New passion for certified used
After a slow start, Hyundai's program attracts big dealers
LOS ANGELES -- After sitting on the sidelines for years, Hyundai's biggest new-car dealers are embracing the certified used-car sales program.
Scott Fink, owner of Hyundai's second-largest dealership and chairman of the brand's national dealer council, opened a store devoted to Hyundai used and certified-used vehicles near his flagship dealership in January.
Fink isn't alone. Three years ago, there was little overlap between Hyundai's top 20 new-vehicle and its top 20 used-vehicle dealers, said Dave Zuchowski, Hyundai's U.S. sales boss. Today, about 80 percent of those lists are the same dealers, he said.
Sales of certified used Hyundais have skyrocketed since 2008, when dealers sold 8,231 certified used vehicles. The brand sold 48,867 certified used vehicles last year, more than double its 2010 total and outpacing the certified used sales growth of all other volume brands last year.
That pace is continuing, with certified used sales up 84 percent to 16,440 vehicles through March.
The program has become especially attractive as limited global production capacity has kept new-vehicle inventories tight for many Hyundai dealers, said John Krafcik, CEO of Hyundai Motor America.
"Dealers suffering with new-car volume constraints can walk a customer to a CPO vehicle with an equal or better gross," Krafcik said.
He said Hyundai holds about a 3 percent share of the certified used market. The company's goal is to match its new-vehicle market share of 5 percent, he said.
The brand's burgeoning lease business should help. Leasing accounts for about 20 percent of Hyundai's new-vehicle sales, up from 17 percent in 2011 and virtually none in 2008, Hyundai says.
"We love that because we know they are coming back in three years," Krafcik said. "As we reduce fleets, it's off-lease that is a feeder into CPO."
Another reason is big profits.
Greg Mauro, president of Gregory Hyundai in suburban Chicago, says certified used vehicles generate an average of about $2,800 in retail gross profit, about $500 more than a noncertified used Hyundai.
Mauro said his dealership sells about 20 certified used vehicles in an average month compared with 10 per month last year and none two years ago.
"It's not an expensive date for us to go and put the cars under the CPO, and it does get an extra set of eyes because some customers will only look at certified used cars," Mauro said. "It's like a franchise within a franchise if you do it right."
Mark Rechtin contributed to this report
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