Revamp of CPO program pays off for Fiat Chrysler

DETROIT -- Two years ago, Fiat Chrysler retooled its certified used-vehicle program.

It simplified the warranty, built in more opportunities for dealers to sell extended service plans and expanded its field team that calls on dealers.

The changes are paying off, said Eric Swanson, FCA US senior manager of certified pre-owned vehicle sales.

The company added about 150 dealers to the CPO fold in 2014, for a total of 1,404, and expects to add 100 or more this year. The automaker had 2,408 dealerships in the U.S. as of Jan. 1.

Sales of certified used Chrysler, Dodge, Jeep, Ram and Fiat brand vehicles in February rose a collective 25 percent to 14,416, a monthly record. In the first two months of the year, FCA increased its sales of certified used vehicles 23 percent to 27,358.

"Usually in January and February, we're just starting to ramp up and it's snowy, but we just blasted our numbers out of the water" in February, Swanson said. "Over-all, we're targeting growth every year."

The industry increased its sales of certified used vehicles in the first two months 14 percent to 392,419. It sold 197,549 certified used vehicles in February, up 10 percent from a year earlier.

To qualify for certification under FCA's program, vehicles must be five model years old or newer and have fewer than 75,000 miles on their odometers.

All vehicles are covered by a 7-year/100,000-mile powertrain warranty, whichever comes first from the time the vehicle was sold as new. They also are covered by a 3-month/3,000-mile warranty from the end of the new-car warranty or the CPO purchase date, whichever comes first, and carry a $100 warranty deductible.

That warranty is shorter than the 12-month/12,000-mile warranties offered by many competing CPO programs. But Swanson pointed out that FCA's program leaves room for dealers' finance and insurance departments to sell service contracts to CPO buyers.

Dealers always had the opportunity to sell wraparound service contracts to CPO customers, but FCA's previous certified program carried multiple warranties depending on vehicle model year, making it somewhat confusing, he said.

The single warranty makes it easier for dealers to understand and sell additional coverage.

"The F&I manager can say, 'Hey, would you like to upgrade to 12 months of maximum care coverage?'" he said. "They can make a little money on the back end in the F&I office and give the flexibility to the customer. The dealers really responded to that."

When Swanson took over the program in 2011, "it was doing OK, but we weren't really growing," he said. The program was not as straightforward, and its warranty deductible was $150.

So in 2012, he took on the major task of examining the program, first by conducting customer surveys and focus groups and then by zeroing in on dealer concerns.

Most of the research confirmed what Swanson already knew: Customers wanted peace of mind when buying used vehicles, and dealers wanted a program that was easy to administer and flexible.

So with the blessing of the company's executive management team, Swanson made changes to the program, which also called for expanding the team that worked with dealers on the program and replacing contract employees with Chrysler employees.

Now, says Swanson, "we're adding new dealers almost every day."