Taking certified-used sales to the next level
Some dealer council chiefs see room for growth after record 2013 volume
Editor's note: An earlier version of this story misspelled the name of Joseph Agresta Jr., chairman of the Mercedes-Benz Dealer Board and owner of Benzel-Busch Motor Car Corp. in Englewood, N.J.
As expected, certified used-vehicle sales set a record in 2013.
Franchised dealers representing 29 CPO programs sold 2,112,761 certified used cars and trucks in the United States last year, 15 percent more than in 2012. The record was no surprise: By the end of November, U.S. CPO sales had topped 2012's total.
Some of the growth came as more brands and their dealers embraced the idea of certifying their used vehicles. Luxury brands have long endorsed CPO sales, in part as a way to offer customers vehicles at lower prices. Now mass-market brands, which have had CPO programs for years, are stepping up their CPO sales, even as smaller brands jump in.
Among brands with CPO sales of more than 25,000 in 2013, those growing fastest were Kia, Subaru, Mazda, Ford (which still includes some Mercury sales), Chevrolet and GMC.
Though the programs generally are very successful, the leaders of some dealer councils say there is room for volume growth and better execution.
Certified used vehicles generally are newer and have been driven fewer miles than typical used vehicles. They also have undergone a thorough inspection and have been approved by the vehicle manufacturer. CPO -- the term comes from the industry expression "certified pre-owned" -- vehicles typically also have extended warranties.
Joseph Agresta Jr., chairman of the Mercedes-Benz Dealer Board and owner of Benzel-Busch Motor Car Corp. in Englewood, N.J., said the Mercedes-Benz certified used-vehicle program is expected to have a 20 percent growth rate "in the next few years."
That would be on top of a 23 percent increase that lifted sales to 99,075 in 2013.
Agresta added: "We expect to see huge growth when leases will peak and that will require a greater CPO effort to keep those values higher."
Scott Fink, who is entering his sixth year as Hyundai's dealer council chairman, said Hyundai Motor America's certified program has been well received. But dealers need to get more engaged, especially with more off-lease Hyundai vehicles expected to return to the market, he said.
Hyundai dealers increased their sales of certified Hyundai cars and trucks 8 percent in 2013 to 75,941.
"The challenge is to get more dealers to recognize that selling CPOs is not a replacement for new-car sales -- it's an enhancement," said Fink, the owner of three Hyundai dealerships in Florida. "Just look at my sales. My new-car sales are up and I'm also setting records every month with CPO sales."
Carey: Dealers followed Mazda.
John Iacono, chairman of the Lexus National Dealer Advisory Council, says Lexus' certified used-vehicle program is doing well, despite lagging the overall CPO market with a 7 percent increase in 2013 to 73,100.
Dealers and the factory are recommitting to the program and putting more marketing effort behind it, he said. The attributes of a CPO vehicle "make it like another model within the brand," he said.
"We have to see how we can take it to the next level," said the owner of three Lexus dealerships in New York.
Tom Carey, chairman of Mazda's national dealer council and owner of Ramsey Mazda in Urbandale, Iowa, said the automaker put more emphasis on its certified used-vehicle program, and dealers did likewise.
As a result, Mazda sold 37,886 certified vehicles last year, up 39 percent or more than double the pace of the overall industry.
Mazda "just put a focus on it -- to measure it, to let dealers see what everybody else is doing in their districts with it," Carey said. "The key thing which we didn't have before was that Mazda made it a focus, and it has gotten all of us as retailers doing the same thing."
Bill Knight, who is entering his second and final year as Lincoln dealer council chairman, says Lincoln's efforts to keep its off-lease vehicles in the hands of Lincoln dealers helped the brand's certified sales grow 12 percent to 21,682 in 2013.
"I think we're seeing more dealers engage in the CPO process," said the owner of Bill Knight Lincoln in Tulsa, Okla.
Infiniti sold 11,728 certified vehicles in 2013, a 1 percent decrease that made it one of only a handful of brands at which CPO sales fell in 2013.
Matt Gunderson, 2014 chairman of the Infiniti National Dealer Advisory Board and owner of Infiniti of Mission Viejo in Mission Viejo, Calif., said Infiniti has gradually accepted the relevance of the CPO program and is finally seizing the opportunity to support it.
Shelly: BMW must not lag.
"They didn't show the commitment or investment in a CPO program in the past, like you saw at BMW and Audi," he said, "but they're really coming around."
BMW brand, a well-established player in the CPO market, had its certified used-vehicle sales underperform the industry slightly last year, with an 11 percent rise to 83,221.
Damon Shelly, a California deal-er and chairman of the BMW National Dealer Forum, hinted that lagging the market is unacceptable.
"There is a CPO committee" as part of the dealer forum, he said. "They have been working on getting it back to being an industry-leading program. Announcements are being rolled out to upgrade the program. It is evolving."
Ryan Beene, Lindsay Chappell, Diana T. Kurylko, Mark Rechtin and Bradford Wernle contributed to this report.
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