Despite tight used-vehicle supplies and steep prices, some dealers are turning to certified used vehicles to fill gaps in their new-car inventories.
In April, industrywide sales of certified used cars and trucks rose 8 percent to 155, 675 units, compared with April 2010. In the first four months of this year, industrywide certified sales totaled 577,279 units, up 12 percent compared with the same period last year.
Production cutbacks since the earthquake and tsunami in Japan have meant a reduced new-vehicle supply.
Certified sales are up because some dealers are steering consumers to the late-model used vehicles as viable alternatives to new vehicles, says Jesse Toprak, vice president for industry trends at TrueCar.com. "At these times of economic uncertainty, consumers don't want risk associated with their purchases," Toprak says.
But used vehicles are in short supply, too, so dealers have to look harder and pay more.
Ricky Beggs, managing editor at Black Book, says the supply of vehicles at some traditional auctions dropped by as much as 40 percent compared with the corresponding period last year, which bolstered prices.
For example, on May 1, the average price of three-year-old entry-level cars such as the Nissan Versa and Toyota Yaris had increased 29 percent, or $1,897, compared with May 1, 2010, Black Book data show. Mid-sized crossovers such as the Chevrolet Equinox and Honda CR-V were up 22 percent, or $3,764.
Beggs says used-vehicle supplies will remain tight "until new-car sales get back to a volume level of 15.2 to 15.5 million."
Taylor Hood, general manager of Preston Hood Chevrolet in Fort Walton Beach, Fla., says that although some late-model used vehicles cost about 10 percent more than they did a year ago, he is finding enough to meet his needs.
Hood says a 2010 certified Equinox can satisfy a customer who was intent on a new Equinox, and certified 2010 and 2009 Malibus can stand in for a new Cruze. "We get them in, and they go," he says of new Equinox and Cruze units, which are chronically in short supply.
Bill Feinstein, president of Planet Honda in Union, N.J., says his new-car supply is off by about 22 percent, limiting some trim levels and color choices. Some of his new-car customers choose to buy certified used Hondas instead. "As the supply of new cars dwindles, people are moving to late-model used, and that just drives the price up," he says.
BMW division is among the few major brands to see certified sales fall. Its sales in April dropped 23 percent to 8,147 units; sales for the first four months dropped 19 percent to 31,104 units.
Tim Sturm, BMW Group Financial Services' general manager of vehicle sales, says the brand's certified sales are off this year because its lease maturities are down by one-third compared with 2010.
But the finance arm has helped dealers keep throughput of used BMWs -- noncertified and certified -- on a par with last year. Dealers have augmented their used-vehicle inventory with trade-ins generated from a program put in place last fall that encourages BMW retail loan customers who have equity in their vehicles to buy new BMWs, Sturm says.
But because of the reduction in off-lease vehicles, he says the company put its 2011 certified sales target in the 94,000-100,000 range, down significantly from the 112,201 it sold in 2010.