You can expect certified pre-owned sales to reach the 3 million mark next year, which would push the string of record years for this growing market to seven — just as off-lease volumes really begin to ramp up.
According to data in a Cox Automotive presentation Sunday in Detroit, later shared with Auto Remarketing, CPO sales should increase this year and then yet again in 2017.
The Manheim Consulting graph included in the presentation predicts between 2.5 million and 3.0 million CPO sales this year, which would follow the record 2.55 million from 2015.
“Given the increased availability of inventory that fits that CPO market — i.e. off-lease units — there’s both the need and the desire to increase those CPO sales, and I think it will be achieved,” Cox Automotive chief economist Tom Webb said in his quarterly conference call last week (which preceded the Detroit event) when asked by a reporter about his expectations for CPO sales this year.
“As always, it’s just dependent on how much marketing dollars, and maybe carrots and sticks, that the OEMs might want to put behind their programs, and of course the ability of dealers to make an adequate gross on those units,” he continued.
If Manheim Consulting’s projections come to fruition, however, it would mean seven consecutive best-ever years for certified.
And perhaps more could be on the horizon, especially when you consider that off-lease volume will likely approach 4 million units in 2018, according to Manheim Consulting data in Sunday's presenation. There are just over 3.5 million off-lease units projected for 2017 and more than 3 million expected this year.
One wrinkle to the certified sales picture, however, could involve the dynamics between new and CPO. That’s something Autotrader senior analyst Michelle Krebs discussed during a monthly conference call with the media on Jan. 5, one day before Autodata Corp. released its data set of 2015 full-year certified sales.
“It’s a record this year. It’ll be a record next year. It’ll be a record the next year after that,” Krebs said of the CPO market. “That’s what we’re anticipating: a continued upward climb. So, I think the question is, ‘OK, do consumers gravitate more toward CPO cars? Is that going to steal some new-car sales?’”
It may be a bit early to answer that, but consider the choices shoppers could be making.
From the consumer standpoint, Krebs said, they may have some additional considerations to weigh when deciding between new and CPO. It’s also important to note the role incentives could play in that decision, she said.
“I mean, they always look at new and nearly new, but there will be more reason to do that,” Krebs said. “And in some cases, if we see incentives continue (to be) high, there may be a reason to buy a new over a CPO. So, it’ll be a really interesting year of which (way) do consumers go in terms of CPO or new.”