Sales of certified pre-owned (CPO) vehicles are growing so rapidly that dealers would like to display them at their annual auto shows and offer different brands of certified used cars on their lots.
Those issues were raised at the National Auto Remarketing Conference in Dearborn, MI, bringing a unanimous “yes” for the first proposal and decisive “no” for the second from a panel of used-car operations directors representing GM, Toyota, DaimlerChrysler and Volvo.
For the first time at major shows, certified vehicles were displayed with new models, notes Scott Heyer of Toyota/Lexus/Scion. The shows were in Los Angeles, Chicago and Anaheim, CA.
Some shows forbid display of used models, but pressure to include certified pre-owns is rising from dealer show sponsors, says DaimlerChrysler's Bud Place. “We find that half the buyers of CPOs didn't know certified programs exist,” he says. “Having CPOs at the shows would further awareness.”
As for co-mingling certified vehicles of various brands on pre-owned lots in multi-brand stores or malls, GM's Jeffrey Heichel leads the group in a thumbs-down response. “Certified vehicles are designated to be sold only by dealers of the same brand,” Heichel declares. “That's what makes the designation so special. If the dealer has other brands at the same location, each has to show the certifieds on dedicated lots.”
CPOs were expected to set a record 1.5 million sales in 2004, up from 1.1 million in 2003, says Heichel.
Steady growth in certified sales is forecasted for 2005, with a consensus that consumers like the fact that factory warranties are offered on vehicles after a 72-point to 100-point inspection.
Toyota and Lexus initiated the CPO process nine years ago. Heyer says it's been a brand strengthener with 45% of buyers new to Toyota.
Place says the program brings to Chrysler “more younger buyers and women shoppers who then become repeat customers.” Off-lease vehicles furnished by DaimlerChrysler supply about 70% of the company's CPO stock.
Volvo's aftermarket director, John Teah, says certified vehicles “contribute to Volvo's upstream marketing image and provide a rewarding avenue for trade-ins and off-lease vehicles.”