Given their increasing influence on the auto industry, there are several different schools of thought about millennials and their approach (or ambivalence) toward driving and car-buying, many of which have been explored in this publication.
Here’s another: they might actually be quite interested in the certified pre-owned inventory on your lot — in fact, possibly more so than other generations.
Discussing some overall sales trends during a recent quarterly conference call, Cox Automotive chief economist Tom Webb had this say about Generation Y.
“The millennials certainly are not adverse to the CPO programs; probably more amenable to them than the overall population,” he said.
“Certainly they’re buying some new vehicles, but I think it’s rather illogical to assume that they’ll be like my generation where you move out to the suburbs and you put three cars in the garage,” Webb added.
This sentiment was reflected in some of the insight that Edmunds.com and its chief executive officer Avi Steinlauf shared with Auto Remarketing in March.
According to a study from Edmunds if a person age 35 or older bought a car from your dealership last year, chances are pretty good (68 percent) that car was used.
If someone in the millennial generation bought a car from you, the odds that it was used are even higher. In fact, more than three-fourths (78 percent) of the vehicles that millennials bought last year were used.
The root of this, Steinlauf said in the March interview, is largely the price-point. Millennials, he said, were hit the hardest by the recession, and it has been “a little bit tougher for them to rebound,” thus making the used vehicle a more attractive option.
But things eventually change.
“As they get older and their incomes increase, they start to mirror the broader population,” Steinlauf said.
As for certified pre-owned, the study didn’t specifically ask millennials about this segment, but Steinlauf emphasized that the assurance and warranty offered by CPO programs would likely be appealing to those in this crowd that value such certifications.
Along those same lines, quality of the vehicle itself is important to millennials.
What often gets lost in the shuffle in media coverage of this generation and the importance of technology, Steinlauf says, is that millennials aren’t just in it for the tech and gadgets.
Granted, many certainly appreciate these features; looking at overall results, four-fifths of Generation Y put a strong emphasis on having smartphone features integrated into the car, and close to two-thirds (62 percent) would spend more if the car was Wi-Fi connected.
But the study found that price, fuel economy and performance rank much higher than in-car technology
Or as Steinlauf put it, millennials “have their priorities straight.”
Staff Writer Nick Zulovich contributed to this report.
Make it nine in a row for Karl Chevrolet.
The Iowa dealer and Auto Remarketing’s 2011 CPO Dealer of the Year has now won the National Sales Leader award from the General Motors certified pre-owned program for the ninth straight year after leading the pack with 1,791 CPO sales in 2014.
“Reaching this level of sales is a remarkable achievement that we share with the more than 3,000 Certified Pre-Owned dealers around the country,” said Doug Kaczmarski, manager of certified pre-owned vehicle operations at General Motors. “Karl Chevrolet’s achievement of nine straight years of sales leadership is unmatched, and a direct result of the dealership’s commitment to consistently providing customers an exceptional experience.”
Karl Chevrolet owner Carl Moyer said: “Being No. 1 for nine straight years shows our commitment at Karl Chevrolet to the GM certified pre-owned program.
“We are extra critical of anything that may come up in the inspection process to ensure our certified pre-owned cars are as dependable as a new car and meet all of the GM standards before it’s sold,” he continued.
Moyer added: “Buying a GM certified pre-owned car at Karl Chevrolet means you never have to worry.”
Top strategies at Karl Chevrolet
As part of Auto Remarketing's annual “Best CPO Dealers in the United States” special edition this winter, we asked top GM dealers to share some of the sourcing strategies they use to make sure there’s enough CPO-worthy inventory at their stores.
“We place emphasize on getting a vehicle traded for at the door. Our objective is to provide our customer with the highest trade value possible while they are here at the dealership,” Moyer said in that feature.
“As your dealer for life, we also see added value in the quality of a car that was purchased here, serviced here and traded for at Karl Chevrolet,” Moyer said. “We do outsource vehicles like any other dealer, but if there’s an opportunity to get that same vehicle from a customer, we put every effort into getting that done.”
Collective certified pre-owned sales increased double-digits for both Asian brands and European brands in June, including one automaker that had its best-ever month, according to Autodata Corp.
Asian brands moved 97,969 CPO vehicles for the month, which beat June 2014 numbers by 14.3 percent. That sum included Kia’s record high month of 6,117 CPO sales, a 50.8-percent improvement, Autodata said.
Through six months, Asian brands have moved 580,223 certified vehicles, which is 7.8 percent ahead of last year’s pace, according to Autodata.
