It may be a bit early to tell what the ceiling is for annual certified pre-owned sales, but here’s a good sign that Edmunds.com director of industry analysis Jessica Caldwell shared with Auto Remarketing on Wednesday.
As CPO inventory volume continues to grow and the segment becomes more of a household name, she said, consumer awareness will increase.
And that should bode well for an already record-breaking certified market.
According to the Q1 2015 Used-Vehicle Market Report from Edmunds, the 614,400 certified sales in the first three months of the year marked the best first quarter in the history of CPO.
To put that in further perspective, there were 369,350 CPO sales in the first quarter of 2010, according to Edmunds. The latest quarterly figure is more than a 66-percent improvement over that.
And in Q1 of this year, certified vehicles accounted for 21.6 percent of franchised dealers' used sales in the first quarter, compared to 19.8 percent in Q1 2014 and 18.2 percent in Q1 2013.
And overall first-quarter used-car sales industrywide climbed for the first time in three years.
Specifically, the total sales figure was at 9.81 million, Edmunds said, up 1.8 percent from the first quarter of 2014. The last time there was a year-over-year increase in Q1 total used-car sales was 2012, according to Edmunds.
Driving this increase were sales for what Edmunds described as “near-new” vehicles, meaning those cars that are no more than 5 years in age. In fact, about two-thirds (66 percent) of used vehicles sold in the first quarter fit into this near-new class.
That beats Q1 figures for each of the preceding three years (61 percent in 2013 and 2014, and 64 percent in 2012). And diving a bit deeper into those numbers, Edmunds said nearly half (48.6 percent) of used retail sales in the first quarter consisted of vehicles 3 years or newer, which beats Q1 2014 figures by 7.6 percent.
As Edmunds illustrated in the report, the same thing helping to push CPO sales to record levels is also fueling the supply of these near-new vehicles: off-lease volumes. (More on that can be found in our upcoming recap of leasing trends analyzed by Edmunds.com)
But don’t discount the impact of older vehicles in the market, whose strong demand Caldwell also pointed out.
These vehicles, along with newer used vehicles, helped drive the strongest first-quarter retail transaction prices for used cars in history, according to the report. Edmunds pinpointed the Q1 average used-car transaction price at $18,088, up 7.1 percent year-over-year.
So, not only has there been an increase in the supply and sales share of near-new vehicles — which, of course, are typically pricier than other used cars to begin with and often are certified, as well, thus tacking on another price premium — but the market is seeing greater demand for older used vehicles, Edmunds reported.
As such, prices there have surged. In fact, Edmunds data indicates that average transaction prices for used vehicles over five years old in Q1 2015 were 33.6 percent higher than the respective age group’s prices were in Q1 2010.
Compare that to the 16.3-percent gain in used prices over the same time span for used cars under 5 years old and the 12.6-percent gain for used cars overall.
Edmunds has spotted price growth in essentially every vehicle segment in the older used-car group, which it says points to “continued strong demand.”
When asked about prices for both older and near-new used vehicles rising at the same time, Caldwell said it’s not uncommon for this to happen, given that you might be working with two separate consumer segments who are interested in different selling points offered by near-new and older used vehicles, respectively.