Big 3 automakers combined to sell nearly 70,000 certified pre-owned vehicles in November, beating year-ago figures by 16.9 percent, according to Autodata Corp.
Specifically, the 69,915 CPO sales among domestics in November put the year-to-date tally at 758,486 sales, a 15.7-percent improvement over the first 11 months of 2013.
Ford’s brands sold 22,552 certified cars in November (up 16.1 percent) with year-to-date sales at 249,095 sales (up 18.9 percent).
Certified sales for General Motors’ Buick, Chevrolet, GMC, Pontiac and Saturn reached 33,268 units in November (up 18.9 percent). 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).
Chrysler’s brands (excluding FIAT) had 12,219 certified sales last month (up 12.8 percent), pushing the yearly tally to 134,181 units (up 19.0 percent).
There were 50 FIAT certified sales in November, with yearly sales at 581.
Year-to-date certified pre-owned sales have already eclipsed the 2 million mark, with last month’s tally of 192,952 sales marking the best November ever for CPO, according to Autodata Corp.
The aforementioned November record beat year-ago figures by 9.3 percent and pushed annual sales to 2.14 million, a 10.2-percent increase over the first 11 months of 2013.
The daily selling rate for CPO in November was 7,718, which beat the year-ago rate by 13.7 percent.
And of the dozens of brands listed in Autodata’s CPO set, only about a handful saw their sales decrease from a year ago.
The bulk of the rest improved certified sales from November 2013, most by double-digit percentages.
Roughly a week ago, Edmunds.com released an analysis indicating that certified pre-owned vehicles represented nearly 21 percent of total franchised dealer used-vehicle sales in the third quarter.
And the CPO share for the current month could be even stronger, according to data that Edmunds shared Monday with Auto Remarketing.
Analysts with the site estimate that 878,000 of the 2.64 million used sales expected for November are via franchised dealers.
And certified units are expected to command approximately a 22.5-percent share of franchised dealer used sales for the month, with about 197,000 CPO cars sold.
The CPO segment becoming an increasingly larger part of the franchised dealer’s used-car operation was one of the key themes addressed at the CPO Forum and Used Car Week earlier this month in Las Vegas.
Not long after the events ended, Edmunds released its Q3 2014 Used Vehicle Market Report, which detailed just how strong the certified market had been through the first nine months of the year.
As the report’s data shows, franchised dealers are not just selling more used cars. A greater proportion of those cars are CPO vehicles.
In fact, the certified side of the business represented nearly 21 percent of total franchised dealer used-vehicle sales in the third quarter, compared to a CPO share of just under 19 percent in the same period of last year.
Edmunds pinpointed industry-wide used sales at 9.16 million for Q3 and 27.89 million year-to-date.
During the third quarter, franchised dealers moved 2.97 million used vehicles, according to Edmunds. Over 611,000 of those were CPO units, meaning that certified pre-owned commanded a 20.59-percent share of all used sales at franchised dealerships.
In Q3 of 2013, franchised stores sold 2.86 million used cars, with 540,260 being CPO (or, an 18.87-percent share for CPO).
Through three quarters of 2014, franchised dealers had moved 8.59 million used vehicles year-to-date, 1.74 million of which were CPO.
That translates to 20.31-percent CPO penetration. A year ago, CPO share was at 19.02 percent through Q3, as 1.57 million of the 8.27 million used cars franchised dealers sold in the first three quarters were certified.
Here’s another way to look at it: Overall used sales for franchised dealers climbed 3.7 percent year-over-year in Q3. CPO sales jumped 13.1 percent.
Similarly, year-to-date franchised dealer used sales were up 3.9 percent through September; certified sales were up 10.9 percent.
One of the key drivers to rising certified sales has been the boost in lease returns, which tends to benefit CPO supply, in particular.
“After leasing fell into the doldrums in 2009, it has been climbing ever since,” Edmunds analysts noted in the report.
“There has been an uptick in number of lease returns — this leads to more certifiable vehicles which have seen the heftiest gain among all the used vehicle segments,” they added, referring to supply.
So, how much more money will a certified pre-owned vehicle fetch than a non-CPO used car? Edmunds.com answered that very question in its Q3 Used Vehicle Market Report.
What the site found was that if you took a CPO model and its non-CPO used counterpart, the certified vehicle will notch a price premium of $1,341, on average.