European CPO sales were at 35,993 units for June, a 15.6-percent increase. Six-month sales were at 221, 806 units, a 12.3-percent increase.
Domestic brands increased their certified pre-owned sales nearly 23 percent in June, pushing year-to-date sales closer to half-a-million, according to Autodata Corp.
More specifically, the Big 3 combined to move 78,995 CPO units during the month, which beat June 2014 figures by 22.9 percent. Through the first half of the year, domestics have moved 473,444 certified vehicles for a 19-percent increase, Autodata said.
The brands at Ford combined to sell 26,120 CPO units in June (up 14.5 percent year-over-year), with year-to-date sales at 145,648 (up 10.4 percent).
Breaking that figure down, Ford/Mercury CPO sales in June came in at 24,019 units (up 15.9 percent) and Lincoln CPO sales were at 2,101 units (up 0.2 percent).
Over at General Motors, CPO sales for the Buick, Chevrolet, GMC, Pontiac and Saturn brands reached 34,777 units in June (up 20.2 percent). Six-month sales were at 224,292 units (up 20.7 percent), according to Autodata.
The Cadillac brand had 2,007 certified sales (up 25.7 percent), with year-to-date sales reaching 12,767 (up 26.2 percent).
Next up, certified sales for the Chrysler, Dodge, Jeep and Ram brands jumped 47.2 percent in June, coming in 16,091. In the first half of the year, these dealers moved 90,737 CPO units (up 29.6 percent).
Sales of certified pre-owned vehicles in June surged 17.6 percent higher year-over-year, pushing the industry to another record-setting quarter.
Autodata Corp. reported late on Thursday that June CPO sales came in at 212,957 units. That figure propelled the second-quarter amount to 660,384 vehicles.
The quarterly total represented a 13.5-percent gain year-over-year as well as a 7.4-percent jump compared to the opening quarter of 2015.
Year-to-date, Autodata indicated the industry has turned 1,275,473 CPO vehicles; that’s up 12.5 percent over the midway point of 2014.
Editor’s note: Look for more details about the more recent CPO sales performance coming from Auto Remarketing after the Fourth of July holiday.
The seemingly constant record-breaking sales is certainly one way to measure the success of the certified pre-owned market, but further evidence can also be found within the traction CPO is generating online.
Take Autotrader, for instance.
Used-vehicle listings on its website in May climbed 4 percent from the year-ago period, while certified pre-owned listings jumped 12 percent. Compare that to May 2014, when CPO listings increased 8 percent year-over-year.
So, at least with that particular metric, the upward slope has gotten a good bit steeper.
Autotrader also shared the 20 CPO models generating the most searches on its website for May, as listed below.
General Motors led the way with five of its models in the top 20 and Toyota was next with four. Ford had three models on the list, including the No. 1-ranked F-150.
1. Ford F-150
2. Chevrolet Silverado 1500
3. Honda Accord
4. BMW 3 Series
5. Mercedes-Benz E Class
6. Ford Mustang
7. Jeep Grand Cherokee
8. Porsche 911/911Turbo
9. Toyota Tacoma
10. GMC Sierra C/K1500
11. Jeep Wrangler
12. Chevrolet Corvette
13. Chevrolet Camaro
14. Chevrolet Tahoe
15. Toyota Tundra
16. Mercedes-Benz C Class
17. Toyota Camry
18. Toyota Highlander
19. Ford Explorer
20. Volkswagen Jetta
Sporty cars have been hot models for a while now since the weather turned, but models from one brand in particular are in heavy demand and short supply.
According to the May installation of Autotrader’s late-model and CPO scarcity reports, used sporty Subaru models are “hot with car shoppers, but hard to find.”
Since spring began, these lists have been dominated mostly by sportier models. In April, Porsche models topped the lists.
This time around, the somewhat more affordable Subaru sporty models took the front seat.
Autotrader senior analyst Michelle Krebs pointed out that Subaru has been one of the fastest growing brands in the U.S., with sales headed for their seventh consecutive year-over-year increase.
On the May scarcity lists, the two-seater CPO Subaru BRZ was the No. 1 hardest-to-find certified vehicle nationally.
“Developed with Toyota, the BRZ’s cousin is the Scion FRS, which did not make Autotrader’s national or major regional scarcity lists in May, suggesting Subaru has street cred that Scion lacks,” Krebs said.
