For many customers, explains Rob Teitelbaum, buying a Mercedes-Benz can often be the celebration of a milestone event, like earning a medical degree, for example.
There’s an excitement attached to that customer experience, and Teitelbaum – the new department manager for pre-owned operations at Mercedes-Benz USA – wants to make sure that same thrill exists on the pre-owned side. After all, that may do wonders for customer retention.
For many buyers, purchasing a certified pre-owned vehicle, in particular, is their first experience with Mercedes. This being their entry point into the brand, Teitelbaum — who began his tenure heading up pre-owned on Sept. 1 — wants to make that CPO experience as strong as possible, so that the customer is likely to remain with the brand as a new-car buyer down the road.
That’s part of his goal for Mercedes-Benz CPO. Additionally, Teitelbaum wants to increase the brand awareness for the program, particularly as it relates to the unlimited mileage warranty, which he said sets Mercedes part from other certified pre-owned programs.
As for his background, Teitelbaum has been with Mercedes-Benz for 16 years, the past three-and-a-half as the area manager for the Southern region. Prior to that, he was an area manager in the Midwest for two-and-a-half years. Teitelbaum got his start with the company as a retail trainer, where he served for three years before earning a promotion to a role as market manager.
He held that position for six years, then took on a similar role in Atlanta, where he worked for a year-and-a-half.
It’s that time of year again: the next generation is headed back to school and their variety of before- and after-school activities.
Parents, family and friends looking at upgrading their vehicles will have this in mind this time of year, so Steve Halloran, the chief editor at CarGurus, has announced his company’s recommendations for them to help ease their guesswork. Dealers can gain a few tips, as well.
“For families with school-age children, finding a vehicle that balances safety and reliability with space, comfort and convenience is important,” Halloran said. “To eliminate the guesswork for shoppers, we’ve identified the vehicles that meet these specific criteria and also offer bonus features that will make time spent shuttling the kids a little more pleasant.”
According to a recent online poll by CarGurus, 38 percent of car shoppers with school-aged kids said they spend between 30 minutes and one hour each day with kids in their car. A third said that time was stretched over an hour.
When a customer comes onto the lot, it may be worthwhile to ask if kid-hauling is part of their regular activities. Here’s a list of vehicles that may be appealing to them, according to CarGurus.
Midsize SUVS
- Mitsubishi Outlander (2016 MSRP starts at $22,995)
- Toyota Highlander (2015 MSRP starts at $29,765)
- Ford Explorer (2016 MSRP starts at $30,700)
- Chevrolet Traverse (2016 MSRP starts at $31,205)
- Infiniti QX60 (2015 MSRP starts at $42,400)
- Acura MDX (2016 MSRP starts at $42,865)
Minivans
- Kia Sedona (2016 MSRP starts at $26,400)
- Toyota Sienna (2015 MSRP starts at $28,700)
- Honda Odyssey (2015 MSRP starts at $28,975)
Large SUV
- Chevrolet Suburban (2016 MSRP starts at $49,700)
According to CarGurus, this list was compiled based on currently available models with a focus on safety records, cargo storage space, seating capacity and availability of technology features.
For more information about CarGurus, visit its site here.
While roughly one third of new-vehicle shoppers say they’d consider purchasing a used vehicle for their next vehicle, an increasing number of consumers are gravitating toward the financial and peace-of-mind potential of certified pre-owned vehicles.
That’s according to a CPO study from Autotrader in 2013, where 33 percent of new-vehicle shoppers said they would consider going used instead of new the next time they were in the market for a vehicle.
Showing consistency, Autotrader’s subsequent 2014 CPO study reflected 59 percent of new-vehicle shoppers were willing to consider a CPO vehicle.
Basing those numbers on potential interest, how many actually put their money where their mouths are?
A white paper from the Used Car Guide division of J.D. Power — titled "Lasting Longer: How Better Quality Is Affecting Used Vehicle Demand" — pointed out a relatively consistent trend over the last 10 years: roughly one third of all vehicles purchased from franchised dealers following the trade-in of a vehicle up to ten years of age took a used car as their new ride, according to data from J.D. Power's Power Information Network.
