Domestics continued what has been a strong year for certified pre-owned operations for the Big 3, increasing their combined September CPO sales by more than 25 percent year-over-year, according to Autodata Corp.
More specifically, their dealers moved 67,526 certified vehicles during the month for a 25.1 percent hike, pushing the year-to-date sum to 612,560 CPO sales (up 14.8 percent).
Ford’s brands sold 23,696 CPO units in September (up 32.7 percent) and moved 203,631 certified vehicles in the first three quarters of the year (up 19.5 percent).
At General Motors, there were 30,285 certified sales of Buick, Chevrolet, GMC, Pontiac and Saturn vehicles, which is a 16.5-percent improvement.
Those same brands have posted CPO sales of 285,362 units this year, a 10.5-percent hike.
Cadillac sold 1,719 certified vehicles for the month (up 34.2 percent), and its year-to-date sales stand at 15,439 units (up 12.2 percent).
Over at Chrysler Group, its CPO sales (excluding Fiat) reached 11,826 units during the September, a 33.8-percent rise.
It has moved 108,127 certified vehicles in nine months of 2014 for an 18.8-percent gain.
(Fiat had 76 CPO sales for the month and 461 year-to-date).
In total, domestics commanded a 35.9-percent share of the overall CPO market in September, and a 35.1-percent share year-to-date, according to Autodata.
General Motors rolled out an ambitious strategic plan on Wednesday, insisting that in 2015, about 27 percent of GM’s global sales volume is expected to come from products new or refreshed within 18 months.
Does it mean when that new metal becomes used — or more specifically, certified pre-owned — the growth prospects still will be as strong?
In what perhaps sheds some light on that question, Kelley Blue Book senior analyst Eric Ibara, who specializes in examining residual values, honed in on what he believes are the strong parts of the automaker’s lineup and where it still faces stiff challenges.
“Since emerging from bankruptcy, General Motors has based its comeback on superior products like the Corvette,” Ibara said in comments provided to the media. “Now the high-margin Tahoe, Suburban, Yukon and Escalade utilities will not only increase sales, but contribute to larger overall margins.
“In this market, the battle is never ending as the new front will be in pickup trucks,” he continued. “Colorado and Canyon are projected to do well, but Silverado and Sierra will have to defend their ground against not only the new aluminum F-150 but also against a resurgent Ram truck.
“Still, it can be argued that the GM lineup is the most competitive that it has been in a long time,” Ibara went on to say.
And that lineup likely is having an impact of what GM is doing in the CPO market.
According to the September data from Autodata Corp., certified sales for the OEM’s Buick, Chevrolet, GMC, Pontiac and Saturn brands reached 37,426 units in August, up 21.9 percent year-over-year. Yearly sales through eight months are up almost 10 percent at 255,077 units.
Elsewhere at GM, Cadillac had 1,848 certified sales in August (up 16.2 percent), and year-to-date CPO sales are at 13,720 (up 10.0 percent).
And speaking of Cadillac, GM reiterated the importance of moving the luxury brand’s headquarters to New York. Officials indicated Cadillac expects to introduce four new vehicles in North America in 2015, including the recently announced CT6. In addition, Cadillac plans to introduce nine new models in the next five years in China, which is expected to become the world's largest luxury car market later this decade.
GM chief executive officer Mary Barra and her executive leadership team outlined the company’s strategic plan at a conference for investors and financial analysts on Wednesday at the company’s Milford Proving Ground.
“In the nine months that this leadership team has been together, we have spent a significant amount of time setting our goals for the future of GM and developing a specific action plan,” Barra said.
“Our strategic plan is a pathway to earn customers for life and create significant shareholder value in the process. Every chance to connect with a customer is an opportunity to build a stronger relationship,” she added.
GM’s strategic plan includes several major initiatives that the company anticipates will help it achieve 9- to 10-percent margins on an EBIT-adjusted basis by early next decade.
Both Kelley Blue Book senior analyst Karl Brauer and AutoTrader.com senior analyst Michelle Krebs emphasized how this plan is devised to get GM past the record number of recalls made so far this year, including all the controversy surrounding faulty ignition switches in older vehicles.
