for the month (up 25.7 percent).
Asian brands led the way in June, selling 110,283 CPO vehicles for a 12.6-percent year-over-year increase. Year-to-date, they have moved 636,724 certified rides (up 9.7 percent).
European-brand CPO sales came in at 35,994 for the month (essentially even with year-ago figures) and their first-half sales reached 214,520 units (down 3.3 percent).
The Big 3 moved 77,283 CPO vehicles for June (down 2.2 percent). Their sales in the first half of the year (473,283) were relatively even with year-ago numbers (473,444).
Used-car leasing is still a small slice of the market, according to Experian Automotive data, which indicates that used cars comprised 3.98 percent of the lease market in the first quarter.
However, that’s up from a 3.90-percent share of the market in Q1 2015, which is more than a 2-percent rise, Experian said.
While that’s not astronomical growth, used-car leasing is starting to gain some ground in the industry (case in point: the Ally Pre-owned SmartLease program launched in April).
And leasing on certified pre-owned vehicles may be ripe for growth, as well.
“I would have to think that that’s definitely an avenue that many of these guys are looking into,” David Lim, a vice president and equity analyst with Wells Fargo Securities, said during an AIADA webinar this week.
From his discussions on an OEM level, Lim said he believes CPO leasing growth “is definitely a viable possibility.”
Lim said one challenge would the finding a way to incorporate the residual factor into the calculation, “but I think the OEMS, with all these vehicles coming back, they’re really leaving no stone unturned.”
While acknowledging that he is not privy to what, exactly, the conversations entail, Lim said that he has heard some OEMs are being approached by online retailers that could serve “as an outlet for used vehicles” during this supply surge.
Point is, automakers need a way to manage that excess supply, and CPO leasing could certainly be a possibility.
“There is simply a wave that’s coming and they’re definitely looking at, ‘how do we manage this going forward and try to maintain residual values?’,” Lim said, “because the thought is, once you put it to auction, the car is going to yield whatever it’s going to yield.”
He added that some are “trying to avoid this to a certain degree. ”
ADESA chief economist Tom Kontos — who joined Lim and Dealertrack’s Mark Furcolo as panelists — shared some overall thoughts on the rise of CPO.
“Definitely certified pre-owned sales have been another really positive factor in the market out there, specifically with off-lease volumes because it’s a very certifiable unit,” Kontos said. “So with the growing awareness — both among dealers to pitch CPO sales and by consumers to be attracted to those types of sales and be aware that’s an option for them — I think that’s been a real positive on the demand side for used-car sales.”
Speaking of used-car sales, Edmunds.com is predicting 3.1 million used-car sales for June, resulting in a SAAR of 38.0 million. In May, there were 3.2 million used sales with a SAAR of 38.0 million, Edmunds said.
TrueCar’s forecast indicates that there may be more than 3.24 million used-vehicle sales this month, which would beat June 2015 figures by 5.5 percent.
For dealerships in both the U.S. and Canada looking for certified pre-owned inventory, General Motors Financial is hosting a series of wholesale events where used-car managers might be able to find exactly what they seek.
GM Financial recently kicked off its annual elite sales series, which can give dealers exclusive access to hundreds of the best pre-owned GM vehicles at a series of one-day sales across the U.S. and — for the first year ever — in Canada, too.
Known for its creative marketing campaign each year, the finance company highlighted that this year’s series theme — 2016 Summer Lanes — is a nod to the upcoming summer Olympics in Rio de Janeiro and incorporates unique promotional features, including a 60-second video advertisement, social media campaign, exciting prize packages and a Buick Enclave giveaway.
“GM Financial’s elite sale events have earned a reputation among auto dealers as excellent opportunities to select from superior pre-owned GM inventory,” said Dan Heinrich, senior vice president of remarketing solutions at GM Financial.
“With two U.S. sales and our first-ever Canadian sale successfully completed, we look forward to carrying the marketing buzz and positive sales momentum we’ve created through the remainder of the sales,” Heinrich continued.
GM Financial kicked off 2016 Summer Lanes in the U.S. at ADESA Dallas on April 28, selling more than 200 units. Finance company officials noted many dealers reported visiting ADESA Dallas on April 28 exclusively to attend the company’s first elite sale of the year.
GM Financial also held its inaugural Canadian elite sale at Manheim Montreal on May 10. The company reported that nearly all of the 250 vehicles offered were purchased, and dealer attendance was at an all-time high for the location.
“Canadian buyers have never seen anything like an elite sale before, so we expected the response to be huge,” said John Paonessa, vice president of Canadian remarketing. “Elite sales offer us a unique way to showcase a large volume of GM product at one location. Dealers recognize that there’s something special about these sales, and we anticipate they will continue to respond favorably.”