And the late-model used BRZ came in at No. 8 nationally. The Audi TTRS topped the list for scarcest late-model used vehicle in May.
Autotrader also offered a few stats from their site that illustrate the supply and demand situation for the certified BRZ.
Autotrader.com showed 22 certified BRZs listed with a median price of $21,978 and median mileage of just under 18,000, with nearly 3000 searches conducted for the BRZ.
The CPO Subaru WRX sedan is also proving popular, coming in at No. 10 on the national scarcity list.
Autotrader had more than 2,200 certified WRX listings in May with a median price of $29,771 with median mileage of about 21,000, with nearly 16,500 searches done for the WRX, Krebs shared.
The pair of Subarus were also scarce in specific regions of the country.
For example, in New York, the CPO BRZ and CPO WRX were No. 1 and No. 2 respectively.
“In Boston, a popular region of Subaru models generally thanks to their all-wheel drive,” said Krebs, the BRZ ranked No. 5 and the WRX No. 6. In Philadelphia; the BRZ was No. 1 on the scarcity list and the WRX was No. 7. In Washington D.C.; the BRZ was No. 2 and the WRX No. 4 — all for the certified models.
The CPO BRZ also made the list of top 10 scarce vehicles in San Francisco-Oakland-San Jose (No. 6). The CPO WRX was No. 1 in Atlanta.
Through the end of May, Autotrader reported, Subaru has sold 228,083 new vehicles, which is up 16 percent year-over-year.
“That’s particularly impressive since Subaru doesn’t sell trucks and larger SUVs, which have seen large sales increases,” Krebs said. “Subaru’s goal is to hit 500,000 annual sales by 2016.”
But Krebs said the automaker’s success isn’t just about sales volume.
“The Japanese automaker spends the least of any automaker on incentives — the only one to spend below $1,000 per vehicle. Subaru’s turn-rate of vehicles arriving at a dealership and being sold to a customer is the fastest of under 28 days, when the industry average is 71 days, and falling, according to data compiled by Autotrader’s sister site, Kelley Blue Book,” said Krebs. “The quick turn of new Subarus may explain why car shoppers are turning to used Subarus, though even those are proving to be as elusive as new ones.”
To view the full May scarcity reports for CPO and late-model used vehicles from Autotrader, click below:
With the CPO market booming and on track for record sales this year, the National Independent Automobile Dealers Association is adding another element to its Certified Pre-Owned program.
Announced during this week’s 2015 NIADA Convention & Expo, the association is expanding its partnership with Carfax to include the company’s vehicle history reports in its CPO program.
Now, all NIADA CPO vehicles will come with a Carfax VHR, provided free to buyers from subscribing dealers and are listed for sales on Carfax Used Car Listings.
NIADA management explained this move was made in direct response to dealer requests.
"Our dealers have spoken loud and clear that they want Carfax for our Certified Pre-Owned program," NIADA senior vice president of member services Scott Lilja said. "Carfax Reports add another level of confidence for buyers purchasing NIADA Certified vehicles. Plus, our dealers' certified inventory gets in front of more ready-to-buy shoppers at carfax.com. We're thrilled to give our 16,000 dealer members a resource that is proven to help sell more cars faster."
With the addition of the NIADA CPO program, the association joins 38 manufacturer brands that utilize Carfax reports to inspire consumer confidence.
"The demand for certified pre-owned vehicles keeps growing every year," said Bill Eager, vice president of the dealer business unit at Carfax. "Carfax and NIADA are helping connect independent dealers with more confident customers that want to buy certified vehicles. With Carfax Used Car Listings, Carfax Reports and myCarfax, dealers have the tools that make it fast and easy for people to find and care for NIADA Certified vehicles."
Vehicles eligible for NIADA certification — administered and insured by Warrantech — must all pass a 125-point inspection and other requirements, including qualifying for the Carfax Buyback Guarantee.
The NIADA CPO program is already reaping positive results at dealers across the country. Auto Remarketing talked with one, in particular — Frank Fuzy, co-owner of Century Motors of South Florida.
Fuzy said the store sells about 50 to 60 NIADA CPO cars each month, but it goes beyond that.
Fuzy said his store is one of the top-selling dealers on eBay Motors, and having the NIADA CPO designation on that site has aided Century Motors of South Florida in its search results presence, helping the store extend its reach.
Frank Fuzy has shipped cars as far north as the North Pole and as deep into the Pacific as Tokyo.
“I’m advertising to the world,” said Fuzy, who co-owns the predominantly Internet-based Century Motors of South Florida with his wife, Gina.