“Mary Barra and GM's management team are clearly ready to move past this year's recall issues and focus on the job of advancing the automaker’s long-term goals. Improved product lines in the United States and abroad, as well as increased global reach, will give GM an opportunity to grow its overall sales and profitability,” Brauer said.
“Barra's long-term plan calls for an investment in connectivity and autonomous technology, two areas every automaker has to take seriously over the next decade to stay competitive,” he continued.
“If Barra and her team can keep GM on the leading edge of this technology wave, while also managing fixed costs and maintaining the company’s overall product competitiveness, they should be able to achieve the financial goals set forth in this plan,” Brauer went on say.
Meanwhile, Krebs made the connection that potentially GM is taking a strategic page out of book of domestic rival Ford and how Blue Oval leadership steadied the automaker in the past decade.
“GM's new management team, on the job since January but focused on the recall fiasco, is finally getting around to setting a future course for the company. They are finally seeing firm deadlines for goals, such as improving operating margins and turning around Europe, that before were vague. They also are laying out an aggressive schedule of new products and technology,” Krebs said.
“Now the challenge will be for CEO Mary Barra and her lieutenants to stay the course and hold everyone accountable for meeting those goals. That's how now-retired Ford CEO Alan Mulally turned Ford around — with consistency, continuity, focus and accountability,” Krebs continued.
“In the past, GM has not held people accountable and has zigged and zagged on various courses. Let's see if this team will crack the whip,” she went on to say.
Dealer and consumer satisfaction with the Costco Auto Program certified pre-owned offering is on the rise, according to CNW Research.
The firm said in its latest Retail Automotive Summary that the majority of Costco CPO users — dealers and consumers — found it to be either a “good” (31.3 percent) or “excellent” (21.8 percent) experience. Those numbers are up from 29.2 percent and 21.3 percent, respectively, in 2013.
“Box store Costco is finding its affiliation with dealers to be quite satisfying for both the dealer and the customer with over 50 percent of Costco CPO users rating their experience excellent or good,” CNW president Art Spinella said in the report.
It appears those satisfaction levels are paying off in the sales reports: there have been approximately 200,000 vehicles through the Costco Select Pre-Owned and Costco Certified Pre-Owned offerings in the last five years and is on track to move more than 50,000 SPO/CPO vehicles this year.
More Costco News
In other news from Costco, it was announced that Polaris Industries is partnering with Costco Auto Program as the exclusive promotional partner for Costco Auto’s powersports division.
As part of the partnership, Costco members can get special pricing and incentives on certain Polaris products at participating U.S. dealers — and select Costco warehouses will have Polaris, Victory and GEM branded products on display.
Costco will include promotions of various Polaris products starting this month, including snowmobiles, off-road vehicles (Sportsman, Ranger and RZR), Victory motorcycles and GEM electric vehicles, officials said, noting that specific Polaris brand participation will vary by store and where the dealer is located.
“We are excited to announce our role in expanding the selection of powersport products offered through the Costco Auto Program,” said Tim Larson, vice president, global customer excellence, Polaris. “This program allows Costco members to experience industry-leading Polaris products at a great value while connecting members with our valued dealers to engage even more riders in our brands and lifestyle.”
Jeff Skeen — president and general manager of Affinity Auto Program, which operates the Costco Auto Program — said: “Polaris is an industry leader offering the breadth and depth of products that are a great fit for Costco members. Costco members rely on us to recommend premium products while saving them time and money. This new partnership gives us the opportunity to offer an exceptional value on powersport products without the hassle of negotiating.”
As new-vehicle sales continue to grow, an ever-increasing number of off-lease and trade-in vehicles are returning to dealers. According to data provided by AutoTrader, certified pre-owned vehicle inventory has increased by 6 percent since March, 80 percent of which are non-luxury vehicles, totaling to 380,758 vehicles.
What will buyers be looking for? Here are a few of the big hitters from the last few years that are returning to lots in big numbers, as well as commentary from AutoTrader.com analysts.
Great Choices in Used & CPO Vehicles for Each Segment, According to AutoTrader:
- 2011 Ford Fusion: The Ford fusion has been a favorite of ours for many years because it combines several desirable qualities. It's good-looking, has a well-designed interior, is reasonably fun to drive and has enough space that a small family can use it every day. There are also several versions of the Fusion to pick from including a fuel sipping hybrid, almost as good 4-cylinder engine and a V6 version that give the Fusion a sport sedan feel.