The remaining 2016 Summer Lanes sales in the U.S. and Canada include:
—ADESA Halifax on July 12
—Columbus Fair Auto Auction on July 20
—ADESA Minneapolis on Aug. 23
—Manheim Statesville on Sept. 20
The National Independent Automobile Dealers Association has named Auction Direct USA chief executive officer Todd Hoagey its inaugural NIADA CPO Dealer of the Year.
Hoagey was presented the award Wednesday during the National Leadership Awards Banquet at the association’s convention.
NIADA said the award spotlights, “the quality of dealership operations, the vehicle certification process, the number of CPO vehicles sold and the dealer's commitment to providing a better product and level of service to his customers and the community.”
Auction Direct had three of the top four dealerships for NIADA CPO last year, including the top-ranked Raleigh, N.C., store.
The Rochester, N.Y., store ranked third and the Jacksonville, Fla., location came in fourth.
“Todd is committed to excellence, quality and customer service," Chris Murphy, senior executive vice president of Warrantech, the NIADA CPO program's administrator, said in a news release. “He has a well-rounded approach to implementing the CPO program into all facets of his dealership operations.
“Starting with service and moving into the sales process, the NIADA CPO program has shifted the culture in his dealerships. That shift can be seen in the marketing and advertising he does to separate his dealerships as best-in-class CPO facilities, which has helped him gain critical market share at all of his locations,” Murphy said.
NIADA CEO Steve Jordan said: “Todd has excelled in business, winning numerous awards thanks to his customer-centric business model. We're proud to honor him with this inaugural award. He exemplifies the best of the best among the dealers who are leading the way in offering the NIADA CPO program to their customers.”
Loyalty. A strong feeling of support or allegiance. Loyalty is devotion and faithfulness to a cause, country, group or person.
Book after book has been written on the topic of loyalty. But what is loyalty and what does it mean to you?
Keeping customers makes good business sense, but it’s not easy to do.
We spend much of our time prospecting new customers; getting them into the store, selling them the car they want and what they can afford. Selling them on your store and on you! So, now that you’ve got those customers, how do you keep them?
The downfall of many dealerships is that they don’t know how to keep customers. This is where there is money to be made — whether in F&I, service, body or parts — yet so few dealerships cultivate this market in order to capture repeat business. Why bother? What are the real advantages of customer retention?
Studies across numerous industries have shown that the cost of keeping a customer is about 10 percent of the cost of acquiring a new one. So, economically it makes good sense. Putting together a good retention strategy will also lead to increased customer profitability, since longer relationships are likely to produce lower account maintenance costs.
So, how does a certified pre-owned program affect consumer loyalty? Some will say that CPO programs in their stores do not drive repeat business and loyalty; arguing that it is the relationship with sales and service which keeps customers coming back.
Those relationships are indeed a piece of the equation. A CPO program offers your dealership a key differentiator over and above the sales and service relationship and another way to drive repeat business.
According to the 2015 Autotrader CPO study, 74 percent of CPO owners are likely to purchase the same brand, and 80 percent are likely to purchase from the same dealership again; 49 percent of CPO owners are likely to purchase a new vehicle in the same brand.
Jared Dively, general manager, Lakeland Volkswagen in Lakeland, Florida, said: “CPO is a smart choice for us. Not so much on gross but on service. When consumers come back to me, half come back for new. Our loyalty is 55-60 percent from certified customers which is higher for us than on new customers.”
Autotrader’s Car Buyer of The Future Study shows that CPO programs support business across several revenue centers at the dealership, especially the F&I department and service center, which reinforces the brand’s value by letting customers know they can buy with confidence and visiting your dealership for help and service. Doing this also increases your touch points on that consumer while driving incremental revenue.
Jay Ward, finance manager at Continental Nissan in Countryside, Illinois, said via Facebook, “The key to CPO is the wrap protection that is available. We do really well with CPO. Vehicle service contract penetration is high and the loyalty to the service department is great for brand retention.”
Finally, the Autotrader CPO study revealed that many consumers, particularly Millennials, aspire to luxury brands, but many can't yet afford the cost of a new car. CPO vehicles are a bridge that allows consumers to crossover into the brands they want to drive sooner.
Dively said, “CPO allows us to shorten the sales cycle on a consumer, to bring them back a year sooner, help them build their credit and then bring them back in.”
CPO vehicles offer many of the same benefits of a new car without the higher price tag and steep depreciation. Each vehicle undergoes an extensive inspection defined by the manufacturer or administrator of the program and must meet a variety of guidelines from age to mileage. Once certified, these vehicles come with a comprehensive warranty, giving buyers the confidence they desire when purchasing a pre-owned vehicle. In fact, 64 percent of shoppers say that the certification process and warranty give them peace of mind.
By cultivating customer loyalty, businesses are creating an army of strong promoters that can outshine their best marketing efforts. These net promoters can help save huge advertising and marketing costs for dealerships as word-of-mouth is a powerful and cost-effective marketing tool. Building loyalty forms a solid customer base helping the business to grow exponentially.
