Certified pre-owned vehicle sales are on track for a ninth-straight record year. An unprecedented number of vehicles are returning from leases. And overall used-vehicle retail sales are expected to climb in 2019 and 2020. It would all seem to add up to prime time for CPO programs.
But with just more than 2.7 million sold last year, certified vehicles make up only around 7 percent of all used-vehicle sales in the U.S. One factor industry observers identify as restricting CPO volume from growing further and faster is that certified vehicles generally aren't on many consumers' minds. Some buyers arrive at dealerships and don't even know what it means for a vehicle to be factory certified.
"There is overall a lack of awareness, and it's where we all sort of fall down from an [automaker] perspective," Eric Swanson, head of CPO vehicles at Fiat Chrysler Automobiles U.S., told Automotive News.
A 2018 J.D. Power study found that, as shoppers get more familiar with certified programs, the likelihood of them purchasing a certified vehicle goes up. But many consumers still aren't aware, said Andrew Stowe, senior director of vehicle valuations at J.D. Power. "Communicating this information to the customer remains one of the biggest challenges that we have within the CPO space," Stowe said.
Increasing awareness, even by spending more to market the programs, promises a payoff. For automakers, selling certified vehicles is a way to build brand loyalty, and the programs can help dealerships, too, he said.
"When we look at certified vehicles and compare them to vehicles which could have been certified but aren't, they turned quicker, they gross better, and the [finance and insurance] opportunity is equivalent to or a little bit better," Stowe said.