The report also showed slightly higher percentage levels of used-car purchases at franchised dealers during the financial crises in years 2008-2011.
Used-car popularity is also supported by this year’s ever-increasing levels of used-vehicle sales, especially CPO sales, where August’s results continued the year’s trends of increased CPO movement. And late last month, industry analysts were predicting overall used-vehicle sales increases for August amid a slowdown of new-vehicle sales.
Monthly certified pre-owned sales fell on a year-over-year basis for the first time since June 2014, but year-to-date sales are still more than 10 percent ahead and four brands posted best-ever sales results.
There were 220,416 certified sales in August, which was off 1.1 percent from August 2014, according to a roundup of CPO sales from Autodata Corp.
Granted, there was one less selling day in August of this year. The daily selling rate for this most recent month (8,478) beat the year-ago figure by 2.7 percent.
And through eight months, CPO sales have reached 1.72 million units, which is a 10.4-percent improvement over the year-ago time frame.
Posting all-time highs in August were Nissan, Infiniti, Mini and Porsche, Autodata pointed out.
So, much like the last time CPO sales fell, take this drop with a grain of salt.
As automakers report August sales this week, here’s a rundown of how a few more brands are faring in the certified pre-owned market:
Hyundai sold 8,166 CPO units August, versus 9,254 CPO sales in August 2014.
Through eight months, it has sold 63,707 certified vehicles, compared to 63,596 CPO sales in the prior-year period.
Porsche had 1,387 CPO sales in August, which marked a 24.7-percent increase.
BMW posted 10,027 certified sales, which was off 7.1 percent year-over-year. However, year-to-date sales of 78,068 sales are up 16.5 percent.
The MINI NEXT CPO sales climbed 3.5 percent with 1,134 sales in August. For the year, it has sold 7,925 certified vehicles for a 25.6-percent hike.
Mercedes-Benz moved 9,804 CPO units in August and has sold 78,347 through eight months.
Mazda’s 3,296 CPO sales were off 26 percent from August 2014.
In Tuesday’s CPO Weekly enewsletter, Auto Remarketing reported that Volvo continued its 2015 surge with August sales that were nearly 38 percent stronger than last year’s. And it will likely beat the 2014 grand total before the third quarter is even over.
The automaker reported that its dealers moved 1,871 CPO vehicles last month, up from 1,359 CPO sales in August 2014.
This follows year-over-year sales spikes of 41.3 percent in July, 53.5 percent in June and 40.9 percent in May. The rest of the year shows much of the same for Volvo, including two straight months (January and February) where CPO sales climbed more than 58 percent.
Through eight months, Volvo has sold 13,541 certified vehicles, which is 44.4 percent ahead of last year’s pace.
To put that in perspective, if Volvo sells just 601 CPO vehicles in September, it will have beaten the 2014 full-year total in just nine months.
Moving to one of the Big 3 reporting CPO sales already, Ford’s brands combined to sell 24,926 certified vehicles in August, compared to 24,977 CPO sales a year ago.
Through eight months, year-to-date CPO sales for Ford are at 195,740, up from 179,935 in the same period of 2014.
Volkswagen saw its certified sales dip 1.2 percent year-over-year, but the company reported its 18th straight month of CPO sales north of 7,000.
Its 8,660 CPO sales in August put the year-to-date tally at 64,314 units, which beats last year’s pace by 3.9 percent.
Audi sold 4,441 certified vehicles in August.
Volvo continued its 2015 surge in the certified pre-owned market with August sales that were nearly 38 percent stronger than last year’s. And it will likely beat the 2014 grand total before the third quarter is even over.
The automaker reported that its dealers moved 1,871 CPO vehicles last month, up from 1,359 CPO sales in August 2014.
This follows year-over-year sales spikes of 41.3 percent in July, 53.5 percent in June and 40.9 percent in May. The rest of the year shows much of the same for Volvo, including two straight months (January and February) where CPO sales climbed more than 58 percent.
Through eight months, Volvo has sold 13,541 certified vehicles, which is 44.4 percent ahead of last year’s pace.