In the report, Edmunds also boiled down the average CPO premiums in 22 different car and truck segments, which can be found below:
Subcompact Car: $826
Compact Car: $864
Midsize Car: $1,085
Large Car: $1,152
Entry Sport Car: $1,324
Midrange Sport Car: $2,026
Premium Sport Car: $3,089
Entry Luxury Car: $2,102
Midrange Luxury Car: $2,237
Premium Luxury Car: $2,886
Compact Crossover SUV: $1,139
Midsize Crossover SUV: $1,258
Midsize Traditional SUV: $1,391
Large Crossover SUV: $1,165
Large Traditional SUV: $1,518
Minivan: $1,135
Van: $1,081
Compact Truck: $963
Large Truck: $1,083
Entry Luxury SUV: $2,362
Midrange Luxury SUV: $2,726
Premium Luxury SUV: $3,531
Note: Edmunds emphasized that these are average premiums, pointing out that vehicle condition can greatly impact savings.
Franchised dealers are not just selling more used cars. A greater proportion of those cars are certified pre-owned vehicles.
In fact, the certified side of the business represented nearly 21 percent of total franchised dealer used-vehicle sales in the third quarter, compared to a CPO share of just under 19 percent in the same period of last year.
These CPO statistics and more are found in the Q3 2014 Used Vehicle Market Report from Edmunds.com, which pegged industry-wide used sales at 9.16 million for Q3 and 27.89 million year-to-date.
During the third quarter, franchised dealers moved 2.97 million used vehicles, according to Edmunds. Over 611,000 of those were CPO units, meaning that certified pre-owned commanded a 20.59-percent share of all used sales at franchised dealerships.
In Q3 of 2013, franchised stores sold 2.86 million used cars, with 540,260 being CPO (or, an 18.87-percent share for CPO).
Through three quarters of 2014, franchised dealers had moved 8.59 million used vehicles year-to-date, 1.74 million of which were CPO.
That translates to 20.31-percent CPO penetration. A year ago, CPO share was at 19.02 percent through Q3, as 1.57 million of the 8.27 million used cars franchised dealers sold in the first three quarters were certified.
Here’s another way to look at it: Overall used sales for franchised dealers climbed 3.7 percent year-over-year in Q3. CPO sales jumped 13.1 percent.
Similarly, year-to-date franchised dealer used sales were up 3.9 percent through September; certified sales were up 10.9 percent.
Used-Sales Drivers
In the report, Edmunds analysts went on to explain what has lifted the overall hike in used-vehicle sales. One big factor? There is more inventory available.
“With the new-car sales rate in 2014 being the highest since 2006, there is simply more volume coming onto dealers’ used-car lots in the form of trade-ins,” analysts said in the report.
In fact, there has been a trade-in with nearly half (47 percent) of new-vehicle sales this year, the report noted.
And with new-car sales projected to reach 16.5 million in 2014, that “nets a lot of trade-ins and a full used-car lot.”
Comparatively, only about 35 percent of new-car sales had a trade-in back in January 2008, according to a chart included in Edmunds' data set.
There’s also the boost in lease returns, which tends to benefit CPO supply, in particular.
“After leasing fell into the doldrums in 2009, it has been climbing ever since,” analysts noted. “There has been an uptick in number of lease returns — this leads to more certifiable vehicles which have seen the heftiest gain among all the used vehicle segments.”
And based on the data charts in Edmunds’ report, the number of lease returns seems poised to only grow from here.
As of the end of Q3, leases commanded more than 25 percent of new-vehicle sales — and they’ve been around that mark for nearly the entirety of the past seven quarters.
With CPO sales booming in 2014 and the potential for certified sales to double in coming years, IntelliChoice announced the winners today of its annual Certified Pre-Owned Car Awards.
The company announced the top certified brands at the CPO Forum in Las Vegas this morning.
Repeat winner, Volvo Certified Pre-Owned, was once again recognized as the Best Premium CPO Program. Volvo also took home honors for the Best Premium CPO Warranty.
And Hyundai has once again been named the Best Popular CPO Program for the fourth year in a row.
Hyundai notched the top spot amongst 14 popular brands due to its strong used-car brand value and CPO sales market penetration, IntelliChoice reported.
"Keeping our customers' needs top of mind enables us to deliver the perfect recipe for an outstanding long-term warranty program that's allowed us to offer one of the strongest, value-driven CPO programs in the market," said Jose Froehlich, senior manager, certified pre-owned, Hyundai Motor America. "Receiving the Certified Pre-Owned Award from IntelliChoice for the fourth consecutive year proves car shoppers are confident in the long-term value Hyundai vehicles offer."
