American Honda Motor Co. Inc. has enhanced its certified used-vehicle program.
The program now covers qualified vehicles up to 6 model years old with fewer than 80,000 miles. Previously, the program covered vehicles up to 4 model years old and with up to 60,000 miles. Also, Honda has extended its powertrain warranty to seven years/100,000 miles from six years/72,000 miles. Its 12-month/12,000-mile warranty on nonpowertrain components is unchanged.
Dan Crowe, Honda corporate remarketing manager, said the changes are to help Honda dealers sell more used Hondas.
'We've had good experience with the program over the past two and a half years - it's bulletproof,' said Crowe, who also is in charge of the certified used-car program at Honda's sister division, Acura. 'So we feel comfortable offering older model cars. It increases our pool of good, used Honda cars.
'We're looking at telling customers that Honda dealerships are the best place to buy used Hondas.'
To participate in the program, dealers must sign an agreement, and their salespeople must undergo training.
About 918 of Honda's 997 dealers participate in the company-sponsored, used-vehicle certification program, Crowe said. The company soon will announce enhancements to the Acura certified program, he added.
To be certified, Honda vehicles must pass a 150-point inspection that includes engine, brakes, exhaust system, steering and suspension, and tires and wheels. The vehicles also must pass exterior and interior appearance standards.
CERTIFIED SALES GROW
Honda and its dealers sold 48,490 certified used Hondas in 1999, almost four times the 12,621 sold in 1998, Crowe said.
Crowe said Honda's certified used vehicles can help a dealership's operations in several ways.
He said while there is little difference between the gross profits of a certified used Honda and a noncertified one, it takes twice as long to sell a noncertified used vehicle than a certified one.
'From the date of certification to the date of sale is about 28 days,' said Crowe, of a Honda certified used vehicle. 'For a noncertified vehicle the average turn is about 60 days. Honda dealers are probably at industry average.
'It takes a lot of money to maintain used-car inventory. This helps the dealer to make more money.'
Marty Stapleton, sales manager at Duncan Honda in Christianburg, Va., said his certified Hondas sell in about 20 days, which is quicker than the industry average. The program changes mean he can certify more used vehicles.
He said he sometimes had 4- to 5-year-old vehicles with close to 60,000 miles that were excellent vehicles but were noncertified because they were too close to the end of the mileage criteria.
Now, those vehicles can be included, he said.
'It does a good job for us,' said Stapleton, who retails about 25 used Hondas a month, of which about half are certified. 'Our sales team does a good job explaining it to customers. Hondas have the reputation of being cars that you just put the key in and drive it.'
MORE CARS, MORE CUSTOMERS
Crowe said the program gives the dealers more flexibility and lets them offer more money on Honda trade-ins. It also serves as income for the dealerships' parts and service departments that inspect and recondition the vehicles.
It also expands the Honda/Acura owner base, he said.
'Eighty percent of the purchasers of a certified Honda never owned a Honda or an Acura vehicle before; for Acura, it's more like 86 percent,' Crowe said.
Mel Matuschka, general manager at Battle Creek Honda in Battle Creek, Mich., said he liked the program even before Honda sweetened it. His biggest problem is he cannot get enough vehicles.
This time last year when Matuschka went to the auction, he would see 250 to 300 off-lease Hondas for sale. In recent weeks, the pool has dwindled to about 50.
Matuschka said that is because the bulk of the off-lease 1996 and 1997 Hondas already have been sold. He expects the pipeline to fill again this fall when the 1998 model off-lease vehicles make their way to the auctions.
'I think Honda's reputation precedes itself. The cars are low mileage with an almost new-car warranty,' said Matuschka, who retails about 40 used Hondas a month, of which about 10 are certified.