To put that in perspective, if Volvo sells just 601 CPO vehicles in September, it will have beaten the 2014 full-year total in just nine months.
Moving to one of the Big 3 reporting CPO sales already, Ford’s brands combined to sell 24,926 certified vehicles in August, compared to 24,977 CPO sales a year ago.
Through eight months, year-to-date CPO sales for Ford are at 195,740, up from 179,935 in the same period of 2014.
Volkswagen saw its certified sales dip 1.2 percent year-over-year, but the company reported its 18th straight month of CPO sales north of 7,000.
Its 8,660 CPO sales in August put the year-to-date tally at 64,314 units, which beats last year’s pace by 3.9 percent.
Audi sold 4,441 certified vehicles in August.
Editor's Note: Stay tuned to Auto Remarketing for more certiifed pre-owned sales results as they come in. If you would like to share CPO results with AR, email editor Joe Overby at joverby@autoremarketing.com.
Edmunds.com offered a couple of statistics in the certified pre-owned vehicle space to illustrate how CPO sales continue to surge.
The site’s latest Used Vehicle Market Report indicated that CPO sales in the second quarter came in 53 percent higher than the same quarter five years ago. And during that span, the percentage of all used-vehicle sales at franchised dealers that are CPO units moved from 19.2 percent up to a new high of 22.7 percent.
Edmunds.com reported that franchised stores sold 660,766 certified vehicles in Q2, a figure more than 230,000 units higher than the same quarter in 2010.
The combination of off-lease vehicles ready to be certified and growing appeal for a CPO unit is driving sales now, and likely going forward, too.
“It is something where the inventory situation is working out,” Edmunds.com director of industry analysis Jessica Caldwell told Auto Remarketing. “It’s for consumers who want a little bit more assurance as that’s traditionally been the big deterrent in buying a used car. You don’t want to buy a lemon. You know a certified pre-owned gives people piece of mind. It just makes sense for the market right now.
“Not only is (CPO sales) important now is it will be growing in importance,” Caldwell continued. “From this point, the sales are only going to go up and the percentage of sales are going to continue to surpass the second-quarter number.
“It’s something the automakers want to push out too. It’s a way for them to get some profit on the used market, which is highly profitable. I do imagine the sector is going to continue to grow,” she went on to say.
Part of the reason Caldwell and the rest of the Edmunds team are making such projections is the often-mentioned off-lease volume. The site expects leasing to stay on a record path. The report noted that last year the industry generated more than 4.5 million vehicle leases, accounting for more than 25 percent of new-vehicle deliveries.
“It’s definitely a massive good feeder for the CPO category,” Caldwell said of leasing. “CPO had traditionally been a lot of luxury cars because that’s what was leased. But we’ve seen leases diversify into a lot of different segments over the past few years. Now we’re even seeing a lot of leases in places like full-size pickups, which you never saw in the past.
“I think that rise of leasing and the diversification of leasing is going to lead to a more robust certified pre-owned market because they’re going to have a lot of different types of inventory,” she continued. “It’s good for consumers because it gives them another option. You can used, you can buy new or you can buy CPO. It gives people a different flavor of what they want to do.
“When we look at where leasing is in 2015, it’s still high. This trend is going to continue because essentially we can forecast what the certified pre-owned market will look like in a few years,” Caldwell went on to say.
The entry-level luxury car has been a solid play on the car side of the new-vehicle market, with many consumers preferring utility vehicles over cars these days.
Not to mention, says Autotrader senior analyst Michelle Krebs, marketing the luxury cars that are in smaller sizes and price brackets has given luxury brands the chance to more effectively reach millennials and then keep them within the brand as their financial situations improve over the years. And that’s especially true for the pre-owned segment.
“Indeed, Autotrader studies show millennials aspire to own luxury cars but haven’t been financially able to acquire them,” Krebs said in the latest Autotrader Scarcity Data Analysis provided to Auto Remarketing. “However, entry-luxury cars make their dream more accessible, and pre-owned ones even more so.
