Certified Pre-Owned Archives | Page 36 of 47 | Auto Remarketing

2 Top Dealers Share Tips to Overcome CPO Hurdles

Certified pre-owned sales have never been higher than they were in the first quarter of this year, according to Autodata Corp., which said Q1 represented the best quarter ever for CPO sales.

But that’s not to say there aren’t challenges.

As part of our annual “Best CPO Dealers in the United States” special edition this winter, we asked Planet Hyundai dealer principal David Tamburro what he saw as a top challenge for the CPO market, and what his dealership does to respond to that challenge.

“Our biggest challenge is securing good trades for the used-car department; we are constantly working with our customers in service to get their trades which have a history that we can talk about with future buyers,” Tamburro said in that CPO feature.

“We also work with customers that are at the end of their leases. Good clean used cars are critical to the CPO program,” he continued.

One challenge that may come up in your CPO operations is engagement, both in terms of getting the consumers interested and educated about certified and in getting your staff to buy in.

For the same “Best CPO Dealers” issue, we asked DeWayne Martin, managing partner at Mazda of Clear Lake, how his dealership gets its staff to buy in to CPO.

Martin said it’s all about the “four P’s.”

“Our team believes it come down to the four P’s: People — In our opinion, having the right people is the No. 1 key. Without a team of the right people understanding all the value and benefits of the Mazda CPO program then the processes in place, product on the lot, and CPO program itself becomes a moot point,” he said. “Processes – Our management team is constantly training over the benefits of the Mazda CPO program and how purchasing a Mazda CPO vehicle, in many aspects, has more value than buying a new vehicle with another manufacture. We believe, this gives the customer the ‘peace-of-mind’ they are looking for in their next vehicle purchase.

“Product — We also believe for any program to have complete success there has to be a full commitment on all fronts. This includes the dealer doing their part by fully investing in a variety of CPO vehicles for the consumer to choose from. We have all heard this before, ‘You can’t sell what you don’t have,’” Martin continued.

“Program — For sure, Mazda has done their part with Mazda CPO Vehicle Program. They have built a program that is packed full of value and benefits that is transparent for the customer from the time they start searching for a vehicle. By doing so, it has made it much easier to build a culture around the Mazda CPO program that everyone believes in,” he added. 

Staff Writer Josh Hyatt contributed to this report.

How to Guide Customers to Sweet Spot of CPO

Certified pre-owned customers are unique — and have different needs and wants for their next vehicle than new or non-certified used customers. These potential buyers might have more financial resources than someone looking for a car on your budget lot, but they might not want to spend close to MSRP for a vehicle fresh from the factory.

A pair of upper-level managers from Lincoln stores offered some of the best ways their dealerships have discovered to market to and reach this niche audience.

Their anecdotes were part of when Auto Remarketing looked into this topic deeper during our annual “Best CPO Dealers in the United States” special edition earlier this year.

“Our dealership has always invested heavily into reconditioning used vehicles, which has allowed our sales staff to confidently sell,” said Rick Jacobs Jr., general manager of South Hills Lincoln in Pittsburgh.

“Our pre-owned vehicles have been ‘certified’ for years; the Lincoln CPO program has allowed us to offer an increased value to our customers with the extended warranty,” Jacobs continued. “In the words of our pre-owned manager Dan Bonomi, ‘Cheaper is only a price. Value is priceless.’ This philosophy must be established within the dealership to maintain CPO sales.”

And that philosophy is spreading throughout the Steel City by a conventional method dealers have been dependent upon for generations.

“A large portion of our CPO business is by word-of-mouth, because we stand behind our pre-owned vehicles,” Jacobs said. “All of the necessary service work is completed prior to the vehicles going on the lot, to make them ‘like new.’ No excuses are needed when everything is done prior to the customer seeing the vehicle.”

Meanwhile in the Lone Star State, the team at Bayway Lincoln is pulling all the levers at its disposal to promote and move CPO metal. Nathan Dawson is the auctions director at Bayway Lincoln in Houston.

“The best ways we have discovered to market is by utilizing the advertising tools provided by the manufacturer, maximizing CPO exposure with third-party vendors and having all departments recognize CPO vehicles as a third brand between new and traditional used-vehicle sales,” Dawson said.

“At ground zero, our service advisers create value in a CPO for potential clients and renew vehicle confidence to customers bringing in their CPO vehicle for service by reminding them of the peace-of-mind they get from owning a CPO vehicle,” he continued.

“We also maintain a vast selection of CPO vehicles with several option package to provide the customer variety, like they would have within our new-car department,” Dawson went on to say.

