Luxury brands are dominating the CPO market this fall, as many consumers see certified luxury vehicles as an entry-way into the more high-end brands.
According to Autotrader’s October Trend Engine data, which measures shopping activity on Autotrader.com every month, luxury brands are the most popular nameplates among CPO shoppers.
And the trend didn’t just pop up in October. Over the past three months on the site, luxury car, luxury SUV and sports car segments outperformed their mainstream counterparts, such as compact and mid-size cars and SUVs, according to the site’s data. For example, the compact car segment saw market share fall this month to 7.60 percent from 7.87 percent in October. On the other hand, the luxury car market share is currently at 22.69 percent.
This past month, six of the top 15 certified models on the site that saw the biggest growth in market share from September were entry-luxury or luxury brands, including Audi, BMW, Bentley, Infiniti and Mercedes-Benz.
- The Audi RS models saw a 23.5 percent increase.
- The Bentley Continental was up 14.5 percent.
- The Infiniti Q-Series saw a 14-percent gain.
- The BMW 4 Series was up 12.3 percent.
- The Mercedes-Benz SL Class bumped up by 11.8 percent.
Autotrader, the sponsor of the CPO Forum, part of the Used Car Week Conferences, shared much of this analysis and more at the event which was held Monday and Tuesday at The Phoenician in Scottsdale, Ariz.
Michelle Krebs, senior analyst for Autotrader, explained why she thinks luxury CPO vehicles are gaining ground: "Both aspirational and economic forces appear to be at work simultaneously in the CPO space.
"Despite fluctuations in the stock market and predictions of a hike in interest rates, this data shows consumers are increasingly interested in well-appointed, status brands but with the added peace of mind, cost certainty and affordability that certified pre-owned vehicles provide,” she continued.
The 2015 Autotrader CPO study also uncovered that millennials may be one demographic pushing luxury CPO sales higher. This demographic aspires to buy luxury brand vehicles, Autotrader found, but many can’t shell out what’s required for a new luxury car.
Autotrader called CPO luxury vehicles a “bridge” for consumers to crossover into the brands they desire, even before they can afford a brand new car.
If you need convincing of the CPO market’s importance to the used-car industry, check out this stat: In October, Autotrader site activity showed the proportion of used-car VDPs going to CPO increase by nearly 10 percent year-over-year.
Autotrader analysts shared that in light of the record flow of off-lease vehicles expected to hit the market next year — an increase of 800,000 in lease maturity volume in 2016, according to J.D. Power — automakers should look to the CPO market as a way to market this influx of vehicles.
Krebs said, "Given the surplus of low mileage, late model used cars that are and will continue to be abundant, we're advising all our OEM clients to ensure they are certifying enough of their eligible inventory now to start winning customer loyalty and repeat purchases sooner rather than later."
And the certified pre-owned market has already eclipsed 2 million sales for 2015, which appears to be the fastest the industry has ever reached this mark in a year.
Autodata Corp. said that the year-to-date CPO sales tally through 10 months is at 2.14 million, a full 10 percent ahead of last year’s pace.