At Kings Toyota in the Queen City, a princely portion of the profits come from certified pre-owned vehicles.
It's the reason the Cincinnati dealership, which sells about 2,900 new Toyotas per year, dedicates prime real estate in its new-vehicle showroom to feature Toyota Certified Used Vehicles, and why it gives CPO buyers the same free-oil-changes-for-life treatment that it bestows on those who purchase new vehicles.
And the treatment has paid off where it counts: in the numbers. Of the 2,835 total used vehicles Kings Toyota sold last year, 1,290 were Toyota Certified Used Vehicles, which tend to not only generate stronger returns for the dealership's used-vehicle department but also profits for the fixed ops and F&I departments.
Last May, Toyota upped its warranty on its CPO vehicles to 12 months/12,000 miles from the CPO purchase date, with an additional 7-year/100,000-mile limited powertrain warranty, also from the CPO purchase date.
"We promote [certified used vehicles] as being good as new, and in some cases better than new, because of the warranty," says Dave Caddell, senior used-car manager for Kings Toyota. "We tell people that they're getting a vehicle that's priced lower than a new car, with a better warranty."
That promotion includes treating its CPO inventory as if was new, with prime display space, point-of-sale materials and special showroom signage that details the certification process. And underneath the marketing, the dealership has taken additional steps to ensure that its supply of CPO vehicles to market remains robust.
Caddell said Kings Toyota hired a reconditioning manager, whose job it is to ride herd over the used vehicles moving through the certification process. The dealership uses vAuto's Lifecycle management software to watch over vehicles as they move through reconditioning.
As a result of these and other changes, Caddell said, the dealership "cut our reconditioning time in half. We started out at a big number, something like 14 days for average reconditioning time. But with the changes we made to our process, and monitoring, we were able to cut the average down to seven days," including for those vehicles which must go through an off-campus body shop. The changes to the reconditioning process increased CPO profits last year by $300 per vehicle, Caddell said.
Kings Toyota is part of Kenwood Dealer Group, a family-owned group of 14 dealerships located throughout the Cincinnati metro region.
Caddell said that Kings Toyota has always "been a believer" in CPO sales, and has led its four-state region — Ohio, Michigan, Kentucky and Tennessee — in recent years in annual CPO sales. He said that as recently as four or five years ago, the dealership's profits from CPO sales were double the average of the rest of the region. But as used-vehicle margins came under pressure from Internet sales, Kings Toyota's CPO profits are now just above the region average. However, even in their lessened state, they still outperform new-vehicle profits, Caddell said.