The strategies utilized at Bayway Lincoln and South Hills Lincoln certainly appear to be paying dividends since the stores finished 2014 as the fourth- and ninth-leading sales leaders for Lincoln CPO, according to sales data shared by the automaker.

Staff Writer Sarah Rubenoff contributed to this report.

3 CPO Stats That May Surprise You

TrueCar shared three statistics, in particular, that may offer some perspective on just how much momentum is building in the certified pre-owned business.

First, the 2.6 million CPO sales the firm forecasts for 2015 is larger than its projection for new pickup truck sales (2.3 million) and new premium/exotic vehicles (2.1 million).

Second, the supply of certified vehicles was at 9.3 million in 2013, which represented a 15-year low. Yet, the industry still managed to hit record sales that year, and then followed that up with another record year in 2014 — its fourth in a row.

And now, the pool of all used vehicles ages 1 to 5 (including certified vehicles) is likely to hit 10.4 million this year, TrueCar predicts.

This inventory boost is one of several positive factors pushing CPO sales to what TrueCar forecasts will be an 11-percent year-over-year increase and another all-time record.

"Improved inventory means we can expect a stellar year for the used market — and particularly for certified pre-owned vehicles," said Larry Dominique, TrueCar's executive vice president and president of ALG, TrueCar's residual value data unit. "Across the industry automakers have enhanced CPO programs to delight buyers with longer warranties, improve their own residual values, and successfully grow volumes of these high-margin products for their dealers."

Here’s the third strong stat, for good measure: the CPO business could pull in $45 million in revenue this year, which would be a record, TrueCar says. The firm estimates a certified vehicle will sell for an average of $17,345 in 2015.

Swing Votes: 4 CPOs for Golf Fans

As the sun sets on this year's Masters Tournament and a new champion dons the green jacket, there remains four certified pre-owned vehicles on Autotrader's list of the top 10 vehicles for golf lovers that can be enjoyed for many seasons to come. 

Every year, shortly before the tournament begins, the company releases a list, based on Autotrader data, of cars that golf lovers are also fans of, ranging from the newest of the new to the wealth of value found in certified pre-owned vehicles.

“Golf, like other enthusiast sports, requires a lot of gear and equipment, but our list of cars addresses more than just the need for ample cargo space,” said Brian Moody, Autotrader’s site editor. “We know golfers are also searching for interior comfort, time-saving features like easy fold-down seating and a car that still feels sporty.”

Autotrader’s Top 10 Best New and CPO Cars for Golf Lovers

• Buick LaCrosse
• Chevrolet Corvette
• Dodge Challenger
• Hyundai Genesis
• Lexus RX
• Volkswagen Golf
• CPO BMW 5-Series
• CPO Cadillac CTS
• CPO Jeep Grand Cherokee
• CPO Volkswagen Touareg

While many would-be shoppers are known to bring various items they would need to fit in a potential vehicle with them to a test drive, such as sporting equipment, child seats, and other items, it is also probably good practice to keep these types of items around the dealership to show someone how things fit in a vehicle they’re interested in should they not be prepared.

“The test drive is your only chance to get a feel for how this vehicle will fit into your lifestyle,” Moody said. “Sometimes you don’t realize just how much cargo space you need until you pack it all in.”

For Autotrader’s full descriptions on each of these vehicles, view its article here.

5 Import Brands Set All-Time CPO Records

Certified pre-owned sales for Asian and European brands both increased in the neighborhood of 2 percent in March, and five import brands reported best-ever CPO months.

According to Autodata Corp., Asian brands combined to move 101,466 CPO vehicles, which beat March 2014 sales by 2.0 percent. First-quarter sales were at 275,622 (up 5.3 percent year-over-year).

European CPO sales were up 1.7 percent for the month at 36,545, and quarterly CPO sales were up 12.3 percent at 105,472 units.

Reporting all-time highs among the import brands in March were Kia, Infiniti, Maserati, Nissan and Subaru, Autodata said.
 

Big 3 CPO Sales Jump 18%

The Big 3 combined to move more than 84,000 certified pre-owned vehicles in March, including a record month for the Chrysler certified programs, according to Autodata Corp.

Specifically, there were 84,064 CPO sales for domestic brands last month, an 18.2-percent year-over-year increase, the firm’s data set indicated.

In the first quarter, they combined to sell 233,356 certified vehicles, beating last year’s pace by 19.0 percent.

Ford’s brands combined to sell 24,787 CPO vehicles in March, essentially steady with year-ago figures. Its Q1 CPO sales were at 68,654 units for a 7.5-percent increase.

