REMARKETING

Lexus eases up on its certified standards

To meet rising demand among Lexus dealers and customers for certified used vehicles, the luxury brand is relaxing some standards for certification.

Lexus executives insist the changes will maintain the quality of the brand's certified cars and trucks.

Starting next month, used Lexus vehicles with as many as 70,000 miles will be eligible for certification, up from the current limit of 60,000 miles. Under the new standards, eligible vehicles can be as old as seven model years, up from the current six years.

The new standards generally are in line with those of other luxury-brand certified programs.

Certified track

  • 80 percent are new to the brand

  • 98 percent say they would make another vehicle purchase at the dealership where they bought their certified vehicle, or recommend the dealership to someone else

  • More than 60 percent return to the dealership for service at least 5 times while they own the certified vehicle

  • 85 percent say the next vehicle they buy likely will be a new or certified-used Lexus


Source: Lexus

Forecast: 7% rise in supply

Matt Kaleba, manager of Lexus' national certified used-vehicle program, said the changes will boost by about 7 percent the supply of Lexus vehicles available for certification. He would not disclose the current number of certified Lexus vehicles.

"Dealers are doing the best they can to use every available source to find inventory," Kaleba told Automotive News. "By giving them more time and mileage, they'll be able to find more vehicles to bring into the program."

Kaleba said Lexus' other standards for vehicle certification remain in effect.

"It still has to be a car in great condition," he said. "It has to have a passing Carfax report" on the vehicle's history.

As recently as four years ago, Lexus executives said some of the brand's dealers were not interested in selling certified used vehicles. Those dealers either did not have room at their stores for certified vehicles or were doing well enough without joining the certified program, said Lexus' then-general manager, Denny Clements.

But Kaleba said Lexus dealers now rely on certified sales to introduce customers to the brand and to stimulate repeat business. All but a handful of Lexus' 223 U.S. dealerships sell certified Lexus cars and trucks, he said.

Need a balance

Stefan Smith, chairman of Lexus' National Dealer Advisory Council, says certified vehicles account for about half of the used Lexus cars and trucks that the brand's dealers sell.

"You can't just let the new-car business pull the load anymore," says Smith, a Lexus dealer in Memphis, Tenn. "You've got to have a balanced operation."

Kaleba said he expects sales of certified Lexus vehicles to rise in 2008. He declined to offer a growth target.

Last month, Lexus sold 3,692 certified vehicles, a 0.4 percent increase from November 2006. In the first 11 months of 2007, the brand sold 45,753 certified vehicles, up 8.5 percent from the year-ago period.

Overall, the industry sold 127,689 certified used vehicles in November, a 0.1 percent increase over November 2006. In the first 11 months of 2007, the industry sold 1,550,520 certified vehicles, 2.4 percent more than in the year-ago period.

You can reach Arlena Sawyers at asawyers@crain.com.


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Lexus dealer Stefan Smith: “You can’t just let the new-car business pull the load anymore.”

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