Last month was the best February ever for certified pre-owned sales, and one automaker reported its best month of all time (February or otherwise).
Sharing final certified pre-owned sales numbers on Thursday morning, Autodata Corp. provided these statistics and an updated CPO figure.
The firm said there were 197,540 certified sales for the month, which was good enough to be the strongest February on record and a 10.3-percent year-over-year improvement.
Autodata pinpointed the daily CPO sales rate at 8,231. This was the second-best rate of all time.
Through two months, there have been 392,405 CPO sales, a 13.6-percent improvement.
As far as individual automakers, Fiat Chrysler Automobiles had its best month ever, Autodata said.
The Chrysler, Dodge and Jeep brands combined to move 14,357 certified vehicles in February for a 24.8-percent year-over-year gain.
With Fiat sales included, their sales were at 14,416 units, a 25.0-percent hike.
Certified pre-owned sales in February beat year-ago figures by more than 10 percent, and the daily selling rate was just a hair away from being the best-ever, according to Autodata Corp.
The firm estimates there were 197,499 CPO sales last month (based on brands reporting results as of Wednesday morning). This would be a 10.3-percent year-over-year gain.
Through two months of 2015, there is already some progress in the CPO market, as year-to-date sales are at an estimated 392,364 units, beating the year-ago pace by 13.6 percent.
Autodata indicates that the daily selling rate was 8,229 units in February. This is up 10.3 percent year-over-year.
While acknowledging that there were only 24 selling days, the firm says this pace narrowly misses the all-time best.
Certified pre-owned vehicles represented a larger slice of the sales pie, and this helped bump up full-year transaction prices on used cars for the publicly traded dealer groups in 2014.
That’s according to the latest blog post on dealer group activity by Cox Automotive chief economist Tom Webb, who also explained how these higher prices combined with several other factors to impact the auction business.
Webb said in this post that the seven public retailers combined to move more than 1.3 million used-vehicle retail vehicles last year, which beat prior-year totals by 8 percent.
Citing company filings, Webb indicated that the fourth quarter represented the 22nd straight time that same-store used retail sales for these groups increased. It also marked the heftiest sales-weighted climb (6.8 percent) for any quarter of the year.
And while acknowledging the slimmer margins the industry has experienced, he pointed out that the fourth-quarter was essentially steady, year-over-year, in terms of sales-weighted gross margins, which came in at 9.2 percent.
“The average used-vehicle selling price for these dealer groups rose 3 percent to $20,775,” Webb said, referring to full-year prices. “This reflected a richer mix of units and a higher share of sales accounted for by certified units.
“Higher sales at higher prices and steady margins combined with increased operating efficiencies to produce record profits,” he said. “It’s those profit opportunities that kept dealers bidding at auction.”
Auto Remarketing followed up with Webb to get a ballpark figure on what kind of share CPO represented for these public dealer groups.
Bearing in mind that CarMax does not sell OEM CPO vehicles, Webb said certified pre-owned was north of 23 percent of franchised dealers’ used-car sales last year.
Explaining his math, Webb said that figure (approximately 23.5 percent) is derived from taking the full-year CPO sales total via Autodata Corp. and dividing it by the total franchised dealer used sales that NADA reported.
Comparatively, the ratio was 20 percent in 2011 and 15 percent in 2007, according to Webb.
As certified pre-owned sales results started to trickle in Tuesday, automakers (at least those reporting, so far) are seeing sales spike significantly from the first two months of 2014 — a trend that bodes well for continued certified market growth.
Volvo impressed last month with a 58-percent boost in CPO sales in February. Its dealers sold 1,343 certified units, up from 850 sold during February 2014. Year-to-date sales also showed an over-50 percent spike. Volvo sold 2,690 CPO vehicles through the first two months of the year, up 58.1 percent from the same period of 2014.
Mazda also reported results early Tuesday. The automaker sold 3,208 CPO vehicles last month, up 8 percent over February 2014’s total of 2,964. So far this year, Mazda has sold 6,645 certified vehicles, up a significant 13 percent over the same period of last year.
Kia reported 4,887 certified sales for the month, which was its second-best month ever. It also represented a 41.89-percent sales increase from a year ago. Kia has sold 9,494 certified vehicles so far this year, which beats year-ago figures by 47.8 percent.
And over at Hyundai, the automaker announced its best February ever with 7,128 CPO units sold. This is up 4.8 percent from the 6,804 sold in February 2014. Year-to-date, the automaker has sold 14,496 certified vehicles, up 4.6 percent from the same period last year.
Volkswagen experienced double-digit percentage boosts in certified sales last month.
The automaker sold 7,176 CPO vehicles in February, up 8.3 percent from the 6,628 sold during the same month of 2014.
So far this year, VW has sold 14,851 certified vehicles in the U.S., up 12.6 percent from the same period last year.
VW also pointed out February marked the 12th consecutive month the automaker has sold over 7,000 CPO units.
VW and Volvo weren't the only european brands to experience CPO sales increases this past month.