- 2011 Honda CR-V: This small SUV essential defines the segment. It's popular, functional and is the perfect no-nonsense car for those who want lots of cargo space and like the elevated seating position of an SUV, but don't want a big truck. Honda's notorious reliability is a big reason this compact SUV is on our list.
- 2010 Toyota Highlander: Like the CR-V, the Toyota Highlander defines the midsize, 3 row SUV. It isn't fancy, but the Limited version has luxury-like features such as leather and a navigation system. But it's the mid-price Sport version that offers the best value. Not too big, not too small, the Highlander is the go-to "just right" family friendly vehicle.
- 2011 Toyota Corolla: This reliable little car has been around since the 1960s and has become the world's best-selling single model, surpassing even the VW Beetle. Efficient and affordable the Corolla is perfect for first time buyers, college students, and seniors on a fixed income as well as young families who need a good car at a low price. Again, like some of the other car on this list, the Toyota Corolla is the textbook definition of "good compact car." Features like power accessories, cruise control and available automatic transmission make the compact Corolla easy to live with even if your automotive aspirations are more Lexus than Toyota.
According to AutoTrader.com, these are all top sellers within their brands, meaning there are a lot of them out there.
"Consumers are armed with a lot of information these days – that means they know the value of a CPO or used car," said Brian Moody, AutoTrader.com site editor. "All of these are priced at about $25,000 or less you can expect these models to fly off lots for great rates and consumers to grow an appetite for used cars throughout 2014 and 2015."
Does used-car leasing, particularly in the certified pre-owned space, make sense?
At least one industry leader connected to the leasing side of business is saying yes — as long as it is done correctly.
Around the time of the recession, many shied away from leasing, particularly on the used-car side. Meanwhile, new-car leasing has roared backed. But what about used leasing? What is the current temperature there?
Scot Hall of Swapalease.com says there is some used-car leasing offered in the U.S., albeit in “small batches” or offered only by regional players. But the potential for more is there.
“It hasn’t completely gone away,” he said. “But what has completely gone away that existed pre-recession are national banks that had used-vehicle leasing programs.”
Hall argues that instead of pulling out of used-car leasing altogether, it would have been better for leasing companies to simply “pick and choose” to only offer leases in the used-car models and segments that are profitable for them, leaving out the ones that are not.
“And I think the smart leasing companies moving forward are going to keep that in mind and say, ‘You know what? We control this, and we’re going to permit leases on these types of vehicles and unfortunately, this small segment of vehicles here hasn’t proved to be a winner for us; it’s proved too risky, we’re just going to leave that out of the equation,’” Hall said.
“I think this also spills over to the captives, as well, and I think it especially fits well with the certified pre-owned programs, because most of those contain — in fact, all of those contain, to my knowledge — some sort of extended factory warranty, which is something that people like to have on leases,” he continued. “I’ve seen maintenance plans added as well.”
Hall added: “Those cars are generally going to be serviced to a high degree and reconditioned to a high degree, so setting up, say, a short three-year lease on those — or maybe even a two-year lease on some of those cars — I don’t think there would be a lot of risk, if it’s done correctly from the leasing company.
“I think it would benefit the consumer, and especially as more and more leases are coming back off the new end, this would be another avenue to help dealers and manufacturers move those off-lease vehicles from a remarketing perspective,” he continued.
Editor’s Note: Have an opinion or insight into used-car or CPO leasing and its risks or rewards? Auto Remarketing wants your take. Email joverby@autoremarketing.com to share your thoughts. And for a look into how Swapalease.com contends leasing could thrive and benefit the subprime consumer segment, watch for a future report from our sister publication, SubPrime Auto Finance News.
In the last five years, the Costco Auto Program has sold approximately 200,000 vehicles through its Select Pre-Owned and Costco Certified Pre-Owned offerings. This year alone, however, Costco is on track to move more than 50,000 SPO/CPO vehicles.