“To that end, the entry-luxury CPO BMW 2 Series was the most sought-after and most elusive vehicle on Autotrader’s July scarcity list nationally and, specifically, in the Los Angeles market, the nation’s largest market for luxury vehicles along with New York,” she added.
Other entry-luxury cars that earned some traction in July were the Mercedes-Benz CLA — which was No. 5 on the CPO scarcity list in Los Angeles and eighth in Chicago — as well as Audi’s A5, S5 and S4.
Though the BMW 2 Series topped the national CPO scarcity list, these Audi models carried their weight, as well: the S4 was No. 5 nationally and the S5 was No. 8.
The Audi A5 was not on the top 10 national CPO list, but made the top 10 in Atlanta, Dallas-Fort Worth, Philadelphia and the San Francisco-Oakland-San Jose market.
The full scarcity charts can be seen below:
Along with listing the top 10 states where used sales climbed most during the second quarter, the latest Used Vehicle Market Report compiled by Edmunds.com indicated that the average used-vehicle retail prices hit a record high in the second quarter.
Aided in part by certified pre-owned units, Edmunds' analysis showed retail prices came in at $18,800 in Q2, up 7.6 percent — or $1,300 per vehicle — from the second quarter of 2014.
Meanwhile, the average age of used cars sold in Q2 2015 was 4.5 years, down from an average of 4.9 years the same time last year.
While used-car managers might think the retail price record might stem solely from the CPO market because of a richer volume of younger, well-equipped units, Edmunds also highlighted in the report how the retail prices for some of the oldest vehicles potentially in dealer inventory are rising sharply. Take a look at what Edmunds uncovered when looking at the year-over-year rise for vehicles from the 2007 model-year and earlier:
— 8 years old: 11 percent
— 9 years old: 13 percent
— 10 years old: 11 percent
— 11 years old: 30 percent
— 12 years old: 30 percent
— 13 years old: 36 percent
— 14 years old: 48 percent
— 15 years old: 55 percent
“There is definitely a lot of demand for vehicles more than 10 years old,” Edmunds.com director of industry analysis Jessica Caldwell told Auto Remarketing during a phone conversation on Friday.
“They’re now at price points for people who just need that mode of transportation,” Caldwell continued. “They’re not looking for the latest and greatest in terms of in-car technology. They want something that can get them from A to B. There’s just a lot of demand in that segment.
“A lot of people in that market are looking for older trucks and SUVs, especially the old body style SUVs before the crossover craze happened,” she went on to say.
While the overall retail price reading is higher, Caldwell noted how stickers for CPO models are becoming more attractive for shoppers.
“Because there's a growing inventory of newer used cars, the prices on these vehicles seem to be more consumer-friendly than in the past," Caldwell said. “For example, 3-year old used cars have more bells and whistles than older used cars, and they’re actually selling for less than they did just one year ago.
“Compare that to vehicles age 8 and over, whose prices are up 11 percent or more, on average, over last year. There's undoubtedly a growing value proposition these days in newer used cars,” she went on to say.
Auto Remarketing will have more details from Edmunds’ report that focuses on the CPO market as well as Caldwell’s assessment of how valuable certified sales are to both franchised dealers as well as automakers in the next installment of CPO Weekly, which is delivered each Tuesday.
And for the opportunity to gather information face-to-face, dealers are encouraged to attend the CPO Forum, which is part of Used Car Week. The CPO Forum gathers together thought-leaders in the certified space that all aim to help stores move more CPO metal.
The CPO Forum begins Used Car Week, which runs from Nov. 16-20 at the Phoenician in Scottsdale, Ariz. More details are available at www.usedcarweek.biz.
Leading states for used sales
All told, Edmunds determined that more than 9.5 million used vehicles were sold during the second quarter of this year, a figure about 400,000 units higher year-over-year.
In the latest report, analysts highlighted the top 10 states that enjoyed the great lift during Q2. That group included:
1. Tennessee: up 34.8 percent
2. Maryland: up 20.8 percent
3. Virginia: up 12.5 percent
4. Utah: up 11.1 percent
5. New Hampshire: up 9.7 percent
6. Oregon: up 9.4
6. Rhode Island: up 9.4 percent
8. Florida: up 8.4 percent
8. Massachusetts: up 8.4 percent
10. Texas: up 7.3 percent
Meanwhile, Edmunds also spotted a quartet of states where used sales softened by double digits in Q2. Maine led the way with a 22.7-percent decrease, followed by Kansas (down 14.5 percent), Arkansas (down 11.1 percent) and New York (down 11.0 percent).