Porsche Approved Certified Pre-Owned vehicle sales in the U.S. also jumped by double digits. In February, Porsche sold 953 certified used vehicles in the U.S., up 13.32 percent from February 2014. So far this year, the automaker has sold 1,980 CPO vehicles, up 21.4 percent over the same period last year.
European luxury counterpart Mercedes-Benz also saw a successful month for CPO.
Mercedes-Benz Certified Pre-Owned recorded February sales of 9,820, with year-to-date volumes increasing 5.4 percent over the comparable period in 2014 to 19,276, the company reported.
At BMW, sales increased slightly in the pre-owned department. Last month, BMW sold 15,157 used vehicles, a number which includes CPO sales, as well. This marked a year-over-year increase of 1.3 percent.
Paul Rohovsky, certified pre-owned manager at Lexus, said: “Lexus CPO continues on a record sales pace as we have developed new resources and programs to support our dealers to achieve new record sales results.”
The most recently completed month was a February record, he said, extending Lexus’ streak of consecutive monthly CPO sales records to seven. Each month since August has been a record for that particular month.
“Lexus is committed to the CPO program and supporting our dealers pre-owned operations and we anticipate another record year in 2015,” Rohovsky added.
The latest Used Car Market Report from Edmunds.com indicates that lease penetration in 2014 reached 27 percent, just five years after rates fell below 17 percent.
One of the segments of the car business that has been a big beneficiary of the rampant bounce-back in leasing has been the certified pre-owned business.
“New-vehicle leasing continues to grow, and the lease returns have helped supply used car inventory — particularly CPO vehicles,” Edmunds’ analysts said in the report. “Additionally, leasing has become so prevalent in every vehicle segment and that has helped to bolster used inventories for segments that have traditionally been purchase-heavy.”
The pool of CPO-worthy cars continues to climb, leading to a record year for both CPO sales volume and market share of franchised used sales in 2014, the report indicates.
“That (record-setting) is expected to continue in 2015 with trade-ins and lease returns expected to increase,” Edmunds analysts pointed out.
So it’s not just robust leasing that lifting the certified market; trade-ins are helping, too.
There were 6.2 million new-car sales with a trade-in during 2014, according to Edmunds’ report. That’s up from a recent low point of 3.6 million in 2009. Each of the past five years has represented a steady increase in the number of new sales with trade-ins, the Edmunds data shows.
“The sourcing of used inventory from new car sales with a trade-in continues to grow after being severely affected by the economic downturn. Since 2012, new cars sales with a trade-in have been 5 million-plus (each year), which has helped expand the depressed used car population,” Edmunds noted.
Coming off the fourth record year in a row for certified sales, the market is at an all-time high.
That’s according to analysts at Edmunds.com, whose latest Used Vehicle Market Report shows that 2014 CPO sales hit an all-time record of 2.3 million.
Interestingly, though it wasn’t a record year for used-car sales overall, the CPO market, in particular, soared in 2014.
According to Edmunds’ report, CPO sales made up 20.8 percent of total used-car sales at franchised dealerships last year.
Its analysts said this is the highest percentage since CPO programs were introduced.
And CPO progress isn’t expected to slow down anytime soon, due in part to the expected influx of off-lease vehicles to hit the used market.
"We fully expect CPO popularity to continue throughout 2015 because many leased cars are being returned to the dealership in excellent shape and lightly used cars are being traded in at faster rates than in previous years. This allows dealers to maintain a large CPO inventory," explained Edmunds.com senior analyst Jessica Caldwell. "Car shoppers are finding a great selection to choose from, and, in the current economy, many are comfortable spending a bit more for that extra peace-of-mind that a CPO car brings."
Edmunds’ report also covered the used-car market in 2014 as a whole, and their findings show expanding supply may not have as much of an impact on used pricing as some suspect.
According to the report, even though there are more used cars in the marketplace than in recent years, retail prices have remained high.
In 2014, there was a 6-percent increase in used prices, year-over-year. The average price of a used vehicle sold at a dealership last year was $16,800, compared to $15,900 in 2013.
In 2014, the average 1-year old vehicle — a prime vehicle age for CPO programs — sold for almost $30,000, which is 5.7 percent higher than in 2013.
"Lightly used cars are very appealing to car shoppers since they are equipped with modern technology and have already taken their biggest depreciation hit," said Caldwell, who pointed out that 19 percent of used vehicles sold in 2014 were 1 or 2 years old, up from 14 percent in 2013.
Rapidly dropping gas prices also played a role in boosting average retail used-car prices, Edmunds analysts pointed out.
According to the report, lower gas rates drew consumers toward larger, less fuel-efficient vehicles, which tend to tout higher price tags.
Also, as lower interest rates were more prevalent and longer loan-terms became the norm last year, shoppers were able to purchase more expensive used vehicles.
Although the prevalence of certified pre-owned has certainly increased in recent years, it still represents less than a quarter of used-car sales.
Or, as AutoTrader.com president Jared Rowe put it: “That’s a lever we haven’t fully pulled.”