People buy from people they trust. By showing transparency in inspections and repairs and adding the safety and security of a warranty, it builds a high level of trust that brings customers back into your dealership time and time again.
Loyal customers, almost by definition, will purchase your vehicles and services again and again over time. In some types of business, you may end up selling more to one loyal customer in a year than you might to even 10 first time customers.
So what is loyalty? Simply put, it is the most powerful and cost-effective way of building your business.
And as we see it, certified pre-owned programs are a way of acquiring new consumers, keeping their business through several different departments at the dealership and are a strong indicator of repeat business.
For more information on shopper insights and buyer behavior, visit www.dealerlearningcenter.com.
Rob Christman is the fixed operations director of sales at Cox Automotive.
May represented a best-ever daily selling rate for the certified pre-owned car business and year-to-date CPO sales have eclipsed the 1 million mark, according to Autodata Corp.
Through five months, there have been 1.1 million certified sales, which is 3.6 percent ahead of last year’s pace, the firm said in its data set released Wednesday.
May’s monthly sum was 221,732 certified units sold — a 4.6-percent year-over-year decrease — but with 24 selling days, the average of 9,239 CPO units sold per day represented an all-time record.
Speaking of records, Lexus had its best CPO sales month ever, Autodata said. It sold 8,924 certified vehicles in May, beating year-ago figures by 16 percent.
Lexus and its Asian-brand peers led the way in May, selling a combined 108,553 CPO vehicles, which was up 0.9 percent. Through five months of 2016, Asian brands have sold 526,413 certified units, which is up 9.2 percent.
May sales for the Big 3 dipped 7.7 percent at 75,404 CPO units sold, but year-to-date sales still remain ahead of last year’s, with 396,000 units sold (up 0.4 percent).
European brands moved 37,775 certified vehicles in May, which was down 12.7 percent. Year-to-date, they have sold 178,528 CPO units (down 3.9 percent).
Autodata notes that Volvo and Bentley figures (which are included in the European and overall totals) are estimates.
Early indications are that May was another solid month for used-car departments at franchised dealers, including their certified pre-owned operations.
Citing data from the National Automobile Dealers Association, Cox Automotive chief economist Tom Webb said in a monthly commentary released Tuesday that franchised dealers’ retail used-car sales were up 5 percent in the first four months of the year.
That’s part of an overall retail used-car market that was up 6 percent, Webb said in the analysis accompanying the latest Manheim Used Vehicle Value Index, citing NADA. The same data indicates used sales were up 8 percent for independent dealers and 5 percent for private parties.
“Preliminary numbers and channel checks suggest sales rose again in May,” Webb said in the report. “Likewise, CPO sales, which were up 6 percent in the first four months of 2016, increased again in May, according to preliminary numbers.”
As for the most recently available final data on certified pre-owned, the CPO market in April was up more than 8 percent and approached 233,000 sales, according to Autodata Corp.
Autodata said there were 232,853 CPO sales last month, which beat year-ago figures by 8.3 percent and pushed the year-to-date tally to 879,211 sales (up 5.9 percent).
In the first quarter, CPO penetration of franchised dealer used-car sales remained essentially static from a year ago at 21.7 percent, according to Edmunds.com.
Typically, current-year CPO parallels leasing from three years prior, explained Edmunds director of industry analysis Jessica Caldwell.
And with off-lease volume being the story of the year in the used-car market, it’s a bit puzzling as to why CPO hasn’t yet taken a greater share of the franchised used market.
In due course, though, certified should pick up a bigger piece of that pie, she said.
“The inventory is there,” Caldwell said in a May phone interview. “There’s nowhere really for it to go at this point but up. So, I think that’s why it was a bit surprising.”
Edmunds anticipates that the CPO share of franchised used sales will increase as the year goes on. It may be an odd timing situation, Caldwell said, where more lease returns are hitting the market later, therefore bumping the full-year CPO penetration rate higher than what was seen in Q1.
Industry-wide certified pre-owned sales for May hadn’t been reported as of Thursday afternoon, but here is what we know so far, based on individual automaker sales reports.
Kia sold 6,359 certified vehicles in May, up 12.1 percent year-over-year. Sales through five months, which have reached 29,525, were up by the same percentage.
Mazda sold 3,178 CPO vehicles in May, compared to 3,670 the same month a year ago.
It has sold 15,705 certified units year-to-date, compared to 17,348 in the year-ago period.
Volkswagen sold 6,019 CPO units May (down 31.6 percent) and its year-to-date sales are at 31,584 (down 20.3 percent).
At BMW Group, CPO sales for the BMW brand were down 3.8 percent with 10,681 units sold in May. Sales for the MINI brand were down 7.0 percent at 1,023.
