The average premium that a shopper will pay for a certified pre-owned car is 3.6 percent, according to an analysis from iSeeCars.com, which said the lowest premium (percentage-wise) can be found on the Jeep Wrangler Unlimited.
The company looked at more than a million 2015 model-year used cars to gauge how much more the CPO variety costs for specific models.
What iSeeCars found is that for the Wrangler Unlimited, the CPO model was only 1.6 percent more expensive than the non-CPO edition.
“The Jeep Wrangler Unlimited is a four-door version of the Jeep Wrangler, and although it is a rugged off-road vehicle, it lags behind other SUVs in its segment in terms of safety ratings,” iSeeCars chief executive Phong Ly said in the analysis.
“The Wrangler Unlimited also maintains its value more than any other SUV, which makes it relatively expensive for a used vehicle, so dealers may opt to reduce the price of certified versions of this car to make it more competitive,” he said.
That Jeep topped the list of lowest CPO premiums, and it was followed by the Nissan Rogue and Honda CR-V, both with a 1.7-percent premium on certified.
The three SUVs topping the list were among five in the top 10. The iSeeCars lowest CPO premium rankings also included two pickup trucks, two sedans and a minivan.
Honda had the most cars represented, at four.
“Honda’s CPO terms include a one-year or 12,000-mile comprehensive warranty and a seven-year or 100,000-mile powertrain warranty from the original time of sale,” noted Ly. “Honda CPO vehicles also have no deductible for repairs, which in addition to the warranty terms provide high value at a minimal cost.”
The top 10 is below, along with dollar-figure premiums:
1. Jeep Wrangler Unlimited: 1.6 percent, $523
2. Nissan Rogue: 1.7 percent, $302
3. Honda CR-V: 1.7 percent, $339
4. Honda Odyssey: 1.8 percent, $420
5. Chevrolet Tahoe :1.8 percent, $707
6. Chevrolet Silverado 1500: 1.9 percent, $529
7. Honda Accord: 1.9 percent, $322
8. Honda Civic: 2.0 percent, $291
9. Jeep Grand Cherokee: 2.1 percent, $560
10. GMC Sierra 1500: 2.1 percent, $646
On the flip side, the Lexus IS 250 had the highest certified premium at 7.9 percent, along with the Mercedes-Benz C-Class at 7.9 percent, as well.
Three others were above 7 percent: Mercedes-Benz E-Class (7.7 percent), Cadillac ATS (7.6 percent) and Mercedes-Benz CLA (7.5 percent).
“Given the higher cost of repairs for luxury vehicles, luxury CPOs typically carry a higher premium than their non-luxury counterparts,” said Ly.
The models with highest CPO premiums are as follows, with dollar-figures amounts, as well:
1. Lexus IS 250: 7.9 percent, $2,022
2. Mercedes-Benz C-Class: 7.9 percent, $2,009
3. Mercedes-Benz E-Class: 7.7 percent, $2,510
4. Cadillac ATS: 7.6 percent, $1,637
5. Mercedes-Benz CLA: 7.5 percent, $1,767
6. Volvo S60: 6.9 percent, $1,353
7. BMW X1: 6.7 percent, $1,411
8. Audi A4: 6.7 percent, $1,480
9. BMW 3 Series: 6.5 percent, $1,458
10. Mercedes-Benz GLK: 6.4 percent, $1,796
In 2012, Auto Remarketing launched its “Best CPO Dealers in the USA” series, an annual program that includes brand-by-brand rankings of the dealerships with the most certified pre-owned sales from the preceding year.
The No. 1 CPO seller for Nissan has been the same in each of the seven editions of “Best CPO Dealers.”
That dealership? The appropriately named Trophy Nissan in Mesquite, Texas. The store, located in the Dallas area, has now added a new “trophy” to its mantle.
Trophy Nissan is Auto Remarketing’s 2018 CPO Dealer of the Year, an award sponsored by ADESA.
The CPO Dealer of the Year award will be presented at the Used Car Awards Luncheon, which is sponsored by TradeRev, on Nov. 13 during Used Car Week.
Used Car Week is being held Nov. 12-16 at the Westin Kierland Resort & Spa in Scottsdale, Ariz. Early bird registration rates for the conference end after Tuesday.
