In 2014, the industry posted record CPO sales for the fourth consecutive year, as dealers sold 2.34 million units, according to Autodata Corp.
A presentation from Cox Automotive in November forecasted another all-time high for CPO in 2015 and more record-breaking years down the road. Manheim chief economist Tom Webb has said the market could grow as high as 4 million to 5 million annual sales.
Amid this growth in the certified market, Auto Remarketing asked Bill Fox, the 2015 chairman of the National Automobile Dealers Association, about the importance of CPO within The Fox Dealerships family.
In an emailed Q-and-A with Auto Remarketing at the end of December, Fox — who is a partner in Fox Dealerships in upstate New York — said franchised dealers have put “an increased emphasis” on certified, given the records in recent years, and he also mentioned ways dealers can realize the full potential of CPO.
“To maximize potential, new-car dealers and their manufacturer partners should increase CPO marketing, which includes informing car buyers about the CPO benefits,” he said. “For example, the majority of car buyers are not aware that manufacturers are involved in the certification process.
“Most do not realize that CPO vehicles can be financed with competitive rates, which helps ease the upfront premium associated with CPO vehicles.”
As for his own stores within Fox Dealerships, he shared a bit about how they have fared in CPO and what kind of emphasis has been placed on certified.
“We’ve had greater success with some brands over others. Ultimately, it’s up to the car buyer to decide if he or she wants to invest in a slightly used vehicle or purchase a new one,” Fox said. “From a competition standpoint, new-car dealers can use CPO sales as a differentiator compared to other independent, used-vehicle retailers who do not have manufacturer-backed certification programs available.”
Editor’s Note: This is an excerpt from a feature in the January edition of Auto Remarketing, the on-site NADA Convention & Expo issue. Stay tuned for our NADA Convention Auto Remarketing Extra e-newsletters later this week for more.
Certified pre-owned vehicles fetched roughly $2,800 more on average last year than used cars that were not certified but in the same age range, according to CNW Research, which said that premium is expected to rise modestly in 2015.
More specifically, CNW is targeting a $3,100 CP0 premium this year.
“Because many in the middle class are being squeezed out of the new-car market because of higher prices and soft wage gains, CPO becomes a solid alternative,” CNW president Art Spinella said in January’s Special Forecast Issue of the company’s Retail Automotive Summary.
“And it’s one that consumers believe provides the new-car smell without the new-car payment,” Spinella added. “That said, in 2014 consumers paid about $2,800 more for CPO models than comparably aged non-CPO used cars.”
Strong sales of certified vehicles — and the higher prices they command — also came up in an analysis of used-car sales by ADESA’s Tom Kontos.
In his latest Kontos Kommentary, he pointed to numbers from CNW indicating a “respectable” overall retail used sales figure of 29.6 million for 2014, which was “very close” to the year-ago sum and adds some shine to a relatively soft December.
“Moreover, the composition of those sales included a higher percentage of higher priced, and typically higher grossing, certified pre-owned (CPO) vehicles, which totaled 2.3 million units in 2014 versus 2.1 million the year before,” Kontos said. “CPO sales were particularly strong in December, rising 3.9 percent month-over-month and 17.2 percent year-over-year, according to figures from Autodata.”
For both domestic and import brand programs alike, records and landmark years in the certified pre-owned business were abundant in 2014.
Statistics and analysis shared by Autodata Corp. indicates that 17 brands/programs posted best-ever years in the CPO market, and three closed out 2014 with their strongest certified sales month in history.
The firm lists the following as having posted best-ever annual sales: Audi, Chrysler, Fiat, Ford Motor Co., Hyundai, Infiniti, Kia, Land Rover, Lexus, Mazda, Maserati, Mercedes-Benz, Mini, Nissan, Nissan, Porsche and Subaru.
Meanwhile, achieving their strongest CPO sales months of all time as 2014 drew to a close were Kia, Land Rover and Lexus.
All told, domestics sold 829,514 certified vehicles in 2014, which beat year-ago numbers by 16.3 percent. And while not included in the best-ever list above, General Motors hit a six-year high for sales of GM Certified Pre-Owned vehicles, which includes Buick, Chevrolet, GMC, Pontiac and Saturn models. There were 389,107 combined sales of those brands, a 13-percent increase.
Next, European automakers sold 416,265 CPO cars last year for a 17.4-percent gain. Asian brands increased their sales by 4.8 percent, moving. 1.09 million CPO units.
Room to Grow in 2015?
So how far will the industry climb? That was something addressed by Manheim chief economist Tom Webb in a Manheim Used Vehicle Index quarterly conference call last week. After four straight years of record CPO sales — a run that includes last year's 10.8-percent growth — can the industry make a drive for five and gain another 10 percent or more in sales?
