The applause was palpable after the dealers heard the news from Michael Ashton.
Jaguar Land Rover North America’s national remarketing, CPO and fleet manager told attendees of the company’s grassroots dealer body meeting that the Land Rover certified pre-owned brand was being brought in house.
What he got in response was a rousing wave of support, to say the least.
With the enthusiasm of its dealers in tow, the company is rolling out a revamped certified pre-owned program on Saturday that, among other items, will put Land Rover’s certified offering under the same umbrella as the Jaguar brand’s CPO program, while also upping the luxury SUV brand’s certified contract coverage to the same level as Jaguar’s.
“When we announced the fact that we were having the CPO in Land Rover, we literally had the room erupt in applause,” Ashton told Auto Remarketing in an interview this week.
“The applause was really the understanding that the retailers and Jaguar Land Rover were delivering a program together that pushed CPO coverage to the next level,” he later added.
Offering more details, Ashton said that previously, a third-party provider was handling CPO warranty for Land Rover (APCO, of which Ashton said is an "excellent company but bringing the program in-house allows us to maximize the program for our customers.").
Now, Land Rover’s program is under the automaker’s fold and will “mirror” Jaguar’s certified offering.
Instead of having total warranty (manufacturer’s warranty plus CPO coverage) and a total of five years or 72,000 miles, the warranty for the new Land Rover Select Certified Pre-Owned — its official name — will now be six years or 100,000 miles, just like Jaguar Select Certified Pre-Owned.
And you can count Ed Dobbs as being impressed.
The center manager of Land Rover Flatirons in Superior, Colo., said the thing that excites him the most about Saturday’s rollout is getting to sell the first certified vehicle.
“There’s a new delivery process in place so that the customer almost gets the same as a new-car delivery they get on a cert pre-owned car,” Dobbs told Auto Remarketing. “The salespeople are excited about it because now when somebody comes on the lot, they can tell them, ‘Guess what? I can offer you 100,000-mile coverage and the guys down the street can’t do that.’ We’re very excited.”
The automaker counted on dealers like Dobbs to help shape the new Land Rover offering.
In fact, Ashton said that dealers’ enthusiasm for the new program stems the automaker working so closely with the dealers in developing it.
He said that, “We’ve spent an immense amount of time working with our dealer councils, our business operating councils, our remarketing committees and numerous dealers that sell CPO and pre-owned vehicles to make sure we were working in tandem with them to deliver the best program.
“So, the dealers had a very active part in the CPO process,” Ashton continued. “Not only that, we’ve got training. We’ve had numerous communications. I’ve set up a CPO website so that dealers, the salespeople, the warranty staff, service … anyone can go into that intra-website and look at all the attributes of CPO, best practices and why it works best for their business, and the long-term residual-value impact that a proper CPO program has.”
Offering some dealer perspective on the new portal, Dobbs said: “It’s nice … a used-car manager logs into one place and all of his information is there.”
Sharing overall input on the dealer feedback process, Dobbs emphasized: “I thought the factory did a great job keeping us involved all the way through and giving us a voice of what we thought should be the plan.”
What Did Dealers Want?
So, what specifically did dealers say they wanted in the new program?
For Land Rover, in particular, the most important element was extending the time/mileage of the coverage.
“It’s a luxury brand, and with a luxury brand, you need the right type of CPO program that allows that benefit for not only the dealer to certify and stand behind it, not only the manufacturer but also for the consumer, to know that we stand behind that product on time and mileage,” Ashton explained.
“Additionally, the dealers were involved with the right type of programs and incentives that we can put out for customers,” Ashton continued. “So when we launch this program on Oct. 1, we’re actually also rolling out with the 0.9-percent APR for the consumer, so it delivers through the consumer the right type of financing for certified pre-owned vehicles.”
The financing offer is good for both Jaguar and Land Rover brand certified vehicles.
Land Rover’s new program also includes beefed up vehicle component coverage. Beyond the time/mileage enhancements, Ashton calls it “one of the most noticeable attributes” of the new Land Rover offering.
“In fact, it’s all inclusive with a list of items that are excluded instead of having it the other way around,” he continued.
While most of the change went to the Land Rover side of the business, there are enhanced coverage components on the Jaguar side, as well.
“Components that weren’t covered in the past, we are now actually covering,” Ashton stressed.
For example, suspension and SRS (i.e. airbag) components will now be covered.