‘Go all in’
Nearly a decade ago, Trophy Nissan decided to “go all in” with certified pre-owned, said Eric Shoemaker, the store’s pre-owned director. The dealership began making sure its personnel was “comfortable with the certification process” and implementing a reconditioning strategy to where any qualifying car was reconditioned to the point it met Nissan’s CPO requirements.
Certified has been “our big value-add,” Shoemaker said, helping to differentiate the store from its peers.
Making CPO a focal point has clearly resonated with Trophy’s customer base. Shoemaker said in the phone interview that, “when we’re asking them why they chose us, it’s ‘because we wanted to buy a certified car.’”
The consumer “acceptance” of CPO continues to gain traction each year, Shoemaker said.
And that’s evident in Trophy’s sales. The dealership sold 2,125 CPO vehicles last year to top Nissan’s ranking, and Shoemaker expects to see an uptick in certified sales (and overall sales volume, for that matter) this year. And he believes Trophy will once again lead Nissan’s CPO list.
“I can’t foresee us losing that spot this year, either,” Shoemaker said.
CPO challenges & opportunity
Going back to Shoemaker’s point on consumer acceptance of certified, he attributes it to the peace-of-mind that CPO can offer.
“I think that everybody’s had a bad experience with a used car, and the certification, that peace-of-mind, knowing that you’re buying something that’s a good piece of equipment, is just more and more important,” he said.
“And people are willing to spend a little bit extra money to make sure that they’re getting something that’s had Nissan certified technicians going through it,” Shoemaker said. “That way they’re not going to have problems after the sale.”
That’s certainly an opportunity CPO offers.
One trend that presents both a challenge and opportunity in certified is the strong supply of off-lease volume.
“It can be a double-edged sword. It’s helped with availability… (however) it’s hurt values, where obviously, big supply always is going to drive down price, which drives down the value of a car,” Shoemaker said. “But as far as for a resale standpoint, people are getting more for their money.”
He did note in the August interview that “in the last few months” supply had gone down, so “we’re seeing a pretty big rebound in values for their product.”
One challenge specific to the Dallas area is that it’s “super competitive,” Shoemaker said.
“And it always has been. As far as wholesale goes, I would say this is probably one of the stronger markets in the country,” in terms of the prices that vehicles will fetch, he said.
“It’s hyper-competitive,” Shoemaker said. “There’s a lot of good Nissan stores in the area, and (they) do a good job. This makes it even more important to differentiate yourself from them.
“It’s everything. It’s your sales process and how you’re handling internet leads; it’s a collection of stuff. Making sure that you get the opportunity and take really, really good care of the customer. That’s kind of the name of the game.”
However, he did note that being in such a competitive market means CPO prices are relatively low, which has driven out-of-state business for Trophy.
Much of that business is set up over the phone, where the shopper discusses the deal with the necessary dealership personnel over the phone and then has an easy handoff once he or she comes into the store.
“More and more people are preferring to do it that way,” Shoemaker said.
As far as the overall used-car market (beyond his neck of the woods), he sees the biggest challenge as “staying competitive and running a decent margin at the same time.”
He counts one of pluses as the fact that there’s solid supply.
“The certified pre-owned business is really, really good. There’s a lot of demand,” Shoemaker said. “If you can acquire and turn it into a good quality product, there’s going to be somebody that’s looking for it.
“That’s a huge positive. There’s a big demand for pre-owned cars, especially certified.”
As interest rates make the parameters for financing a new vehicle less appealing, Autotrader spotted eight financing campaigns for certified pre-owned vehicles that makes these models potentially even more appealing.
“Fall is typically a buyer’s market for auto sales,” said Brian Moody, executive editor for Autotrader. “Dealers are looking to move both new and used vehicles off their lots. Car buyers can score significant savings on certified pre-owned vehicles this time of year, and at a price lower than a new car but still backed by a warranty.”
The editors at Autotrader have rounded up some of the best CPO deals to help shoppers find that perfect certified pre-owned vehicle this month.
BMW
Through the end of October, qualified shoppers who finance a certified pre-owned 2015 or 2016 BMW through BMW Financial Services can take advantage of no payments for three months at the start of their contract an appealing offer for many shoppers, right after making a big down payment to buy a vehicle.
