Nissan will put certified pre-owned stamp on non-Nissans

With new-car supplies disrupted, Nissan Motor Co. is helping its dealers step up their used-vehicle game.

This fall, the automaker will launch a certified pre-owned program for non-Nissan brand vehicles.

The vehicles will receive an 84-point inspection and a 6-month/6,000-mile limited warranty, compared with a 167-point inspection and a 7-year/ 100,000-mile warranty for Nissan-brand CPOs.

Nissan hopes the expanded program will draw shoppers who might not have otherwise considered the brand to its stores, creating an opportunity to flip them into a new or used Nissan when it's time to upgrade or buy a second vehicle.

"We want to build connections with customers about the Nissan brand and the Nissan experience," Dan Mohnke, Nissan U.S. vice president of eCommerce, told Automotive News. "The biggest benefit for the dealer is new customers that they wouldn't have normally seen."

Tyler Slade, operating partner at Tim Dahle Nissan Southtowne in suburban Salt Lake City, called the CPO offer a "triple win" — for the brand, consumers and dealers.

The program generates revenue for Nissan through certification fees and widens the brand's exposure to new customers.

Slade said consumers get peace of mind knowing they are buying an inspected vehicle backed by a limited warranty. And the program means new business on the sales lot and in the service drive for dealers.

Slade said that at his dealership, CPO customers are 30 percent more likely to return to buy a new vehicle. "Those customers are also more likely to service with you," he said.

CPO sales accounted for a slice of the 40 million-unit used-vehicle market in 2021, and 16 percent of all used cars sold through franchised dealerships were CPO, according to J.D. Power. Dealers sold about 2.75 million CPO vehicles last year, up about 5 percent from 2020.

Nissan is the latest automaker to see the value in helping dealers grow their used-vehicle business to build customer loyalty.

For more than a year now, Ford Motor Co. has offered certification and a limited warranty for non-Ford vehicles. General Motors will follow suit this year with a similar initiative.

These programs are an "acknowledgment that the used-car business is in an unprecedented era of challenge with respect to used-vehicle acquisition," said Brian Finkelmeyer, senior director at Cox Automotive.

Ryan Hall, executive manager at HGreg Nissan Kendall outside Miami, said Nissan's expanded CPO program will help retailers dealing with lean new-vehicle supply.

"I don't think Nissan would be going down this path if new-car inventory was healthy," Hall said. "This is about keeping people coming to the store because our new-car supply is cut in half."

CPO programs can be profit drivers, boosting transaction prices and sales turnover.

According to J.D. Power, in the first quarter of 2022, the gross profit on a CPO vehicle from a mainstream brand was $587 higher than on a non-CPO vehicle.

CPO transaction prices were $1,095 higher than for non-certified cars, and CPO vehicles sold 10 days sooner.

Finkelmeyer said Nissan's limited warranty on nonbrand vehicles is a "relatively low-risk profit opportunity" for the automaker.

"CPO warranties cover the transaxle and transmission," he said. "How often do we have catastrophic transaxle failures?"

The expanded CPO program including non- Nissan vehicles could help franchised dealers compete with big independent retailers such as CarMax and Carvana.

"It gives us much better footing against the retail startups and puts us in a position of strength," Slade said.

Even so, with elevated prices for used vehicles at auction, dealers might be hesitant to pay extra for certification.

"If I'm paying $20,700 [at auction] for a car that retails for $20,000, do I want to add another $400 to certify the car?" Finkelmeyer said.

Starting in the fall, Nissan will make CPO inventory available on its [email protected] e-commerce platform, which enables consumers to shop for a car, schedule a test drive, complete the paperwork for the purchase and take delivery without stepping inside a brick-and-mortar store.

Used-car buyers are typically younger, and they "expect online retailing to be the norm," Mohnke said.

Jonathan Banks, J.D. Power vice president of vehicle valuations, said listing multiple brands on a digital platform can be a data gold mine for automakers.

"The more inventory you have, the more traffic you're going to get, and the more understanding you have of what people are looking for" and what they end up buying, Banks said.

Slade said the nationwide reach offered by [email protected] will be a "godsend" for retailers who are not as effective in marketing used vehicles.

"Nissan is handing them on a silver platter a very reputable way to sell more used cars while footing much of the advertising," the dealer said.