As explained by management, the SPO program — a relatively new offering from Costco — consists of cars that are “higher-end pre-owned vehicles” that might not be eligible under an OEM CPO program but still have some of the OEM warranty remaining.
In detailing the program, the Costco Auto Program website indicates that “not every used car can be classified as ‘select pre-owned’ by the Costco Auto Program. Select pre-owned vehicles must meet certain eligibility requirements.”
Also included among the benefits is the fact that “repairs can be made at any franchised dealer (manufacturer-backed warranty).”
Costco pilot-tested the SPO program in 2013 and began officially rolling it out this year.
Explaining the launch in more detail, Costco Auto Program management indicated: “We want to make sure the dealers, who are already on our CPO program, have the resources they need to offer the SPO program and are prepared to provide an exceptional experience to Costco members so complete rollout will take place throughout 2015. For the Costco Auto Program, it’s about quality not quantity for both dealers and members.”
Auto Remarketing talked with members of the Costco Auto Program’s management team in August for an update on the program, and at that time, SPO and CPO sales were up 10 percent against 2013 figures, which was on par with the rest of the industry.
Lori Grone, field director for the Costco Auto Program’s remarketing division, explained how dealers have reacted to SPO and illustrated some of the opportunities the program brings for them.
“The reaction overall has been very good,” Grone said, “because with just having CPO, it’s more restrictive since it’s a smaller pool of inventory.
“But by adding SPO, it allows the dealers to have more of their vehicle eligible for the program for our members,” she added. “The SPO guidelines are still very late-model cars that have 12 months and at least 12,000 miles left on the bumper-to-bumper comprehensive warranty. They’re still very good cars — some of them are possibly certifiable, but are not certified for various reasons — that we’re able to include in the program.
“So, that works to the benefit of the dealers,” Grone added. “Also, some dealers do not certify all of their cars, so it enables them to offer those vehicles that fall into those parameters to our members.”
Not to mention, SPO allows dealers to certify vehicles that aren’t same-make cars. For instance, say, a Toyota dealer gets a really solid Honda as a trade-in. The dealer can certify it through SPO, and thus, provide more value to the customer.
Instances like this open up the possibilities for dealers using Costco’s programs to certify more cars and create more selling opportunities. And from Costco’s perspective, having SPO broadens the pool of offerings the company can provide for its dealer partners and customers.
What has also broadened Costco’s pool of SPO- and CPO-worthy vehicles has been the tide of off-lease vehicles that have hit the used-car market this year.
In fact, Costco’s management referenced the 400,000 additional off-lease units expected for 2014, per an article in Auto Remarketing the morning of the interview.
“It’s having a positive impact. It’s kind of good timing because there are a lot of off-lease vehicles,” Grone said.
“What that means is there’s a much better supply of quality used vehicles that would be perfect candidates for our CPO and SPO programs,” she added. “That all dovetails nicely into what we’re doing with our programs and the growth that we expect.”
Volkswagen has a new leader for its certified pre-owned program to replace Scott Weitzman, its former general manager of used-vehicle operations who is now chief operating officer at digital marketing firm DealerX.
Named the national CPO senior manager at VW is Michael Ashton, who was previously the regional used-car manager for the Northeast for the automaker.
Before joining the team at Volkswagen two years ago, Ashton was the national CPO and remarketing manager at Jaguar-Land Rover.
In talking with Auto Remarketing about the new role leading VW CPO, which he began on Sept. 1, Ashton said one of his goals was to “absolutely focus on dealer profitability.”
And that, he said, has many components to it — be it emphasizing the value of certified on the showroom floor or best practices dealership-wide.
Honing in on dealer profitability was something on which Ashton said his predecessor Weitzman also put a great deal of emphasis, and he hopes to continue those efforts.
Additionally, Ashton aims to continue expanding the level of communication between VW and its dealer body in regards to used and CPO processes.
These goals tie in to Ashton’s emphasis on relationship-building with the dealers; CPO, he said, is a partnership between VW and its dealers. That is something he put a great deal of importance on during his time leading the Northeast, and he plans to those efforts national.
Weitzman’s New Role
Meanwhile, it was announced Thursday that DealerX named Weitzman its COO. Weitzman was at VW for three years, after positions with Ford, Autobytel.com, J.D. Power and Associates and iSky, Inc.