Buick
This quarter, Buick is offering a strong incentive that sweetens the deal. Through the end of the year, qualified shoppers can get 1.9 percent AOR for up to 36 months on certified pre-owned Enclave and Encore crossovers.
Chevrolet
Through the end of the year, Chevrolet is also offering a similar incentive to its fellow GM brands. Qualified shoppers can get 1.9 percent APR for up to 36 months on several popular models — the Cruze and Malibu sedans, the Equinox and Traverse crossovers, and the Silverado pickup.
GMC
This month, qualified shoppers can get 1.9 percent interest for up to 36 months on certified pre-owned versions of the Acadia and Terrain crossovers or the Sierra pickup.
Jaguar
Through the end of October, the best offer is for qualified shoppers looking to finance a certified pre-owned Jaguar over 24 months, as most models are offered with 0.9 percent interest. For shoppers who would prefer a longer term, many desirable models are offered with 1.9 percent APR for up to 36 months, including the 2015-2016 XF, the 2015-2016 XJ, the 2015-2016 F-Type, and the 2015 XK.
Land Rover
This month, qualified shoppers who get a certified Land Rover Discovery Sport can get a great deal, as Land Rover is touting 0.9 percent APR for up to 24 months, or 1.9 percent APR for up to 36 months.
Lexus
In October, Lexus is sweetening the pot with another promotion for certified pre-owned versions of its Lexus RX crossover. Through the end of the month, qualified shoppers interested in a CPO RX can get 3.9 percent APR for up to 60 months — “a strong deal for a pre-owned vehicle,” according to Autotrader.
Subaru
Through the end of October, Subaru is touting 0.99 percent APR on certified pre-owned vehicles for up to 36 months, “which is an excellent offer for a used car — especially when you factor in the warranty,” Autotrader said.
A sampling of results shared by automakers in news releases or via email shows a mostly positive September for the certified pre-owned car market.
Kia, for example, said it sold 6,201 certified vehicles in September, up from 5,777 a year ago.
Volvo, meanwhile, said it increased its CPO sales by 35.5 percent year-over-year, moving 1,970 CPO units last month. Its year-to-date sales are up 18.1 percent at 16,375.
Mazda lifted its CPO sales 29.7 percent in September (4,642 cars sold) and has driven sales up 21.3 percent so far this year.
Porsche reported 1,826 certified sales last month for an 18-percent gain.
Mercedes-Benz lifted its CPO sales 17.8 percent, moving 10,274 units last month. Through nine months, it has reached 95,569 certified sales (up 9.0 percent).
At BMW of North America, the BMW brand had 9,857 certified sales in September (down 7 percent), with year-to-date sales at 95,856 (down 8.4 percent). Its MINI brand had 1,193 CPO sales for the month (up 40.9 percent), with sales through three quarters up 23.6 percent at 10,597.
CPO will be a big topic once again at next month’s Used Car Week conferences, which are being held Nov. 12-16 in Scottsdale, Ariz.
At the Pre-Owned Con portion of the week, the action will get started with a session on “The Off-Lease Effect: CPO Industry Ripe for Continued Growth.”
The panel will be moderated by, well, the author of this story, but the real insight will come from the expert panelists, which include:
- Don Luke; owner of Bill Luke Chrysler Jeep Dodge
- Frank Pelligreen, used-car director of Larry H Miller Toyota Peoria
- Eric Shoemaker, pre-owned director at Trophy Nissan
- Basem Tartir, program manager, certified pre-owned, Mazda North American Operation
Carfax is now playing a bigger role in the certified pre-owned vehicle programs at Nissan North America’s Nissan and Infiniti brands.
When a shopper buys a CPO car from an Infiniti or Nissan dealership, he or she will be signed up for the free myCarfax service that sends out service reminders and recall alerts.
Whichever Nissan/Infiniti dealer the consumer buys from will be listed as his or her “favorite shop” in the myCarfax platform.
The automaker is the first to include myCarfax enrollment as part of their CPO program.
“Our goal with the myCarfax app is to increase the value of our CPO program to our customers along with allowing us to enhance the overall customer experience,” said Michael Verpoort, Nissan’s senior manager of certified pre-owned sales, in a news release.
The partnership also provides the CPO car buyer with free copies of the car’s Carfax Vehicle History Report and Carfax Buyback Guarantee from the dealership.