“And we’ve got the shipping routes down pat. It’s so reasonable that it just opens up the world,” he said. “We learned the freight tricks and the routes, how to move a car from coast to coast.”
Sales to such faraway markets as Greenland, Iceland and Australia don’t make up most of their business by any means (90 percent of their sales are domestic), but these export sales do speak to just how far the dealership’s influence has spread.
“South Florida” might be in the store’s name, but its reach extends much further: 80 percent of their sales do come from U.S. markets outside their local area — many well beyond the Sunshine State — with buyers flying in from or shipping to all corners of the country, some hundreds or thousands of miles away. Just 10 percent of sales are local.
One way in which Fuzy’s reach has been helped is through his participation in the NIADA Certified Pre-Owned Vehicles Program from the National Independent Automobile Dealers Association. The store sells about 50 to 60 NIADA CPO cars each month, but it goes beyond that.
Fuzy said his store is one of the top-selling dealers on eBay Motors, and having the NIADA CPO designation on that site has aided Century Motors of South Florida in its search results presence, helping the store extend its reach.
It also provides an additional level of credibility, Fuzy said.
“It works for us,” he said of NIADA Certified. “We love it. It’s a great, great opportunity, again with the eBay searches and offering a warranty. You tell a single mom with three kids that she has a warranty, and it’s so much easier to close the deal.”
And for independent dealers to be able to certify a vehicle, “it’s huge.”
“When we certify the cars, it makes it an even playing field, where now we can compete with the OEM’s new-car dealers,” he said.
Certification Facility
An interesting facet to their operation is their standalone certification facility. The dealership bought a former Mercedes-Benz collision center three years ago and turned it into the standalone facility that it is today, with nine lifts, three mechanics and a full crew.
“I need a spot, basically, to park some cars. We keep about a 180-car inventory and our facility, we can hold 150 comfortably,” Fuzy said. “So, with the new certified center … as the cars sell, we bring the sold vehicles over there, and they get the final inspection.”
The 20 to 25 cars that the dealership sells each week and the “get-ready” vehicles go to this facility, where everything from breaks to lights, blinkers and washer fluid is checked out.
“Everything gets done. And then we store it there until, either A) a customer flies in or B) we ship the vehicle. So, literally there’s 100 cars sitting in this building,” he added. “It’s about a 22,000-square-foot building. So we safely park all the sold cars at that location, and we’re constantly revolving.”
Editor's Note: For a seperate feature, Frank Fuzy also shared his insight with Auto Remarketing about how to spot flood-damaged vehicles. Check out our latest story on flood damage to see tips from Fuzy and other dealers.
Considering the prolific nature of the current certified pre-owned vehicle market, iSeeCars.com decided to look a bit further into the CPO programs provided by manufacturers to see exactly how much of a premium their programs carry.
As it turns out, the majority of car brands average less than $1,000 extra for their CPO vehicles when matched to comparable non-certified vehicles. Overall, the average “premium” was $722, or an average increase of 2.9 percent.
iSeeCars.com highlighted the nine car brands with the lowest manufacturer-provided CPO premiums, which were all on average less than $500, as seen in the chart it provided.
A portion of FCA’s wheelhouse, Jeep, Dodge and Ram, make up the cheapest average CPO premiums on the list, with Chrysler coming in at No. 7. Japanese manufacturers Subaru, Honda and Mazda comprise the middle of the list while General Motors’ Chevrolet and Buick brands round out the bottom of the nine.
“Looking at the manufacturers with what are typically considered the best CPO programs, our analysis found some real bargains that can make buying a certified pre-owned car very compelling,” said Phong Ly, iSeeCars.com’s chief executive officer. “The data indicates that consumers are more likely to find a CPO car at a highly competitive price from the top brands on our list. However, they should also pay careful attention to what’s included in the certification.”
The company’s study analyzed over 3.5 million used vehicles, with a model-year range of 2010 to 2015, sold between Nov. 1, 2014 and April 30 of this year. The vehicles were limited to mileages of 70,000 miles or less. For each vehicle, the average price of the manufacturer CPO vehicle was compared to the average price of a comparable non-certified used vehicle. The company’s data excluded vehicles with fewer than 10 CPO sales as well as vehicles with non-certified mileage outside of the range of 15 percent of the average CPO vehicle’s mileage. Abnormal pricing outliers were also excluded.
For more details, the report from iSeeCars.com can be downloaded here.