Commenting on this year’s winner for mainstream brands, Eric Anderson, ownership database supervisor for IntelliChoice, said, "Hyundai winning the Popular Brand Certified Pre-Owned Program Award for four straight years is a testament to the strength of Hyundai Certified Pre-Owned.
"Hyundai's 10-year/100,000-mile powertrain warranty, compelling financing incentives and 100 percent inspection score provides the peace of mind that consumers want,” he added.
Highlighting a few more winners, the Best Popular Program Award went to Mini NEXT Certfied Pre-Owned.
The Best Premium Brand Used Costs Ownership Award went to Lincoln, and the popular brand counterpart went to Honda Certified Used Cars.
IntelliChoice annually evaluates 26 manufacturer-backed programs and segments.
Vehicles are segmented into premium and popular categories, which reflect the overall market position and price range of their vehicles, the company explained.
Nine areas are assessed, including extended manufacturer warranties, used-car ownership costs, inspection process comprehensiveness, dealer compliance, and special financing incentives.
There’s been a lot of chatter recently in regards to the growing number of lease returns and its impact on used-car prices. It is true that there are a great deal of leases returning – an expected figure near 2.1 million vehicles for 2014 before the year is over, according to Manheim data.
There is a fear, in some minds, that too many lease returns are putting downward pressure on used-vehicle prices.
But that is just a small slice of the story, according to Swapalease.com’s executive vice president Scot Hall.
“It’s easy to point a finger at leasing when it comes to falling car prices simply because there has been a great resurgence in lease deals since the recession,” Hall said. “However, when you go from 10 million SAAR to 16 million SAAR, there’s a great resurgence all around, not just leasing. It’s difficult to congratulate leasing in helping you get to 16 million SAAR and then also say it’s hurting the industry by forcing falling auto prices.”
Swapalease.com also points out several other factors to consider when thinking about the over 2 million vehicles expected to return from their leases this year:
- Between 8-9 million trade-ins, overall, are expected in 2014 (per industry average)
- Leasing, according to previous numbers, will account for just 22.5 percent of vehicles coming back into dealerships this year
- Lease return vehicles (3-year-old) are actually helping to fuel the CPO recovery
What is your outlook on this topic? Let us know in the comments or tweet us @autoremkting.
Here’s something from the 2014 AutoTrader.com Certified Pre-Owned Study that might surprise you about what CPO shoppers are really after.
In the portion of the study dealing with owners of certified cars, AutoTrader discovered that all of the intricate details of a given manufacturer’s CPO program were not as pertinent to the consumer as the details of the specific car.
The study was released as part of a presentation on Thursday morning in Detroit, and Auto Remarketing caught up with AutoTrader’s Michelle Krebs and Rick Wainschel — who led the presentation, along with Manheim’s Tom Webb — by phone later in the day to talk about the study.
“The way that I was thinking about this was, people are buying a car with the reassurance of the program; they’re not buying a program with the details of the car,” said Wainschel. “I think that, sometimes, some of the communications that are associated with CPO get into the nitty-gritty details … when really what consumers are looking for is, ‘I want to find a car that I really like, at a price that I can afford, with features and benefits that I want in it. And then I’ll make a decision about whether doing a CPO version of that makes sense for me.’
“And for many of them, it does, because it provides that peace-of-mind and reassurance, and (knowing that) if it breaks down, they’ll fix it, and if it breaks down, they’ll come get me or give me a rental car and whatever else,” he continued. “And people are satisfied with those aspects of the programs, but they’re not really swayed in making the purchase decision by the details of the program. They’re swayed by the details of the car, with the reassurance of the program helping them to make the CPO portion of that decision come into focus.”
Krebs added: “I could envision an advertising campaign that focuses on the car, just as every bit as the new car, but blanketed in this peace-of-mind aspect.”
And quality of the brand comes into play, too. As Krebs and Wainschel emphasized, the quality of the individual vehicle and the equity of the brand play a much vital role, versus, say, comparing the number of inspection between two programs.
In other words, there’s not a “one-upsmanship on the quality of the program and the specifics of the program,” Wainschel said.
“I think it’s a reassurance of the quality of the car and the quality of the brand, and the fact that program exists to reinforce and reassure people about those characteristics of that brand,” he noted.
“And that the assurance that the manufacturer is the one that’s backing it, standing behind its product,” Krebs added.