Nissan and Infiniti have mandated Carfax reports run on all certifiable vehicles. All Nissan/Infiniti CPO vehicles have to qualify for the buyback guarantee, as well.
Carfax.com also lists all Nissan/Infiniti CPO vehicles.
“Nissan’s decision to register their CPO customers with myCarfax helps reduce the cost of car ownership while increasing certified dealer revenues,” Carfax general manager Vern Poyner said. “Well-maintained vehicles tend to last longer and experience fewer costly problems, saving owners money in the long run.
“Service reminders from myCarfax help ensure more customers return to the same dealer for service, bringing in potentially thousands of dollars in additional service revenue. Plus, our research suggests that regular service customers are nearly twice as likely to buy their next vehicle from the same dealer.”
An entrepreneur who spent more than 10 years helping dealerships cultivate their online capabilities now has his own start-up company to help individuals sell their vehicle privately with tools similar to what might be at the dealer’s financing office.
Jordan Stuart recently launched eCARmerce.com and CarSalesByOwner.com, offering features traditionally reserved for dealers such as certification, warranty and assurance programs.
CarSalesByOwner.com is designed to assist and protect the car buyer, not simply list vehicles for sale.
Meanwhile, eCARmerce.com is designed to assist the vehicle seller, providing a solution to get a vehicle certified for sale by owner. The current owner also has the opportunity to buy a warranty for the vehicle at reduced dealer rates. This warranty can transfer to the new owner in the event of its sale. Once a vehicle is certified and warrantied, a seller can justifiably ask a higher cash value for it.
“These are the very same technologies and services we provided to some of the most successful and largest dealer groups in the country,” said Stuart, whose previous business helped dealerships market vehicle online. “You do not need to involve a car dealer to safely buy and sell pre-owned cars.”
“I believe people will benefit greatly from the solutions we’ve put into these sites,” continued Stuart, who spent more than 10 years in the automotive Internet industry before creating eCARmerce and Car Sales By Owner. “Who wants to sit in a dealership for four to six hours with a salesman to get less money for their trade-in while overpaying for their car purchase?”
New vehicles from the 2018 and 2019 models are filling rows at franchised dealerships, but Autotrader spotted a half dozen financing offers that are making certified pre-owned vehicles stand tall at stores, too.
This week, Autotrader compiled a list of what experts believe are the best CPO deals going in September, noting a mix of both mainstream and high-line units.
“The comprehensive inspection process, incentives and warranties for certified pre-owned vehicles changes the game for how car shoppers should look for their next vehicle,” said Brian Moody, executive editor for Autotrader.
“With cars less than a few years old back on the market, you could even end up with a certified pre-owned vehicle that’s part of the 2018 model year,” Moody said.
A 2018 model might fit some of the OEM campaigns, while others are geared to turning metal that might be coming off lease. Here are the details:
BMW
This month, BMW is offering excellent incentives on certified pre-owned i3 models to qualified buyers. Through the end of the month, BMW is touting 1.99-percent interest on all certified pre-owned 2015 and 2016 i3 models for up to 24 months.
Cadillac
Cadillac’s certified pre-owned program is even more alluring this month thanks to special incentives offered on the ATS entry-level luxury car, the Escalade SUV and the SRX crossover. Through Sept. 13, qualified shoppers who choose a CPO version of one of those models can get 2.9-percent interest for up to 36 months.
Ford
Through the end of September, Ford is touting low interest rates for qualified shoppers, boasting 1.9 percent interest for up to 36 months, 2.9 percent for up to 60 months or 3.9 percent for up to 72 months.
Mercedes-Benz
Through the end of September, Mercedes-Benz buyers can get 1.99 percent interest for up to 48 months on most CPO models, including the CLA, the C-Class, the E-Class, the GLK, the GLC and more.
Nissan
Through the end of the month, qualified Nissan shoppers can get a certified pre-owned Altima or Rogue with 2.99 percent interest for up to 60 months.
Subaru
Through the end of the month, qualified buyers interested in a certified pre-owned Subaru can get 1.99 percent interest for up to 36 months.
The certified pre-owned vehicle market reached a major milestone in the second quarter and “moved past the 700,000 threshold for the first time,” according to a report released Tuesday by Edmunds.
Specifically, there were 711,270 CPO vehicle sales during the quarter, beating year-ago figures by 2.5 percent, Edmunds said in its latest Used Car Report.
