In a bit of irony, strong demand may indirectly be keeping the certified pre-owned sales from achieving “massive growth.”
Still, year-to-date CPO sales through the third quarter are beating year-ago figures by 11% and outpace 2019 numbers by 3%, according to a Data Point report from Cox Automotive that analyzed data from Motor Intelligence.
The latter ended up being the ninth straight record year for certified sales, a tally that Cox Automotive said could potentially be matched in 2021.
The company’s revised forecast is for 2.70 million CPO sales this year, which would beat last year’s 2.60 million but fall short of the record tally from 2019, when CPO sales were at 2.80 million units.
However, matching that record high “remains within reach,” Cox Automotive said in the report.
As for the most recently completed month, there were 228,118 CPO sales in September, to 224,536 in September 2020 and 204,946 in September 2019.
In August of this year, there were 222,942 certified sales.
“In today’s market, everything is selling so quickly and at such high prices, that I think that in many cases the dealers are selling cars before they get a chance to pull them into their shops to spend the time to recondition them up to full CPO standards,” Manheim Consulting vice president Kevin Chartier said during the Manheim Used Vehicle Value Index call last week.
“So, this is why we haven’t seen massive growth in CPO. But with that said, CPO has been pretty good and continues to be right up there with the historic highs that we have seen over the past few years,” he said. “And as we see new-vehicle inventories drop, CPO presents a great opportunity for the dealers to have something to sell to people coming in looking for a new car.”
And 2022 may be a year of great opportunity CPO, as Cox Automotive is projecting 2.90 sales, according to the quarterly report.
Looking at the total used-car market, The company’s revised forecast projects 39.2 million overall used-car sales this year, with 21.4 million of those being retail used sales (or sales coming from a dealership).
That’s up from an estimated 36.7 million total used-car sales in 2020 and 19.5 million retail sales, according to Cox estimates from earlier this year.
In 2022, Cox is forecasting total used-car sales of 39.3 million and used retail sales of 22.1 million.
Brand-by-brand CPO results
Among individual automakers reporting recent CPO results, Mazda North American Operations said it moved 5,603 certified units last month, a 7.0% decrease.
Mercedes-Benz reported that is third-quarter CPO sales were up 4.1% year-over-year with 36,446 units moved. Through nine months, its year-to-date certified sales are up 15.2% at 110,325 units.
Volvo moved 2,944 certified vehicles in September and has sold 29,949 so far this year. It moved 9,105 CPO units in Q3.
At BMW of North America, there were 26,048 CPO sales for the quarter, which was off 8.7% year-over-year.
Through nine months, BMW has sold 86,563 CPO units, which is up 4.6%.
For your certified pre-owned buyers this year, you might want to keep in mind the brands that fall under the CPO programs Autotrader has honored with the title of top CPO vehicle programs for luxury and non-luxury automakers this year.
According to the site, programs from Lexus (luxury) and Kia (non-luxury) stand out in 2021 — something to keep in mind when discussing options with CPO customers.
"With used-car prices on the rise and new-car inventory scarce, right now it makes a lot of sense to consider a certified pre-owned car or truck," said Brian Moody, executive editor for Autotrader. "Autotrader expects the prices of used cars to remain higher than usual for the remainder of 2021, so the gap between a typical used-vehicle price and a CPO price is narrowing. Shoppers can view these current market conditions as an advantage, as buying CPO includes several benefits above and beyond purchasing a non-certified used car."
To break down the reasoning for the top brand choices, Autotrader shared the main item of record for Lexus was the fact there is no mileage cap for its added CPO warranty, in addition to other program features.
Take these details for example: To qualify for Lexus L/Certified, a vehicle must be no more than six years old, have no more than 70,000 miles on the odometer, pass a factory-supervised 161-point inspection, and have a clean vehicle-history report. In addition, its CPO warranty adds another two years with unlimited mileage coverage to whatever remains of its original four-year/50,000-mile new-car warranty — an impressive perk to sell your customers on their next Lexus. Other highlights of the Lexus L/Certified program include: 24-hour roadside assistance, loaner car covered during repairs, and trip-interruption allowance providing reimbursement for meals, a rental car, lodging and four scheduled maintenance visits.
For Kia, on the non-luxury side, Autotrader said the Korean brand beat out other heavyweights in what is a very competitive CPO marketplace. Why?
What Autotrader called Kia's “stellar powertrain warranty” as well as the fact that the CPO coverage is transferable, combined to make the program stand out above the rest this year.
Kia's CPO coverage can be transferred to another private owner for a $40 fee. Here are the details: For a used car or SUV to qualify for Kia's CPO program, it must be no more than five years old, have no more than 60,000 miles on the odometer, pass a 173-point inspection, and have a clean vehicle-history report. The program also features a 10-year/100,000-mile powertrain warranty.
“When a Kia model passes from its original owner, its powertrain warranty is reduced to five years/60,000 miles from the original new-car purchase date. However, Kia reinstates the original 10-year/100,000-mile powertrain warranty for its CPO cars and SUVs,” Autotrader explained in the press release announcing the news.