That last point can be crucial, particularly given what Krebs noted elsewhere during the conversation: many consumers believed the dealer was the one to certify the vehicle, and didn’t know that it’s the done via OEM criteria with a manufacturer warranty.
“What we also found that kind of fits with that is that peace-of-mind is the big thing with those buyers,” she added. “They were much more interested in considering a CPO when they understood that it was a manufacturer behind those (vehicles).”
Wainschel will provide more detail on these findings during his presentation on Tuesday at the CPO Forum during Used Car Week.
Go to UsedCarWeek.biz or cpo.autoremarketing.com to learn more.
It’s likely that certified pre-owned sales won’t just hit an all-time high for the fourth straight year. The CPO market will probably break another record in 2015 and then again in years to come.
That’s according to a presentation made by Cox Automotive leaders on Thursday morning in Detroit during the release of the 2014 AutoTrader.com Certified Pre-Owned Study.
Auto Remarketing caught up with AutoTrader’s Michelle Krebs and Rick Wainschel — who led the presentation, along with Manheim’s Tom Webb — by phone later in the day to talk about the study.
When asked about the potential ceiling for annual sales, Wainschel pointed to something that Webb “confidently” forecasted during the event: next year will be another best-ever for CPO and several more record years could be in store.
“One of the things I’ve heard Tom say is that CPO has the capacity to double from where it is right now, which (would be) somewhere in the 4 to 5 million range,” said Rick Wainschel,. “Now, whether it gets there remains to be seen — and there’s a lot of convergence between values on CPO versus new, and things of that sort, where the economy goes. But what it does say is that we are by no means at a peak in the CPO space.”
And supply may be a big part of that, as lease returns roll in. Interestingly enough, though, CPO sales are actually climbing more rapidly than supply, according to data from Manheim Consulting.
Not that supply is short.
“Over the next few years, more than 9 million certifiable vehicles will be hitting the market, making now the time for consumers, manufacturers and dealers to pay close attention to the CPO landscape,” Wainschel said in a press release from AutoTrader. “The insights from this study clearly show that consumers are more open than ever to CPO vehicles, and if dealers and manufacturers can turn shoppers into owners, they are well-positioned to build long-lasting relationships with those consumers.”
Another interesting dynamic was this one pointed out by Krebs: there is a much wider net on the supply and demand side.
“The premium brands have always had strong CPO programs. They’ve had demand there. But what we’re seeing, because of a wider array of leasing being available — for example to a Hyundai, to a Kia — that kind of supply will come to the market that treally didn’t exist before. Especially with Millennials coming into the market, there’s a more diverse array of vehicles at various price points available, which therefore widens the market for CPO.”
AutoTrader’s CPO study takes a comprehensive and deep dive into the various influences in the market. Beyond better supply and demand, it goes on to point out a multitude of good signs for the certified business, including these Wainschel highlighted: greater familiarity with CPO, a more positive opinion and consideration for these cars, greater first-time consideration and a higher willingness among shoppers to pay the premium.
Or, as he would add: “There is all these very, very healthy factors coming into play, where CPO is very much in favor with consumers, but it also has the convergence of the market dynamics and the inventory dynamics that will allow (CPO) to become even more mature than it is now.”
Of, course, there are challenges and things automakers and dealers must improve upon to reach those targets. One of which is education.
“CPO vehicles provide shoppers with a good value, but the key to getting them to buy the vehicles is education,” Krebs said in the release. “CPO still isn’t clearly understood, so dealers and manufacturers need to ensure that they are communicating clearly — early and often — about what CPO is so they can capitalize on these opportunities to build lifelong, happy customers.”
Stay tuned to Auto Remarketing for more on that. Additionally, Wainschel will provide more detail on these findings during his presentation on Tuesday at the CPO Forum during Used Car Week. Go to UsedCarWeek.biz or cpo.autoremarketing.com to learn more.
This is how good October was for the certified pre-owned business. For just the fifth time in history, the industry moved more than 200,000 certified vehicles in a single month, Autodata Corp said in a sales recap Wednesday.
The 202,409 CPO sales for the month marked a 13.8-percent year-over-year increase and a 7.5-percent hike from September, the firm said.
Not to mention, there were best-ever CPO sales months reported by Chrysler and Subaru. General Motors, meanwhile, didn’t reach that mark but did record its best CPO outing in five years, Autodata indicated.
For the year, certified sales are already knocking on the door of 2 million units through just 10 months, as year-to-date sales have reached 1.95 million. This marks a 10.3-percent improvement over the year-ago time frame, Autodata said.