One of the companies making some waves in the used-car and certified pre-owned space these days is SiriusXM, so as part of our annual Power 300 issue of Auto Remarketing, we reached out to Joe Verbrugge, senior vice president and general manager of SiriusXM Auto Remarketing Division, to talk about the company's footprint in the pre-owned space.
Our Q&A with Verbrugge is below.
Auto Remarketing: What is your biggest challenge as an audio entertainment provider within the automotive space, particularly as it applies to the used-vehicle realm?
Joe Verbrugge: SiriusXM has been highly successful at gaining Pre-Owned Program adoption, with more than 17,000 dealerships giving 3-month subscriptions to their pre-owned customers.
We are trying to reach more dealers, so that we can help provide a positive experience for customers buying pre-owned vehicles. If a dealer isn’t in our Pre-Owned Program, the satellite radios in the vehicles they sell may not be activated, which detracts from the customer ownership experience.
AR: What has been your biggest “conquest strategy” to target used-vehicle shoppers?
JV: The strategy boils down to providing customers what they want through a program that is easy and at no-cost for dealers to deliver. We want to provide used-car buyers the same opportunity to experience SiriusXM’s wide variety of commercial-free music, plus premier sports talk and live events, comedy, news, exclusive talk and entertainment, as those purchasing a new vehicle.
Our “conquest strategy” is to deliver the best audio experience in the car and remain the go-to entertainment for drivers and passengers in the vehicle. We also provide dealers with the ability to give their pre-owned vehicle customers three-month All Access trial subscriptions — our best package —where listeners can get all of our content in their car, on the SiriusXM app and online at siriusxm.com.
Dealers benefit by enabling the radios in their pre-owned inventory with the added-value of SiriusXM, which is a point of differentiation for the dealership.
AR: What methods do you employ to gain and/or retain customers who aren’t shopping for a replacement and have owned their vehicle for a while?
JV: Our programming is constantly changing and updated, with new channels, hosts, and exclusive music, talk and comedy programming. We love new opportunities to show customers what we have to offer. One way we do this is though our Service Lane Program, which complements dealers’ service loyalty programs and gives customers with eligible radios a new 2-month trial subscription as a thank you.
Like our Pre-owned Program, dealers need to enroll in this program, and participation doesn’t create any additional work in the service bays.
AR: Looking forward, what sorts of projects or strategies does SiriusXM have in the works to maintain their influence in the used-vehicle market?
JV: Our penetration in pre-owned vehicles is growing every year, and we want to make it even easier for dealerships to interface with SiriusXM. We recently launched our new SiriusXM Dealer App so dealers can simply scan the vehicle’s VIN with a smartphone or tablet and the radio is activated without having to manually enter a SiriusXM Radio ID number online or call Dealer Support in order to activate the Dealer Demo Service.
We are also focused on working with DMS providers to integrate SiriusXM as a feature in their product software, providing the dealer with the ability to seamlessly identify vehicles equipped with SiriusXM and activate the radio, allowing the customer to leave the lot listening.
Dealers will notice more of us in the field engaged and continuously visiting dealerships to ensure they have the latest information, tools and marketing to help them deliver on the best customer experience possible when showcasing a vehicle equipped with SiriusXM.
Other features in this special section include:
4 questions with NextGear’s Brian Geitner
4 questions with NADA Used Car Guide's Larry Dixon
4 questions with Infiniti CPO manager Sam Liang
4 questions with Black Book’s Anil Goyal
4 questions with Autotrader president Jared Rowe
4 questions with Geoff Parker of ADESA Cincinnati-Dayton
4 questions with Hudson Cook chairman Tom Hudson
4 questions with Edmunds CEO Avi Steinlauf
4 questions with Experian's Melinda Zabritski
