SCOTTSDALE, Ariz. - Remarketing executives are eager to have standards for certified used vehicles.
'The time is right now,' said Larry Brasher, chairman of the Standards Committee of the National Auto Auction Association.
Speaking at the conference on Developing Standards for Used Vehicle Certification, held here Oct. 24-26, Brasher said his group is creating a standard condition report. The group also hopes to develop an objective used-vehicle grading system. But he believes standards are still in the conception stage - and that a retail-based standard will be more difficult than one at the wholesale level.
The conference, sponsored by Auto Remarketing magazine, drew questions and ideas from dozens of used-car leaders. They represented manufacturers, finance firms, auction chains, valuation guidebooks, trade associations and service-contract providers.
Although certification ultimately benefits the consumer, it values dealers in the form of added profit - though participants disagreed on how much. Marv Ingram, national certified pre-owned and fleet manager at the Lexus Division, gave the keynote speech. Despite reconditioning costs of $400 to $2,300 per car, Ingram said his dealers see 6 percent to 12 percent profits from certified sales.
Elizabeth Spear, economist for the National Automobile Dealers Association, provided a wealth of data. Several attendees questioned Spear's report that preliminary figures show little difference in gross profit (roughly $200) between certified and noncertified vehicles.
A NADA study cited by Scott Lilja, president of the NADA Official Used Car Guide, found retail customers might pay $500 to $1,200 more for a certified vehicle. Certification costs an average of $300 to $500, and return on investment averages $700 to $900.
'Standardization is critical,' Lilja said. We are now seeing 'a lot of confusion, and not a lot of consistency.' Lilja thinks a governing body is needed to oversee standards.
Charlie Vogelheim, editor of the Kelley Blue Book, wondered whether certification can qualify as a feature worth a set amount of money, such as air conditioning, in the guidebooks. He sees a need for 'minimum standards that apply to all programs.'
Standards will take a while, said Pat Key of the Black Book. Clear definitions are needed first. 'Is this an inspection program?' he asked. 'Or is this a standard for reconditioning? Or is it something more?'