“It’s always depending on how much marketing efforts the manufacturers want to put behind them,” Webb said. “You would anticipate a fifth consecutive record to occur, but a double-digit increase would probably be overly optimistic.”
Editor's Note: Staff Writer Nick Zulovich contributed to this report.
In discussing potential automaker incentive spending amid forecasted slower new-car sales growth in 2015, AutoTrader.com senior analyst Michelle Krebs — who said this year will be a “true test of the discipline in the auto industry” — added this “twist” involving the used-car market.
“Not only are new-car sales not going to increase at the rates that we’ve seen, but we’re also going to see a surge in used cars and specifically, certified pre-owned vehicles, come on to the market,” Krebs said during a conference call with the media on Monday.
“And one of the things that I’m going to be watching carefully is who does a good job of either moving people who are buying used cars into new cars, and who’s going to keep people in their fold of certified pre-owned cars,” she added. “We call it the ‘defending the castle’ kind of thinking.
“We’ve seen the new-car market expand; we’ve seen the used-car market expand because there’s been such a shortage. Well, now, we’re going to have a lot of supply.”
So, the manner in which automakers respond to that increased supply will go a long way in determining the “winner” of who keeps buyers “in the fold,” be it new or used, Krebs added.
Krebs and Alec Gutierrez, a senior analyst with Kelley Blue Book, were presenting during their monthly sales conference call and fielding questions from media. They both pointed toward a likely measured, targeted approach to incentives by automakers in 2015.
The certified pre-owned market just completed its fourth consecutive best-ever year, but the records don’t end there.
A few handfuls of brands posted all-time highs for annual CPO sales, according to Autodata Corp., which said Tuesday that last month was a best-ever December, and the final three months of 2014 marked a best-ever fourth quarter.
All told, there were 2.34 million certified sales in 2014, which beats 2013 figures by 10.8 percent, according to Autodata. Dealers moved 200,671 CPO vehicles in December, a 17.2-percent increase from the same period of 2013.
There were 596,178 certified vehicles sold in Q4, a 13.4-percent year-over-year hike.
Reporting best-ever years for CPO, according to Autodata, were: Audi, Chrysler, Fiat, Ford Motor Co., Hyundai, Infiniti, Kia, Land Rover, Lexus, Mazda, Maserati, Mercedes-Benz, Mini, Nissan, Porsche and Subaru.
Prior to these results being released, Auto Remarketing provided a sneak peek at how some of the automakers reporting early CPO results had fared in 2014.
For even more CPO coverage, stay tuned to our debut CPO Weekly e-newsletter this afternoon. A complete run-down of industry and brand-level certified sales results will be available in the January print issue of Auto Remarketing.
In today's debut CPO Weekly e-newsletter, Auto Remarketing gets things started by looking at how a few brands reporting early certified pre-owned results fared in 2014. And in what likely was yet another record year for the industry, CPO operations looked promising for many automakers.
Starting with Ford, its brands combined to sell 22,610 certified vehicles in December, pushing the annual sum to 271,705 units.
The Lincoln brand had 26,557 certified sales in 2014, with Ford/Mercury CPO sales at 245,148 for the year.
Moving over to Mazda, it sold 3,768 certified vehicles in December, which beat prior-year figures by 19 percent. It finished the year with 43,129 CPO sales, a 14-percent increase.
Hyundai had its best December ever with 7,674 certified sales, which was a 27.3-percent year-over-year improvement. For the year, Hyundai sold 95,486 CPO vehicles, which beat 2013 sales by 25.7 percent.
Despite its annual certified sales dipping 1.2 percent, Volkswagen finished 2014 with its best December ever, selling 7,862 CPO vehicles.
That was a 15.7-percent increase over December 2013 and pushed yearly sales to 92,520. It was also the program’s 10th straight month of 7,000-plus CPO sales.
Audi sold 4,349 certified vehicles in December to finish the year with 47,023 CPO sales. The annual sum for Audi is up from 40,190 CPO sales in 2013.
Volvo sold 1,261 certified units for the final month of the year, a 63.3-percent increase. The program finished 2014 with 14,129 annual sales, a 38.5-percent improvement.
Porsche moved 1,111 CPO vehicles in December (up 14.6 percent) and sold 11,843 certified cars for the year (up 16.9 percent).
The Mercedes-Benz certified pre-owned program had its best December with 11,379 (up 17 percent year-over-year) and finished 2014 with 119,257 annual sales (up 20.4 percent).
At BMW, its CPO and non-CPO used sales came in at a combined 17,122 units for December (down 8.6 percent). For the year, the sum was 196,930 CPO sales, an 8.1-percent increase and representing a record year.
