More than half of new-car shoppers are willing to consider buying a certified pre-owned vehicle, up from 43 percent a year ago, an AutoTrader.com study released today says.
Moreover, the 55 percent of new-car shoppers who would think about buying a certified pre-owned vehicle jumps to 69 percent once shoppers understand what certified pre-owned entails, the study found.
Among used-car shoppers, 60 percent said they would consider certified pre-owned, and that figure rose to 66 percent once the definition of certified pre-owned was explained to them.
“While it is good to see that consideration for CPO vehicles is strong, there is still a lot of confusion about what CPO actually means,” said Rick Wainschel, AutoTrader vice president of consumer insights, in a statement. “The more shoppers know about CPO, the more willing they are to consider the vehicles.”
Certified pre-owned vehicles are generally newer and have been driven fewer miles than the typical used vehicle. They also have undergone a thorough inspection and have been approved by the vehicle manufacturer or a third-party certifying body. CPO vehicles typically also have extended warranties, which can appeal to buyers.
The AutoTrader study reported that certified pre-owned vehicles can be a conduit for dealers and automakers to build brand loyalty. Seventy percent of CPO vehicle owners are likely to return to the dealership for service, compared with 61 percent of drivers who have never had a CPO vehicle.
CPO vehicle owners are also more likely to shop for their next vehicle from the same dealership: 60 percent vs. 47 percent of drivers who have not owned a CPO vehicle.
Automakers and dealers “need to ensure that they are doing everything they can -- from certifying the right amount of their eligible inventory to educating shoppers on what CPO means and merchandising CPO vehicles effectively -- to turn shoppers into CPO owners,” Wainschel said. “Doing so can have a lasting, positive impact on both the brand and the dealership.”
According to the study, 92 percent of CPO vehicle owners who are in the market for another CPO vehicle are likely to stick with the brand they currently drive.
CPO sales are on track for a record sales year.
Automakers sold 177,831 certified pre-owned vehicles in October, the most recent month for which data are available, up 21 percent from the year-earlier month, according to the Automotive News Data Center. Through the first 10 months of 2013, 1.8 million certified pre-owned vehicles were sold, a 15 percent increase from the year-earlier period.
Pay a premium?
Still, the AutoTrader study said shoppers were less willing in 2013 to pay a premium to buy a CPO vehicle over a noncertified used vehicle. Two years ago, 51 percent of used-car shoppers were willing to pay a premium for a CPO vehicle, but now only 34 percent of used-car shoppers would be willing to pay a premium.
The decrease among new-car shoppers was less drastic: 67 percent of new-car shoppers would have paid a premium for a CPO vehicle in 2011, while 62 percent were willing to pay a premium this year.
However, the study found that new- and used-car shoppers said the premium they would be willing to pay was higher in 2013 than it was in 2011.
This year, new-car buyers said they would pay a $2,940 premium for a CPO vehicle -- more than double the $1,245 they would have paid in 2011. Used-car shoppers said they would pay $2,163 this year, up from $1,292 in 2011.