Certified-used sales hit record in 2012
Smaller brands, newer programs account for the biggest gains
Kia Motors America's certified used-vehicle program doubled its sales last year, to 20,076 units. From a much larger base, sales of Ford Motor Co.'s certified used vehicles rose by roughly one-third in 2012, to 172,536.
Gains were common across the industry last year. Franchised dealers of all brands sold a record 1,834,746 certified used cars and trucks, a 5 percent increase over 2011, according to data compiled by the Automotive News Data Center and Autodata Corp.
And certified-used programs aim to push forward this year. Ford Motor Co., for instance, rang in the New Year by beefing up the program's warranty on its nonluxury brand cars and trucks for the second time in as many years.
Starting this month, the 12-month or 12,000-mile warranty on certified-used Ford and Mercury vehicles begins after a vehicle's new-car warranty expires if any such warranty is left on the vehicle. Before, the certified warranty on those vehicles ran concurrent with any available new-car warranty. The change can mean additional months of coverage for the buyer of a certified-used vehicle.
Last year, the company extended the certified warranty from three months or 3,000 miles.
John Felice, general manager of Ford and Lincoln sales, said the key drivers of the sales increase were the lengthened warranty, special finance rates from Ford Motor Credit Co. and a realigned team of people to support the certified-used program's marketing and dealers.
Sales of certified-used Ford, Mercury and Lincoln vehicles rose 32 percent to 172,536 in 2012, just shy of the company's record of 173,837 set in 2006. Sales of certified-used Ford and Mercury vehicles rose 34 percent, while sales of certified-used Lincolns rose 23 percent.
"It's the renewed focus in the company, cross-functional support from the senior leadership team including Ford Motor Credit and our entire field organization really getting behind the certified program," Felice said. "It really was an organizational mind-set shift that this was something we wanted to work on with our dealers to drive the business."
The biggest gains in certified-used sales came at smaller brands or those with relatively new certified-used programs. Kia's gain, for instance, was the largest of any certified-used program selling at least 1,000 vehicles. But some companies with larger, more mature programs, excluding Ford, were flat or lower.
For example, sales of Toyota division, the top selling certified used-vehicle brand, were flat at 330,814. Sales at GM Certified -- including Buick, Chevrolet, GMC, Pontiac and Saturn brands -- fell 4 percent to 275,203.
Excluding discontinued brands such as Hummer, these brands had double-digit declines in certified-used sales: Cadillac, Chrysler, Jaguar, Infiniti and BMW.
More dealers, sales
Volkswagen brand also racked up double-digit sales gains. It sold 86,188 certified units last year, an 18 percent gain. That followed a 32 percent increase in 2011.
Scott Weitzman, general manager of used-vehicle operations for the VW brand, says increases in dealer participation over the past three or four years have bolstered sales. He says dealer participation rose after VW added a used-car manager in each of its five sales regions, to help dealers run a more efficient used-car operation and understand the profit potential associated with certified sales.
"About 94 percent of our dealer network is involved in selling certified pre-owned every month," Weitzman says. "If you go back to 2009, 2010 we were at about 60 percent of the dealers. In 2011 and into 2012, it really took off."
As a result of the tight supply of used vehicles over the past couple of years, Weitzman says dealers had to work hard to find enough vehicles to certify. Despite predictions of more off-lease vehicles in general returning to the market this year, he says the supply of certifiable used VWs will be limited.
Financing aids Mazda
Mazda North American Operations also is making strides in certified sales. It sold 27,239 certified used vehicles last year, up 44 percent.
Roger Basa, manager of Mazda certified pre-owned and remarketing, attributes the increase to the company's offer of 0.9 percent financing on 36-month contracts on most certified Mazdas over the past 15 months.
In September, the company also enhanced its warranty with a three-year buy-back guarantee through AutoCheck, the vehicle-history reports arm of Experian Automotive.
If AutoCheck reports a clean title and it is later found that a certain title designation existed when the history report was conducted, AutoCheck will buy the vehicle from the consumer for as much as 110 percent of the retail value, as published by NADAguides.com. It also will cover as much as $500 for aftermarket accessories.
Title designations, known as "brands," indicate if the vehicle has been damaged or is potentially unsafe to drive.
Says Basa: "We don't incrementally charge a customer or a dealer for this added benefit."
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