Separately, the latest analysis from KAR Auction Services chief economist Tom Kontos, citing Autodata Corp., indicates there was a 7.5-percent sequential decrease and a 1.9-percent year-over-year drop in certified sales during July (given the fewer selling days), but that through seven months of the year, CPO sales have climbed 2.8 percent.
Overall, there were 10.42 million used cars sold in Q2, compared to 10.17 million used sales a year ago, Edmunds said.
In an Industry Update released last week, Cox Automotive said there was approximately a 3-percent year-over-year lift in used-car sales for July; that's despite last month having one less selling day. The annualized used-car sales pace has climbed to 39.5 million, which is up 1 percent year-over-year and a “new peak for this expansion period,” Cox Automotive analysts said.
‘Trend that will hold for years’
Going back to the Edmunds report, franchised dealers moved 3.03 million used vehicles in the second quarter, up from 2.95 million in Q2 2017.
And 25.5 percent of those franchised dealer used-car sales were 3-year-old vehicles. Comparatively, the share was at 22.3 percent a year ago. And the crop of those 3-year-old rides was at an all-time high in Q2 2018.
“Taking into consideration that new-car lease penetration rates have held at nearly 30 percent through 2018, off-lease vehicles will now effectively constitute the majority of franchise used sales until at least 2021,” Edmunds said in the report.
Residuals flat
The strong supply of 3-year-old vehicles has led to “flattening” residuals on these cars, Edmunds said.
Even as overall transaction prices reached a 13-year high ($20,153).
For instance, the average 3-year-old vehicle sold for $13,339 less than a new car last quarter. In the same period of 2013, the gap was only $10,632, the analysis indicates.
“The gap between new and used vehicle prices is significantly widening,” said Ivan Drury, Edmunds’ senior manager of industry analysis, in a news release.
“Near-new vehicles offer greater savings now than they ever have before, thanks to a constant supply of off-lease vehicles and a shortage of older vehicles in the market,” he said.
Offering even more context, Edmunds noted in its report: “The used market is contending with two extremes: the constant supply of off-lease vehicles and a shortage of older vehicles. Comparing Q2 2018 to Q2 2013, we see that residual values are flattening and creating less of a discrepancy between model years, underscoring how buying a near-new vehicle presents a greater value now more than ever before.”
By segment, the largest percentage gap between 3-year-old and new prices is within the luxury midsize segment (48 percent). Next are sports cars (45 percent) and large cars (43 percent).
The narrowest difference is in midsize trucks, where new models are just 27 percent more expensive than 3-year-old editions. Luxury large cars (30 percent difference) and large trucks (33 percent) followed.
“Luxury midsize cars serve as an example of the used market providing significant savings since these vehicles often have the highest lease penetration rate of any vehicle category,” said Drury.
“On the other end of the spectrum, midsize trucks is a category that has been invigorated on the new sales front with the resurrection of old models, but leasing has never been popular among these shoppers,” he said. “And with such limited quantities on the used market, midsize trucks retain high values, making them less appealing from a savings perspective.”
Among the 20 top sellers on the used-car side, the BMW 3 Series had the biggest price gap between new and 3-year-old editions (48 percent). It was followed by the Chevrolet Malibu (46 percent) and Chevrolet Cruze (45 percent).
The comparisons were closest for the Toyota RAV4 (29 percent), Honda CR-V (30 percent) and Toyota Corolla (32 percent), respectively.
“BMW’s 3 Series faces weakened residual values because of high lease volumes in a segment that is no longer seen as the entry point into the luxury market, but those who regard the 3 Series as the luxury compact sedan to own can benefit from significant savings,” said Drury.
“On the other end, the Toyota RAV4 was a best-seller when new, and even though it was heavily leased three years ago, the strong residual values of this vehicle combined with the healthy overall demand in the compact SUV segment don’t allow for significant savings.”
Impact of tariffs
Be prepared for change, though, should tariffs have an impact. Drury adds: “If tariffs are enacted against specific models, these savings figures are bound to change and are certain to test customer loyalty.”
The report further notes: “If tariffs are imposed, would-be new-car buyers could shift their purchases toward used vehicles. Depending on the scope and severity of the tariffs, there could be a massive influx of consumers who begin to eye a near-new vehicle over a tariff-imposed competitor.”