Along with the extra warranty coverage, Kia's additional CPO program features include: 24-hour roadside assistance, up to 10 days car-rental allowance of $35 per day for covered repairs, limited trip-interruption reimbursement of up to $500 for five days, and a three-month satellite radio subscription.
Almost a year ago, Lotpop founder Jasen Rice said in an episode of the Auto Remarketing Podcast that the certified pre-owned segment could emerge as the post-pandemic “winner” in automotive.
While COVID-19 is certainly not over, there is a light at the end of the tunnel. And Rice’s CPO prediction appears to be ringing true, particularly in March, which was a record month for certified sales, according to Cox Automotive.
The company’s analysis of Motor Intelligence data indicates there were 286,061 certified pre-owned sales in March, beating year-ago figures by 80% and February sales by 36%.
They were also more than 7% stronger than the prior record of 265,878 CPO sales, which happened in March 2019.
First-quarter certified sales came in at 696,828 units, beating year-ago figures by nearly 14%.
That’s quite a leap, especially considering that January and February CPO sales were down year-over-year.
More specifically, there were 201,023 CPO sales in the first month of the year, compared to 215,959 certified sales in January 2020, the Cox analysis shows.
In February, there 209,744 certified sales, compared to 238,229 in February 2020.
But March’s CPO sales increase of more than 80,000 vehicles more than made up the difference.
Brand results
And in addition to the overall industry record, Mazda North America Operations reported its best-ever month for certified sales, moving 7,834 units. That beat year-ago figures by 74%.
Elsewhere, Mercedes-Benz USA reported a strong Q1 for CPO, moving 34,995 units. That beat year-ago figures by 9.0%.
At BMW of North America, Q1 certified sales reached 28,152 units for the BMW brand (up 2.2% year-over-year) and 2,727 for the MINI brand (up 10.7%).
Volvo’s quarterly CPO sales total came in at 9,510 units, having moved 2,662 certified vehicles in January, 2,956 in February and 3,892 in March.
Cox said in its analysis that the leaders in the CPO clubhouse remain Toyota, Honda and Chevrolet. That trio combined for a 32% certified market share last month. For full-year 2020, they combined for a 30% share, Cox said.
Overall used-car sales
Looking at the overall used-car market, Cox Automotive said the seasonally adjusted annualized rate of total used-vehicle sales was 40.5 million last month, which is 117% stronger than March 2020, when COVID-19 was declared a pandemic and the impact to markets quickly escalated.
In addition to soundly beating the year-ago used-car SAAR of 18.5 million, the used-car sales rate in March was also stronger than February’s clip (38.0 million) and where the market was in March 2019 (39.2 million), according to Cox.
Looking at Cox Automotive’s estimated used retail SAAR, which includes only the sales involving a dealer, March’s rate came in at 22.2 million. That compares to 9.8 million in March 2020, 20.8 million in February 2021 and 20.6 million in March 2019.
Cox Automotive is forecasting 39.3 million total used-vehicle sales in 2021, softer than the 40.0 million in 2019 but up from 37.2 million last year.
The company anticipates 40.2 million total used-vehicle sales in 2022 and then 39.8 million in 2023.
Analysts are projecting 21.5 million retail used-vehicle sales this year, which would beat both 2020 and 2019 figures. Last year, there were 19.7 million used retail sales, down from 21.0 million in 2019.
Strong model availability. Incentives offered. Long powertrain warranty. Good bumper-to-bumper coverage and additional ownership perks.
After evaluating all of the available certified offerings on the market based on those factors, Autotrader editors have picked the best non-luxury and luxury certified pre-owned programs for 2020.
Autotrader selected Hyundai as the top pick for the non-luxury CPO program and named the Lexus CPO program as the best among luxury carmakers.
“The bottom line is that both Lexus and Hyundai offer the kind of program and the kind of cars you can count on for many years to come,” Autotrader executive editor Brian Moody said in a news release.
Autotrader noted that compared to a typical used car, CPO vehicles come with manufacturer-backed warranties and extras such as roadside assistance and free trial subscriptions to satellite radio.
All CPO cars go through manufacturer-required, multi-point inspections and repairs, as needed, to restore all functions back to factory settings.
“This gives the buyer peace of mind that they are buying the best the brand has to offer when it comes to a pre-owned vehicle,” Autotrader wrote. “The CPOs will have extended warranties that provide protection for additional years, and in many cases unlimited mileage, during the time the second buyer has the car.”
For the non-luxury CPO program, Autotrader said Hyundai continues to stand out as the top pick. Hyundai's CPO program has an advantage because of its 10-year/100,000-mile new-vehicle powertrain warranty, Autotrader said.
Hyundai's CPO program reinstates the full term of the original powertrain warranty. Hybrid and electric CPO cars also qualify for a 10-year or 100,000-mile battery warranty.
In addition, whatever remains of the original 5-year or 60,000-mile bumper-to-bumper limited new-car warranty also transfers to the CPO vehicle.
For Hyundai, full transferability if you sell your CPO car to a private buyer, a $35-per-day rental car allowance during covered repairs, complimentary 24/7 roadside assistance and trip-interruption benefits when covered repairs are required more than 150 miles from home are additional CPO benefits.
