"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.
Ron Cooney, Toyota Certified Used Vehicles sales operations manager for Toyota Motor North America, said most Toyota dealers nationally are seeing a lift in CPO sales. In 2019, Toyota sales of CPO vehicles nationally rose 13 percent, while the number of vehicles the automaker certified rose 15 percent over the previous year.
"It's probably one of the best brand-retention tools that we have," Cooney said.
CPO sales also don't exactly follow new-vehicle trends, Cooney explained. "I'm still 55 percent cars and 45 percent [light trucks] nationally. I tell dealers all the time, 'Don't be afraid of sedans. Don't be afraid of Corollas,' " because CPO customers are sensitive to fuel economy and affordability.
Dealerships such as Kings Toyota that make what Cooney calls a "big deal" out of their CPO inventory bolster confidence not only in the CPO units, but in their new-vehicle inventory as well, because customers can see firsthand what their new vehicle is likely to look like in a few years.
And the CPO product bolsters dealer profitability, Cooney says.
"Dealers are starting to witness and see that it's not just about the front-end profit," he said, "it's about the department profit."