Certified pre-owned vehicle sales winners for the two Ward's Megadealer 100 firms headquartered in Charlotte, NC: Hendrick Automotive and Sonic Automotive.
Hendrick's sales director for new and used vehicles, Chris Little, says the group achieves 20% higher grosses on certified vehicles.
“Three-fourths of our 50 dealerships handle certified pre-owneds,” Little says. “We'll average sales of 100 certifieds a month which have been reconditioned with costs of $800 to $1,600 per vehicle, depending on the brand.
“The selling prices give us a profit, and we average 45%-50% penetration on service contracts on top of the factory warranty, 70% on the GAP (guaranteed automotive protection) policies, and accident and health policies sell better than on non-certifieds.”
Sonic's director of certified and subprime sales, Larry R. Beasley, says that only 36% of its 150 dealerships are licensed to sell certified pre-owneds, only because not all its brands have established certified programs.
But he forecast that 60% of Sonic's stores would become purveyors of certified vehicle because they bring numerous benefits, including improved customer satisfaction, quicker turn cycles and higher grosses and finance and insurance sales.
“There are pitfalls,” Beasley said. “It's critical not to certify the wrong cars, so you have to do your homework on the vehicle's history and not scrimp on reconditioning.”
He adds, “Maybe certifieds need a new name. So many dealers use ‘certified’ to advertise cars that are really not factory-certified. Shoppers get confused.”
Beasley and Little agree that certifieds are a great asset because they're backed by their auto makers, just like new cars and trucks, and can be leased, financed and armed with F&I products. When featured in Sonic dealer ads, said Beasley, certified vehicle are a “powerful draw for customers.”
Sonic ranks 3rd and Hendrick 7th on the Ward's Megadealer 100.