GM sees its CPO sales flat this year, industry up 5%
U.S. sales of certified-used vehicles are likely to rise about 5 percent this year, the head of General Motors' certified used-vehicle program predicted. But he said GM's sales will be constrained by a shortage of vehicles.
"We're flat," said Larry Pryg, national manager of GM certified pre-owned vehicle operations. "We're No. 2 in the segment. We'll sell around 285,000 this year," he said, while No. 1 Toyota's certified used-vehicle sales will probably be in the "310,000 or 320,000 range." He did not give a unit forecast for industrywide sales.
GM's certified used-vehicle sales are "mainly centered around Chevrolet," especially pickups and mid-sized cars, Pryg said. The highest volume nameplate is the Chevy Silverado full-sized pickup, followed by the Impala and Malibu.
Vehicles must be less than 5 years old to qualify for certification. Because of the collapse of sales in 2008-09, GM and other automakers are short of 3- to 5-year-old vehicles.
Much of the industry's growth is from new or newly active entrants in the certified segment, Pryg said.
Although he didn't name any other automaker, Hyundai-Kia has been ramping up its certified used-vehicle program in line with its sales growth over the past half decade.
About 70 percent of GM's dealers are enrolled in GM's program. That contrasts sharply with almost 100 percent enrollment at some import luxury brands, where certified-used vehicles often serve the entry-level price point, giving a consumer his first chance at owning, say, a Mercedes-Benz.
"We don't require our dealers to be in it," said Pryg, on a conference call to reporters and analysts in late August. But those 70 percent of GM's dealers cover "80 to 90 percent" of GM's new-vehicle volume, he said.
Pryg and Howard Polirer, director of industry education at AutoTrader.com, who joined in the conference call, agreed that certified used-vehicle sales are rising because of a number of factors.
The first is consumers' greater awareness of CPO programs.
From 2009 to 2011, Polirer said, the third-party auto research and referral site found in its surveys an "almost 20 percent increase" in new- and used-car shoppers combined saying, "Yes, I'm aware of certified."
It's not just used-vehicle shoppers who look at or consider a certified vehicle, he said. About 53 percent of shoppers who visit the AutoTrader site are considering both new and used vehicles, Polirer said.
3 reasons to buy
In AutoTrader's surveys, he said, consumers give three main reasons for considering certified-used vehicles:
1. The peace of mind that comes with a certified-used vehicle was cited by 71 percent of the consumers surveyed by AutoTrader. Vehicles typically must meet certain age and other criteria to qualify for certification and undergo a thorough inspection. GM's dealers are required to present the inspection results, along with a vehicle history report, to buyers of certified vehicles.
2. It "comes with a better warranty" than a used vehicle was the next most-common reason given. GM's certified-vehicle warranty, similar to those of other automakers, includes both a powertrain and bumper-to-bumper component. GM also offers an "owner care" program that covers all routine maintenance on certified-used vehicles for two years or 30,000 miles.
3. Of the respondents, 58 percent said they could not afford a new vehicle. "The economy is certainly affecting the way people are buying," Polirer said. Because of the "value proposition of certified" to a consumer, "60 percent of new-car shoppers were more likely to consider certified due to the economy."
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