At General Motors, certified sales for the Buick, Chevrolet, GMC, Pontiac and Saturn brands came in at 41,485 for the month (up 29.7 percent) and 115,993 units for the quarter (up 25.2 percent).

There were 1,993 Cadillac CPO sales in March (up 14.1 percent) and 5,751 certified sales for Q1 (up 19.0 percent).

Next up, the Chrysler, Dodge, Jeep and Ram brands combined to move 15,799 CPO units in March (up 25.5 percent) and 43,018 (up 23.6 percent) for the quarter.

The Fiat brand (whose numbers are not included in the aforementioned totals) sold 82 certified vehicles in March, beating the year-ago sum of 38. Fiat sold 191 CPO sales in Q1, up from 98 a year ago.

Quarterly CPO Sales Hit All-Time High

Last month’s certified pre-owned sales figure narrowly missed the all-time record set in August, but March ended up completing what was the best quarter ever for the CPO market, according to Autodata Corp.

Not to mention, the daily sales rate in March (8,883) was the strongest ever recorded in a month, Autodata said, and six all-time monthly CPO sales records were reported: Chrysler, Kia, Infiniti, Maserati, Nissan and Subaru.

Overall, there were 222,075 CPO sales in March, according to the firm.

This marked a 7.6-percent year-over-year increase and was only 690 units fewer than the best-ever sum reached last summer.

March’s total pushed the first-quarter sales figure to 614,450 units, an 11.4-percent improvement and the best quarter of all time.

March Another Solid Month for CPO

The arrival of spring also appears to be bringing with it some strong certified pre-owned sales. A few automakers began reporting March results on Wednesday, which can be found below.

Kia had an all-time record month with 5,986 CPO sales in March, marking a 55 percent year-over-year increase from March 2014's results as well as a 22.49 percent increase over last month's certified sales.

Volvo increased its March CPO sales from 1,128 last year to 1,583 this year. Its year-to-date sum is up 51.3 percent with 4,279 certified sales through three months.

Hyundai moved 8,593 certified vehicles for the month, which beat year-ago numbers by 1.3 percent. Its first-quarter tally is 23,089 CPO sales, up 3.3 percent from last year’s pace.

At Ford, its brands combined to move 24,787 certified vehicles in March, compared to 24,785 last year. Three-month sales are at 68,628 CPO units. The automaker had 63,860 CPO sales in Q1 of 2014.

By brand, Lincoln sold 2,276 CPO units in March and Ford sold 22,511.

Over at Mazda, CPO sales were at 3,630 units, down from 4,336 last March.

First-quarter sales, however, of 10,275 CPO vehicles still beat last year’s Q1 total of 10,216.

Volkswagen reported 8,490 certified sales, a 2.5-percent year-over-year increase and the 13th straight month of more than 7,000 CPO sales. It has sold 23,341 CPO units so far this year, an 8.7-percent hike.

Audi sold 3,881 CPO units in March. 

Lexus & Cadillac Execs Talk CPO Benefits

The certified pre-owned segment allows dealers and automakers to offer more options to consumer — it’s essentially an extra model in your lineup that can bring in customers who might not be able to afford a luxury model, says Mark Templin of Lexus. 

But there’s something more important at play here, he said: protection of residual values.

Templin — who is the managing officer at Toyota Motor Corp., and executive vice president of Lexus International — was speaking alongside Cadillac president and General Motors executive vice president Johan de Nysschen at the NADA/J.D. Power Automotive Forum in New York on Tuesday.

De Nysschen noted that certified “has to be part of a well-rounded strategy” for a luxury brand like his.  

He said Cadillac is aiming to further engage dealers in CPO and identified another challenge to which others might be able to relate.

“One of the things that keeps us busy is that a lot of our Cadillac business gets fragmented (into) the very large General Motors stable of dealers,” de Nysschen said. 

He wants to find a way to channel and manage that process in a concentrated and efficient fashion; one example noted by the moderator was that instead of a certified Cadillac being at a Chevrolet store, it’s at a Cadillac store.

29 Luxury Units That Could Spark CPO Sales

The March issue of Perspective produced by NADA Used Car Guide explained how dealers can structure their inventory and make a presentation to a potential buyer about how they may be able to score a luxury model even if they only have a mainstream unit budget.

By leveraging the possibilities of a certified pre-owned vehicle, NADA UCG showed that by looking solely at retail prices ― without getting into the discussion of overall cost of ownership ― someone looking for more content and premium features can essentially trade mileage and newness for a considerably upscale model by choosing used over new.