Rowe was speaking last week at the 2015 Digital Summit , an event at Google’s Mountain View, Calif., headquarters hosted by Haystak Digital Marketing.
Rowe says that his company — which, like Haystak, is part of the Cox Automotive family — has a sharp focus on CPO.
The segment itself is not understood as it should be, Rowe said, but presents a big profit opportunity for dealers.
Granted, Rowe said he understands the cost for the dealer to do certified is high; but here’s the thing: when consumers understand what CPO entails, they are more likely to pay a premium for it, he said.
Across the board, the top benefit consumers find in CPO is the peace-of-mind it offers. But it doesn’t just promote confidence and assuredness in consumers. It can help boost margins and drive loyalty.
That last point — plus the fact that CPO actually “skews young” toward millennials, Rowe said — presents an interesting opportunity for luxury brands, in particular.
Interestingly enough, millennials identify with luxury brand more than any other generation, he said. Of course, they might not all be able to afford a new luxury vehicle.
But CPO allows luxury brands to get millennials in the door, then — bearing in mind the loyalty element — keep them in the fold.
A relatively new program within BMW’s certified pre-owned operations that helps dealers retail used loaner and demonstration cars is gaining share in the company’s CPO pie and resonating with dealers and consumers, alike.
Called BMW CPO Elite, the program was rolled out in January 2014 and, according to the company’s website, includes newer-model, lower-mileage BMW vehicles — those having over 300 miles, BMW said, but fewer than 15,001.
The program tacks on an additional one year or 25,000 miles (whichever comes first) of warranty once the four-year/50,000-mile New Vehicle/SAV Limited warranty expires, plus other benefits found on the BMW website.
So, far it appears to be helping BMW move more of its loaner and demo cars into the CPO sales streams.
“It was intended to assist dealers with loaners and demos going into the used-car inventory,” said Kevin Rustad, national pre-owned sales manager at BMW North America. “In the past, we were only getting about 5 percent of these vehicles sold as CPOs; now, we get over 24 percent, and it is climbing.”
Rustad said that 20 percent of all BMW CPO sales were CPO Elite in 2014. However, he points out that the program has gained a lot of ground — for instance, CPO Elite represented 29 percent of all BMW CPO sales in December.
And it seems that it has gained favor among both the dealer body and the buying public.
“Both consumers and dealer shave responded extremely well,” Rustad said. “Dealers are now more confident in turning loaners and demos because they know they have some support on the back end to assist them in retailing these vehicles.
“Dealers also love the fact that more customers are gravitating towards CPO Elite because CPO customers are also much more likely to return to the brand when they purchase a CPO,” he continued.
“Consumers have embraced it also, as it provides extra peace-of-mind, a longer warranty and sales support, which equates to a lower monthly payment,” Rustad said. “Every consumer can always appreciate paying a little less per month for The Ultimate Driving Machine.”
They also enjoy the chance to get a car that’s even younger than those typically arriving on dealer lots via off-lease routes.
In fact, when asked which of the differences between CPO and CPO Elite has stuck out the most to shoppers, Rustad said: “Consumers appreciate the fact that they can now get a low- mileage, younger used car which is certified. In the past, it was primarily off-lease cars which were available for CPO; they love the fact that now there is younger alternative for them.”
Certified pre-owned sales of Asian-brand vehicles jumped close to 11 percent in January, and European-brand CPO sales moved even higher, improving by nearly 25 percent year-over-year.
That’s according to Autodata Corp., which released its monthly breakdown of industry-wide and brand-by-brand CPO sales.
Starting with Asian OEMs, their 87,623 CPO sales last month were up 10.9 percent from January 2014. Market share was 45.0 percent, down from 47.5 percent a year ago.
Dealers with European brands posted 34,397 certified sales in January, good for a 24.6-percent spike. That put their market share at 17.7 percent, beating the year-ago tally of 16.6 percent.
While no brands reported having best-ever CPO sales, a few confirmed that last month was their strongest January, those being:
Hyundai (7,368 sales)
Lexus (6,653)
Mercedes-Benz/smart (9,456)
Volkswagen (7,675)
Dealers with Big 3 brands collectively sold nearly 73,000 certified pre-owned vehicles last month and picked up an extra 1.5 percent of market share, according to Autodata Corp.
Domestics commanded 37.4 percent of the CPO market in January, the firm said, and their 72,841 certified sales beat year-ago figures by 22.1 percent.
Brands within the Ford family sold 22,714 CPO vehicles for the month, beating out January 2014 by 20.3 percent.
Over at General Motors, there were 35,362 certified sales of Buick, Chevrolet, GMC, Pontiac and Saturn vehicles. This was a 24.0-percent year-over-year improvement.
Cadillac had 1,873 certified sales for a 21.9-percent gain.
Moving to Fiat Chrysler Automobiles, the domestic brands there (Chrysler, Dodge and Jeep) sold 12,892 certified vehicles, which was a 20.2-percent uptick.
The Fiat brand, which is not included in that total or the overall Big 3 sum, moved 50 certified units last month, beating the January 2014 total of 34.