Autotrader said it sees only one significant shortcoming of Hyundai’s program: the $50 deductible that Hyundai requires for every covered repair. But Autotrader said that is “fairly standard among nonluxury CPO programs.” Only a few nonluxury CPO plans, such as Chevrolet and Honda, don’t require a deductible. Others, including Ford and FCA (Chrysler, Dodge, Jeep and so forth), have a $100 deductible.
Among luxury brands, the Lexus CPO program, L/Certified, “checks nearly all the boxes of what a CPO program should offer,” Autotrader said.
To the remaining balance of the original four-year or 50,000-mile bumper-to-bumper new-car warranty (which includes powertrain coverage), the CPO warranty adds two years and unlimited mileage.
That works out to a total of six years with unlimited mileage.
“Its unlimited mileage puts L/Certified over the top in our voting,” Autotrader wrote.
Autotrader said that although other programs feature unlimited mileage, the time cap is usually about two years.
“In this case, Lexus knows they have a quality product and stand behind it with unlimited mileage and a long warranty period,” Autotrader wrote.
Unlimited mileage is a strong advantage, Autotrader said. That is especially the case for those doing a lot of driving. Lexus does not require a deductible for covered repairs. For repairs estimated to take more than eight hours, it also offers a complimentary loaner car.
Autotrader identified the 2020 Best Non-Luxury and Best Luxury CPO Programs based on factors such as powertrain warranty length (with a minimum of six years or 100,000 miles of coverage from the original sale date), available inventory, bumper-to-bumper warranty coverage and transferability to future vehicle owners, special financing terms, highest volume and broadest possible spectrum of CPO vehicle types and price ranges currently listed for sale, and ease of understanding warranty overall.
"Today, car shoppers are really focused on value and affordability,” Moody said.
Moody continued, “For those who have decided a new car is too expensive but are unsure of the long-term prospect of buying a used car, certified pre-owned vehicles are an excellent alternative.”
Porsche Cars North America has launched its new pre-owned and certified pre-owned vehicle search platform, which it says is its latest step toward fast-tracking its e-commerce strategy to meet growing customer demand for digital access to the brand.
PCNA said the platform, called Porsche Finder, includes optimized search filters for model and generation.
It also features vehicle equipment and packages, pricing options, dealer inventory search without ZIP code, and an expanded selection of interior and exterior vehicle colors, including cabriolet roof colors.
Porsche said in launching the platform it is “streamlining and enhancing” the customer’s ability to connect from home with one of the 192 U.S. Porsche dealerships.
The platform, according to Porsche, helps customers “quickly find precisely the vehicle they’re looking for.”
Porsche Cars North America and Porsche Digital cooperated in developing Porsche Finder.
“Now is the time to put our foot on the accelerator to make the Porsche digital experience as stellar as our cars,” PCNA president and chief executive officer Klaus Zellmer said in a news release.
Zellmer continued, “Providing seamless access to our products is a top priority in our existing e-commerce strategy, with the goal of creating a one-stop shop for new and pre-owned vehicle search and purchase, which will follow down the road. For now, the new Porsche Finder platform for pre-owned vehicles will enhance the customer experience and greatly benefit our dealer partners.”
PCNA optimized the porscheusa.com website that hosts Porsche Finder to enable search on mobile and tablet devices. The company is doing that while noting that consumer data shows more than half of users conduct vehicle searches on a mobile device.
Creating a more streamlined platform is the company’s goal, and through the refined search parameters and dedicated communication channel with dealers, customers will gain greater flexibility to their vehicle of choice.
PCNA is working to further support pre-owned sales. The automaker is collaborating with its dealer partners on various initiatives under the banner of “Porsche At Your Service,” or PAYS. The new program bundles online and home delivery options.
That makes access even easier for customers once they have located the vehicle of their choice on the Porsche Finder platform.
Porsche Financial Services is also offering various services to do its part in financing customers’ mobility needs:
— Lease-end extensions: Porsche Financial Services is offering up to a six-month extension on lease contracts, for all requests received through May 31, which is four months longer than the regular extension period. The company said that provides customers peace of mind that their mobility needs are secured.
— Payment deferrals: In addition to the longer lease extensions, Porsche Financial Services on a case-by-case basis will consider payment deferrals on lease and retail contracts for customers who have entered into a contract prior to May 1. Most payment deferrals are 30 to 60 days based on individual need. Porsche Financial Services says that benefited customers during the 2008 financial crisis.
— 90 days to first payment finance program: PFS is offering a “90 Days to First Payment” finance program for new and certified pre-owned vehicles in states where the laws allow, on retail finance contracts dated April 4 to June 30. Because of state regulations, the program is not available in Pennsylvania or Maine.
— 1.95% APR for 60 months finance program: On select new and CPO retail finance contracts dated on or between April 16 to June 1, PFS is offering a 1.95% APR for up to 60 months. The 1.95% program is compatible with the 90 days to first payment finance program and is only available to Level 1 (Tier 1 credit) qualifying customers.