Overall, Ashton said: “We made sure the component coverage wasn’t just saying that we were standing behind (the vehicle), but the right types of components within the program so the customer, in essence — with the exception of some exclusionary items — is (getting) about as close as you can get to a manufacturer’s warranty."
Additionally, both brands will see enhancements in the reconditioning checklist.
On the 150-point inspection checklist, the automaker improved the following areas: engine area, electrical system, interior and exterior, road test and emissions and heating/air conditioning system.
“We’ve bolstered the checklist up to ensure that the certification process delivers through to the customer the optimal vehicle,” Ashton explained.
“The primary goal for Jaguar and Land rover is to support our dealer network and to support the consumer with our products. And to deliver that confidence that we as a manufacturer stand behind that product and offering up that certification,” he added.
“It’s a rigorous inspection, with regards to the certification and the requirements there-in. So we want that benefit of that certification and reconditioning of the car up to the maximum standard so when the consumer purchases that vehicle, they’re getting a product that they’re confident about and they’re confident about the fact that the manufacturer stands behind that product, as well,” Ashton shared.
After making all these changes, the automaker also has some targets in mind for the new program.
Ashton said that last time he checked statistics from Autodata Corp., the CPO-to-new ratio for Jaguar was 33 percent, while Lexus was at 41 percent and BMW came in at 38 percent.
“Our goal corporately is to be the leader in the industry as it relates to CPO-to-new sales,” he said. “We’re giving ourselves a stretch objective of 50 percent.”
Dobbs chimed in, saying he and his fellow dealers are aiming to recoup some CPO market share the brand has lost in past few years.
“I think that we can go back out and buy the market back,” Dobbs said. “This program — building on the brand recognition of the Select edition name that Jaguar’s made, a prominent name in the CPO world — will allow us to be able to get that market back and bring that strength in to the Land Rover brand.”
He added: “The certification process is more thorough than it’s ever been before, so they’ll ultimately get a better product than they ever have. And the warranty being up to 100,000 miles, I think that’s benchmark.
“It will put Land Rover CPO cars on the list that maybe weren’t there before, consumers knowing that they can get one and have it covered for 100,000 miles,” Dobbs continued. "That’s a lot of peace of mind they’re getting.”
Training for Dealers
To help dealers get the most out of the program and accomplish CPO goals, one of the training techniques the automaker is using is to a lineup of video vignettes.
“We are setting up a full suite of video vignettes. They’re short training sessions that are delivered through to the retail staff through the CPO website that I set up. And then that website, they’ll be able to click in and go through specific trainings on why it’s a benefit for them.”
There will also be formalized sales training programs to train dealers, as well.
Finding CPO Supply
Of course, to hit its targets, dealers will have to have plenty of supply.
One of the biggest challenges that automakers have these days in the certified market is finding CPO-worthy inventory. Jaguar Land Rover is no exception.
“We have the same inventory constraints that many manufacturers are facing right now. The Land Rover side and the Jaguar side, we’ve seen increased values at the auction. We’ve seen our retention upstream of auction increase," Ashton pointed out.
Those challenges are especially difficult on the lease-return side. At this point in the fourth quarter, the automaker is seeing “one of lowest inventory returns in history,” but does expect to see things get better next year and into 2013.
In response to cutbacks in leasing, the company is urging its dealers to tap into upstream purchasing, Ashton said.
“We want to keep the Jaguars and Land Rovers within our franchise dealer network, so we actively work to send out schedules on when vehicles are coming back to work with our dealers to use,” he noted.
“We have a proprietary system that is much like a CRM system that is set up to pull in information from the banks so dealers have an easier method of identifying which customers they can get in touch with prior their lease termination,” Ashton continued.
At Land Rover Flatirons, the dealership it tapping into its existing customer base and also reaching out to other-brand in the area to purchase Land Rovers that come in.
“We’re working our own customer base much harder,” Dobbs said. “It’s kind of a new focus on what customers are at a point either in their lease or contract that it would make sense for them to trade in.
“And then we’ve also been working hard at talking with other-brand used-car managers and letting them know that we’ll pay top dollar for any Land Rover products that they get in and to at least give us a call,” Dobbs continued. “And that’s worked well.”
And in order for dealers to reach their market-share goals, they’ll have to be “aggressive” in buying Land Rovers, Dobbs said.
“I think they just need to be aggressive and go after it. When cars are going through the lane, now that we can cover that car to 100,000 miles, don’t be afraid to buy it,” Dobbs stressed. “Yeah, everyone knows their own market and what price a car will bear, but keep in mind that you’re able to offer coverage that nobody else can offer.”