With this tactic in mind, NADA UCG analyzed which used luxury vehicles ― model year 2012 and newer ― could be purchased as alternatives to mainstream compact cars and mid-size sedans

“While the prospect of buying a new car fresh off the assembly line can be enticing, there are cases in which consumers can find a comparably-sized used luxury vehicle within three model years of a new mainstream model for the same price,” analysts said.

“Although $20,000 is a relatively small budget to shop for an automobile, a significant percentage of car buyers purchase compacts, which fall right around that price point,” they continued.

Here is a rundown of some of the models NADA UCG found to have fit this strategy:

“For many younger drivers, which include recent college graduates and young professionals, cost is of great concern as careers are just getting started and student loans need to be repaid,” analysts said.

“Millennials are savvy, selective shoppers looking to get the most value for their money,” they continued. “These image-conscious consumers with a penchant for premium features are faced with a question of how to purchase a luxury car on a strict budget. For them, the answer resides in the luxury compact car market.”

And younger buyers aren’t the only ones who might want one of these vehicles. Another demographic analysts cited as an example are empty nester Baby Boomers who have no need for utility to carry more than a few family members.

“Similar to how young buyers must stretch what little disposal income they have, it is critical retirees make best use of their nest eggs,” analysts said.

For potential buyers who might have even more money to spend, NADA UCG found a host of luxury options of potential CPO luxury models that might cost about $25,000. Analysts see this group as individuals ages roughly 40 to 51 who are mid-career professionals with children in their teens.

“As such, they have more mature tastes from the standpoint of design and performance and require cars with more interior space that can accommodate both adults and older children,” analysts said.

With those considerations as a backdrop, NADA UCG pinpointed a variety of luxury models that might be appealing, including:

And furthermore, if dealers find a potential buyer with even more potential purchasing capacity, NADA UCG offered a lineup of vehicles for budgets that can extend up to about $30,000 with luxury-vehicle traits such as all-wheel drive, impressive power and higher performance. That group included:

"Anyone in the market for this sized vehicle ― be it from Generation X or any other demographic ― can feel good about their options when it comes to finding exceptional cars on a limited budget,” analyst said.

Highlighting Positives of CPO

NADA UCG reiterated that one of the benefits of buying a used late-model luxury vehicle is its warranty coverage.

“Luxury brands come with longer new vehicle warranty periods than their mainstream counterparts, so all of the vehicles on our list could still be covered under their respective new vehicle limited warranties, assuming the vehicles original in-service date and mileage fall within the warranty period guidelines established by each manufacturer,” analysts said.

For the 2012 model year, NADA UCG pointed out that Lincoln, Volvo, Acura, Audi and Mini vehicles all came with bumper to bumper warranties of four years or 50,000 miles. Infiniti was even better with four years or 60,000 miles of coverage.

“Although warranty coverage for this group of vehicles is beginning to run thin in terms of both time and mileage, buyers will find comfort in knowing they are still covered for a short period if any post-purchase issues are encountered,” analysts said.

For customers worried about warranties running out on used models, NADA UCG emphasized that dealers need to stress how CPO programs can be an attractive avenue to consider in alleviating any potential concerns.

As many dealers know, all CPO vehicles must meet certain criteria involving mileage and condition. Any deficiencies found following a rigorous inspection process are corrected and the vehicle is reconditioned to like-new condition.

“Once the automobile passes through this multi-point inspection, it’s ready for resale as a CPO vehicle. One of the many benefits of buying a CPO vehicle is that it’s backed by a warranty, which covers any future problems, just like a brand-new vehicle warranty,” analysts said.

NADA UCG acknowledged that it is important to note that CPO warranties vary by manufacturer in terms of how long the vehicle is covered and what parts and services are included.

“Often a manufacturer will honor the remainder of the original new car warranty on their factory certified used cars along with an additional short-term bumper-to-bumper coverage package,” analysts said. “However, other car manufacturers may not transfer the original factory warranties and instead offer a new bumper-to-bumper coverage package.”

NADA UCG went on to mention that another factor to consider is the difference between a manufacturer-certified vehicle and a dealer-certified unit. Manufactured-certified vehicles can be repaired at any like-branded dealership. A dealer-certified car may have to be returned to the dealership where the buyer purchased the vehicle for any necessary work to be done under the warranty.

“Purchasing a CPO vehicle does come at a premium, and buyers should expect to pay approximately $750 to $3,500 more than a comparable non-certified model,” analysts said. “Often, CPO vehicles are offered with reduced-rate loans which could balance out the premium down the road.”