As for the MINI brand, it had 2,083 combined CPO and non-CPO used sales in December for a 6.6-percent increase. Its annual figure was 24,765 sales, a 12.4-percent hike. These marked MINI's best month and year, respectively.
Certain dealers in the certified pre-owned space may have another selling point this holiday season. Four of what AutoTrader.com editors consider to be the “top 10 must-shop family cars” are CPO models.
While the company also noted the year-end bargains as dealers clear their lots for new inventory for the new year, AutoTrader.com site editor Brian Moody said: “December can also be a good time to check out used or certified pre-owned options too, since most of those cars will be a year older and prices tend to go down slightly as newer or all-new models start showing up at the dealer.”
AutoTrader’s list of the top 10 must-shop family cars, which include a mix of new and CPO models, is as follows:
New Vehicles:
2015 Chrysler 200
2015 Ford Fusion
2015 Honda Accord
2015 Honda Fit
2015 Subaru Outback
2015 Toyota Camry
CPO Vehicles:
2013 Buick Enclave
2013 Ford Flex
2013 Mazda5
2012 Toyota Sienna
“The holiday season means lots of road trips, and without a doubt, families now have more choices than ever when shopping for a car that fits their lifestyle and budget," Moody said. “It’s no longer just about cargo space, number of seats and safety — it’s also about value and practicality. Our list identifies the top ten cars that exceed our expectations and are definitely worth taking a test drive this winter.”
In announcing the name change from Chrysler Group LLC to FCA US LLC on Tuesday, officials with the Michigan automaker emphasized in their press release that neither the location of company headquarters (Auburn Hills) nor the company’s holdings, management, board or brands would be impacted.
But what about the used-car side? What is the branding impact to the certified pre-owned program of the formerly titled Chrysler Group?
According to Eric Swanson, who heads up the CPO programs for these brands, the effect is minimal.
Although the warranty on vehicles will say “backed by FCA US LLC,” the branding should remain the same, said Swanson, who explained in an email to Auto Remarketing that “the logo and identity is more related to the brands than it is the corporate entity.”
He also noted that brochures and posters will eventually be reprinted with the new corporate name included, “but the look and feel of the logo will be unchanged.”
Beyond the pre-owned world and speaking to the overall name change on a corporate level, retail consumers aren’t likely to notice much change, either, says Karl Brauer, senior analyst for Kelley Blue Book.
“Changing the name of Chrysler's parent automotive group will mean little to the average consumer. Car shoppers are often unaware of these corporate naming structures, instead paying far more attention to a vehicle's badge, the name on a dealership or the name referenced in marketing messages,” said Brauer.
“All of those names will continue to be ‘Chrysler’ and will be attached to much better product, including the all-new 200 and updated 300 sedans for 2015,” he continued. “In the eyes of the car-buying consumer, these improvements in product quality will do far more to strengthen the Chrysler brand than any corporate name changes might do to weaken it.”
General Motors has a new certified pre-owned manager to replace Larry Pryg, who is now Global On-Star marketing manager.
Named manager of certified pre-owned vehicles for GM this month was Todd Brown, who was previously the marketing manager for the Cadillac Escalade and SRX.
Brown has been with GM since 1999, when he came aboard as a district manager at the Dealer Business Center in Detroit.
His 15 years at GM have included field experience as several sales and operational positions, including: South Central Region district sales manager, North Central regional distribution specialist, district manager and regional operations manager for SAAB, retail operations manager for SAAB, Cadillac, Hummer, Cadillac and customer experience manager.
GM is fresh off a month where its Buick, Chevrolet, GMC, Pontiac and Saturn sold 33,268 CPO units (up 18.9 percent from November 2013). Through 11 months, these brands have sold 356,075 CPO units (up 12.4 percent). Cadillac had 1,876 CPO sales in November (up 20.4 percent) and year-to-date sales are at 19,134 units (up 13.7 percent).
These results were part of 69,915 CPO sales among domestics in November (up 16.9 percent year-over-year). This put the year-to-date tally at 758,486 CPO sales for the Big 3, a 15.7-percent improvement over the first 11 months of 2013.
Import automakers enjoyed solid months in the certified pre-owned market, as European brands increased their CPO sales by more than 16 percent in November while Asian brand sales climbed nearly 2 percent and pushed their year-to-date sum above 1 million, according to Autodata Corp.
European certified sales came in at 34,931 units for the month (up 16.1 percent year-over-year), with year-to-date sales at 377,688 (up 16.9 percent).
There were 88,106 CPO sales by Asian brands in November (up 1.7 percent), as year-to-date sales were a touch higher than 1 million (up 4.3 percent).
At least two import brands had their best Novembers for CPO sales: Volkswagen reported its strongest November with 7,827 sales (up 9.6 percent) as did Hyundai, which moved 8,138 CPO sales (up 33.0 percent).
