SAN FRANCISCO - To Bob Breedlove, general manager of Sam Swope Honda in Louisville, Ky., the Honda certified used-vehicle program makes a lot of sense.
'If you went out to buy a new car, would you buy it without a factory-backed warranty? Of course not,' said Breedlove during an interview at the National Automobile Dealers Association convention here.
'So why would you buy a used-car without a factory-backed warranty?' he asked.
The problem is convincing customers - as well as the dealership staff - that paying extra for a reconditioned certified vehicle is worth it.
Sam Swope Honda has overcome that obstacle through a combination of leadership, staff training and advertising. It has increased used-vehicle sales to 100 per month, from 45.
The dealership has become the largest Honda Certified Used Cars dealership in the country.
In December 1997, Breedlove and Frank Moody, the dealership's general sales manager, decided to jump into the new Honda Certified program.
At first, they met resistance from their used-car manager. They asked him how many more used vehicles the dealership would sell if it spent an extra $30,000 per month on advertising for the Honda Certified program. The used-car manager was pessimistic. Maybe one or two, he told them.
That used-car manager has since been replaced.
'He just didn't see the vision or the opportunity,' Breedlove said.
More often than not, it is the dealership owners and general managers who do not see the vision, according to Ed Harris, former director of the national Honda Certified program. Harris recently became the North Central zone sales manager for American Honda Motor Co. Inc. Honda has yet to name his replacement.
DEDICATION IS ESSENTIAL
The successful certified dealerships are the ones whose top management has bought into the certified program. 'Unless that direction is there, it's hard to get it started with just one department manager,' Harris said.
Honda has been trying to sell dealers on the program by showing them that all dealership departments benefit from Honda Certified. For example, Honda dealers make more money from finance-and-insurance contracts for certified vehicles than for new vehicles, Harris said.
Honda also has sent about 30 dealers to visit Sam Swope Honda to observe how the certified program is working there.
'They are definitely the leaders right out of the gate with Honda Certified,' Harris said.
Like most factory-backed certified programs, Honda Certified requires the dealer to conduct a 150-point inspection of the vehicle and recondition it to the program's standards. The vehicle then carries a limited warranty for up to six years or 72,000 miles.
Honda dealers pay Honda $329 to certify the vehicles (the exception is the Passport at $459). They also handle the reconditioning costs, which at Sam Swope Honda average $512 per vehicle.
Moody said a certified used vehicle typically sells for about $500 more than a noncertified one.
The vehicles must be no older than 3 years and have fewer than 60,000 miles.
Two years ago, that type of vehicle was rare at Sam Swope Honda. Today the dealership tries to keep 100 certified used Hondas on the lot.
Moody said the dealership never bought used Hondas in bulk before. But now Sam Swope Honda buys plenty from closed Honda auction sales and other sources.
By aggressively selling certified used vehicles, Sam Swope Honda also has eliminated its wholesale losses, which reached $250,000 in 1997. Certified vehicles are sold within 30 days.
Moody said the dealership has yet to wholesale a Honda Certified vehicle.
Honda wants to increase U.S. sales of Honda Certified vehicles to 26,000 for 1999, up from nearly 13,000 in 1998. Breedlove and Moody want to play a big part in that increase.
They expect used-vehicle sales at Sam Swope Honda to reach 140 a month this year. About 100 of those monthly sales will be certified vehicles.
The two dealership managers also want to lease more used vehicles in 1999. Used-vehicle leases were nearly nonexistent at the dealership before the certified program.
Today, the dealerships writes about 30 used-vehicle leases per month. Moody said that should exceed 50 per month in 1999.