As 2015 chairman of the National Automobile Dealers Association, Bill Fox will represent and lead the nation’s nearly 16,000 new-car dealers. But it’s not just new cars that these dealers are selling.

The used-car department has been and will remain an important focal point for franchised dealers, whose pre-owned operations are benefitting from advancements in technology and data, vehicle quality, awareness in certified pre-owned offerings and more.

“Used-vehicle operations will continue to be a point of emphasis for new-car dealers in 2015 and beyond for a variety of reasons,” Fox said in an emailed Q-and-A with Auto Remarketing at the end of December. “Consistently higher new-vehicle prices make used vehicles an attractive alternative for value-conscious car buyers, as does the ongoing improvement in the promotion to raise consumer awareness of manufacturer certified pre-owned programs.”

Fox, who is a partner in Fox Dealerships Inc. in upstate New York, added: “Technology and access to data will continue to support used operations, as well. The insight gained allows dealers to make more informed decisions regarding trade-in appraisals, wholesale and retail pricing and inventory acquisition. Used-vehicle sales also present greater opportunities in the service and parts departments.

“The pool of used vehicles is also much better from a historical perspective. Vehicle design and technology have never been better,” Fox continued. “With the average vehicle age still above 11-years-old, there will continue to be strong demand for used vehicles as cost-conscious car buyers enter the market to replace their aging vehicles.”

Stand-Alone Used-Car Stores

Going back to Fox’s point on technology, that has been a major cog in the development of both Q auto and EchoPark Automotive, the respective stand-alone pre-owned store programs from public retailers Asbury Automotive Group and Sonic Automotive.

In discussions last year that Auto Remarketing had with leaders of those two programs — both of which launched in 2014 — technology, particularly as it relates to shoppers utilizing the iPad during the shopping experience at the store, was central to how they were approaching the in-store experience.

And early overall reaction to both Q auto and EchoPark has been positive.

Fox, himself, sees potential in this type of used-car concept store, but acknowledges it will take some time for them to grow.

“It’s not surprising to see public dealer groups invest in stand-alone used-vehicle stores given the potential benefits cited earlier,” he said. “It’s likely that the concept will spread slowly over time for larger dealer groups. From a valuation standpoint, the technology and data that public dealer groups use must be robust and dependable enough to determine competitive retail prices on used vehicles.

“If done right, loyalty, and subsequently business, will improve over the long term. In addition, the experience for car buyers should also be consistent across stores and be on par with the experience at new-car dealerships,” Fox added. “This won’t happen overnight.”

CPO Growth to Continue

A more seasoned and perhaps proven concept in the used-car business has been the certified pre-owned market. In 2014, the industry posted record CPO sales for the fourth consecutive year, as dealers sold 2.34 million units.

A presentation from Cox Automotive in November forecasted another all-time high for CPO in 2015 and more record-breaking years down the road. Manheim chief economist Tom Webb has said the market could grow as high as 4 million to 5 million annual sales.

Fox said franchised dealers have put “an increased emphasis” on certified, given the records in recent years, and he also mentioned ways dealers can realize the full potential of CPO.

“To maximize potential, new-car dealers and their manufacturer partners should increase CPO marketing, which includes informing car buyers about the CPO benefits,” he said. “For example, the majority of car buyers are not aware that manufacturers are involved in the certification process.

“Most do not realize that CPO vehicles can be financed with competitive rates, which helps ease the upfront premium associated with CPO vehicles.”

As for his own stores within Fox Dealerships, he shared a bit about how they have fared in CPO and what kind of emphasis has been placed on certified.

“We’ve had greater success with some brands over others. Ultimately, it’s up to the car buyer to decide if he or she wants to invest in a slightly used vehicle or purchase a new one,” Fox said. “From a competition standpoint, new-car dealers can use CPO sales as a differentiator compared to other independent, used-vehicle retailers who do not have manufacturer-backed certification programs available.”