Porsche sold 1,509 CPO cars in May, up 11.4 percent year-over-year.
Audi sold 3,836 certified vehicles in May.
At Mercedes-Benz, there were 11,327 CPO sales in May, pushing the year-to-date sum to 50,626. The five-month sum beats the year-ago time frame by 1.0 percent.
Stay tuned to Auto Remarketing for more results.
Midsize cars and compact cars combined to make up more than two-fifths of certified pre-owned sales in the first quarter, according to Edmunds.com.
In the company’s Q1 Used Vehicle Market Report released last week, these two vehicle types led the list of 10 largest CPO segments, with midsize cars claiming a 21.1-percent share of the certified market and compact cars taking a 20.6-percent share.
“Despite having little to negative year-over-year price growth, midsize and compact cars are the largest CPO segments. Leasing in these segments has become quite prevalent and has led to a healthy supply of vehicles that meet certification standards,” Edmunds said in the report.
Compact crossover SUVs were next at 13.6 percent, followed by midsize crossover SUVs at 9.1 percent. Rounding out the top five was the midsize traditional SUV (5.8 percent).
The complete top 10 CPO vehicle segments from Edmunds is below:
- Midsize car: 21.1%
- Compact car: 20.6%
- Compact crossover SUV: 13.6%
- Midsize crossover SUV: 9.1%
- Midsize traditional SUV: 5.8%
- Minivan: 5.0%
- Large truck: 4.3%
- Subcompact car: 4.0%
- Entry luxury car: 3.7%
- Large car: 2.4%
On a Monday in late April 2015, Auction Direct USA announced that it was partnering with the National Independent Automobile Dealers Association to offer NIADA Certified Pre-Owned vehicles at its stores.
A few days later, NIADA and Auction Direct leaders gathered at the latter’s Raleigh, N.C., store for a ceremony to celebrate the partnership.
Auction Direct chief executive officer Todd Hoagey was back in the Raleigh store on Thursday, just over a year after Auction Direct jumped into the NIADA CPO program, for a push to spread awareness of the program.
But this time, instead of being a newcomer to the certified program, Auction Direct is its top seller.
In fact, three of the top five NIADA CPO-selling dealerships are Auction Direct locations, including the Raleigh store, which ranked No. 1 nationally.
According to the association — which could not provide sales numbers for contractual reasons — the top five dealership locations for NIADA CPO, based on full-year 2015 sales, are the following:
- Auction Direct USA (Raleigh, N.C.)
- Century Motors of South Florida
- Auction Direct USA (Victor, N.Y.)
- Auction Direct USA (Jacksonville, Fla.)
- Aussie Auto, Inc.
So, what’s next for Auction Direct when it comes to NIADA CPO?
While it may be too early to set concrete goals, Auction Direct is fine-tuning its own NIADA CPO metrics to determine what works best.
“We’re experimenting with inventory level and seeing the effect on the sales level,” Hoagey said.
In other words, what is the ideal share of Auction Direct inventory to put through NIADA certification? And that may vary from market to market.
“We know the program works, we know that the consumer demand is there,” Hoagey said. The key, he added, is figuring out how much exactly from a percentage standpoint.
“Because there is a price difference in a CPO and a non-CPO vehicle. But the retail benefit of a CPO far outweighs the non-CPO,” he said.
A big key will also be working with the association to help push the awareness of NIADA CPO.
Hoagey was joined by Auction Direct executive vice president and chief financial officer Kevin Phelps as well as Kevin Condon, the general manager of the Raleigh store, for an on-site interview with Auto Remarketing.
During the interview, Phelps said the NIADA CPO program allows dealers like Auction Direct to distinguish themselves from automaker CPO programs by offering certification on older vehicles.
Most OEM programs allow for certification on vehicles up to five or six years old. And, often, the bread-and-butter is the off-lease vehicle, which tend to be even younger.
According to its website, NIADA CPO has two age-limit tiers, one that allows for vehicles going back eight years; the other, 14 years.
Through NIADA CPO, Auction Direct targets customers who are interested in cars that are further back on the age spectrum than late-model units, the executives explained, but still want the reassurance and peace-of-mind that certification brings.
Condon says Auction Direct’s strategy is to target vehicles out of manufacturer warranty for NIADA certification.
“That’s the one that’s really going to give the customer the most value,” Condon said.
In essence, he said, it’s for the customer that might not be able to afford the car with only 10,000 miles or that’s still under OEM warranty.
And Condon said a big part of the value of using NIADA CPO has been the fact that it’s verified by a third-party like NIADA.
Not to mention, they typically turn faster. At the Raleigh store, the NIADA CPO vehicles turn 11 days quicker than non-certified “bread-and-butter” inventory.
Auto Remarketing will have more from our interivew with the Auction Direct leadership in coming editions.