“I am honored to have the opportunity to join the innovative team at DealerX,” said Weitzman.
“I intend to leverage my 20-plus years of experience in the automotive realm and help deliver winning strategies and premium digital solutions to our partners; solutions unlike any other offerings available in the market,” he added.
Like their domestic counterparts, the majority of Asian and European brands are posting stronger certified pre-owned sales numbers — including several who just posted their respective best months ever for CPO.
Overall, certified sales for Asian brands were fairly static year-over-year in August (down 0.4 percent at 102,154 units), according to numbers from Autodata Corp.; however, year-to-date, they’re up 3.4 percent with 735,732 certified vehicles sold.
European brands sold 42,603 CPO vehicles last month, up 29.9 percent from August 2013, Autodata indicated.
Through eight months, they have sold 275,418 certified vehicles this year (up 15.2 percent).
Regarding those record-breakers, a recap is below and can also be found here:
Kia had its best-ever month for CPO, selling 4,883 units in August. This marked a 36.83-percent increase.
Hyundai, which also posted its strongest certified sales month of all time, sold 9,254 CPO units in August for a 26.7-percent year-over-year hike.
Mazda sold 4,469 certified vehicles during August, marking a 22-percent increase. This was Mazda’s best-ever CPO sales total, says manager of CPO and remarketing Roger Basa, who indicated that “CPO Inventory levels are at historic all-time highs.”
Over at BMW Group in the U.S., the company is reporting the best August ever for its BMW brand’s used-vehicle sales (which include CPO and non-CPO used) as well as an all-time high for the MINI’s used sales (again, CPO and non-CPO combined). Those totals: BMW at 19,318 units and MINI at 2,561.
Big 3 brands increased their certified pre-owned sales by nearly 20 percent in August and pushed their year-to-date sales above half-a-million units.
According to Autodata Corp., domestics sold 77,918 CPO units last month, which was up 19.8 percent year-over-year.
Through eight months this year, they’ve increased certified sales by 13.7 percent, moving 545,034 CPO cars.
Breaking those figures down, Ford’s brands sold 24,977 CPO vehicles in August (up 16.9 percent) and have moved 179,935 units so far this year (up 18.0 percent).
Chrysler Group reported 13,760 certified vehicles in August (including Fiat sales), which was its best month ever for CPO and a 20.8-percent increase.
Through August, its CPO sales (including Fiat) have reached 96,686 units, a 17.3-percent hike.
(Note: the aforementioned Big 3 totals do not include Fiat results)
Over at General Motors, certified sales for its Buick, Chevrolet, GMC, Pontiac and Saturn brands reached 37,426 units in August, up 21.9 percent year-over-year, Autodata indicated.
Yearly sales through eight months are up almost 10 percent at 255,077 units.
Elsewhere at GM, Cadillac had 1,848 certified sales in August (up 16.2 percent) and year-to-date CPO sales are at 13,720 (up 10.0 percent).
August represented the best-ever certified pre-owned sales month in history, besting the prior record CPO sales total by more than 15,000 units.
According to Autodata Corp., there were 222,675 certified pre-owned sales in August, making it the strongest month of all time for CPO sales.
The previous record was set in May, when dealers moved 207,371 CPO vehicles.
(The industry sold 181,106 CPO cars in June and 199,950 certified cars in July).
August’s sum also beat year-ago figures by 11.1 percent. Through eight months, there have been 1.56 million CPO sales, an 8.8-percent increase.
Breaking the August total down further, domestics sold 77,918 CPO cars last month for a 19.8-percent hike. This moved their year-to-date sum to 545,034 certified units (up 13.7 percent).
Asian brands moved 102,154 certified units, down a modest 0.4 percent year-over-year. Through eight months, they have sold 735,732 CPO units, which beats the year-ago pace by 3.4 percent.
European brands increased their CPO sales nearly 30 percent, selling 42,603 units. So far in 2014, they have moved 275,418 certified vehicles for a 15.2-percent hike. Such widespread strength in certified likely bodes well for the overall used-car market, as a recent analysis by KeyBanc projects CPO will be a big driver for pre-owned sales in years to come.
And several brands have reported record CPO sales individually, as well.