At a time when many people are inside trying to dodge the high temperatures, drivers interested in shopping certified pre-owned vehicles may find coming out and facing the summer's heat this August worth their while.
Autotrader has come out with its latest list of top CPO deals that consumers can take advantage of all month long.
This month's list includes an enticing low-interest finance rate incentive offered by Mazda's CPO program throughout August. When financing a CPO vehicle, qualified Mazda shoppers can now get 0.9 percent interest for up to 36 months.
“The extra cost of a certified pre-owned vehicle may seem like a lot, but it provides more peace of mind than a regular used car,” Autotrader executive editor Brian Moody said in a news release. “You can’t discount the value of a comprehensive inspection, which every CPO vehicle goes through, and the added perks of CPO are a great option for buyers to consider.”
Acura
Through the end of August, Acura’s CPO program touts that qualified shoppers seeking either its MDX or RDX models can get 0.99 percent interest for up to 36 months, 1.99 percent interest for up to 60 months or 2.99 interest for up to 72 months.
BMW
At BMW, CPO shoppers interested in 2014, 2015 and 2016 CPO versions of the 3 Series, 4 Series and 5 Series can get 1.9 percent interest for up to 60 months.
Buick
Throughout August, Buick's CPO program is offering qualified shoppers1.9 percent interest for up to 36 months on all certified pre-owned versions of the Enclave and Encore crossovers.
Chevrolet
This month, Chevrolet's CPO program has a special finance offer of 1.9 percent interest for up to 36 months for qualified CPO vehicle shoppers interested in taking home the brand’s Chevy Cruze, Equinox, Malibu and Traverse models.
Ford
At Ford, qualified shoppers looking for a CPO model can get 1.9 percent interest for up to 36 months, 2.9 percent for 60 months or 3.9 percent for 72 months.
Lincoln
This month, qualified shoppers who visit Lincoln can take advantage of 2.9 percent interest for up to 66 months on all CPO models.
Subaru
Subaru's CPO program is offering qualified shoppers who qualify interest rates starting at 1.49 percent for up to 36 months.
Along with the heat, July has brought with it plenty of attractive CPO vehicle incentive offerings that summer car shoppers can take advantage of through the end of the month.
Autotrader has released its latest list of top CPO deals that used-car buyers can check out in July.
This month’s list includes Nissan's CPO program, which has a few attractive incentives this month.
In addition to offering 3.99-percent interest for up to 36 months or 4.69 percent for up to 72 months, qualified Nissan shoppers who pay in cash can also get up to $450 in cash back with their used-vehicle purchase.
“The mid-year point is always a great time for car shoppers to consider what they need and want from their next vehicle, plus more CPO vehicles are entering the market,” Autotrader executive editor Brian Moody said in a news release. “Buying a CPO vehicle gives car shoppers that new-car feel at a lower price, with benefits from a rigorous inspection process and additional warranty offers.”
GMC
This month, GMC touts 1.9-percent interest for up to 36 months to qualified shoppers for CPO versions of its Acadia and Terrain crossover models.
Hyundai
Through July, the Hyundai CPO program offers qualified shoppers 1.9-percent interest for up to 36 months.
Mercedes-Benz
At Mercedes-Benz, along with one year of warranty protection with no mileage limit, qualified buyers interested in CPO CLA, C-Class, E-Class and S-Class models can get 1.99-percent interest for up to 48 months.
Lexus
At Lexus's CPO program, through the end of the month, the automaker is offering qualified buyers warranty coverage of six years with no mileage limit. And Lexus shoppers interested in CPO versions of the RX and RX L models can get 3.9-percent interest for up to 60 months
Toyota
Toyota's CPO program touts an added year of comprehensive coverage on top of its factory warranty, as well as six years or 100,000 miles of powertrain protection. And qualified CPO shoppers interested in a CPO Camry or Camry Hybrid can also get 1.9-percent interest for up to 36 months.
Volkswagen
Volkswagen’s CPO program offers qualified CPO shoppers 2.49-percent interest for up to 60 months on all CPO VW models.
Volvo
Along with seven years or 100,000 miles of coverage from the original sale date, qualified Volvo shoppers can take home a 2015 S60 with zero-percent interest for up to 24 months.
