Auto Remarketing’s Used Car Week is officially underway with the Certified Pre-Owned Conference, bringing together representatives from dealerships, manufacturers and industry partners to discuss trends and best practices in selling certified used vehicles. Dealers and industry experts alike are focusing on the challenges of inventory supply constraints, while also making a case for certified programs as a way for dealerships to mitigate new car supply issues and secure higher pricing, more service revenue and higher loyalty from its customers.
The conference kicked off with a report from J.D. Power & Associates, which revealed that used vehicle prices are up, largely due to supply constraints driven by lower new car sales and leasing contracts during the recession. The J.D. Power Study found that there were additional benefits as well:
- CPO turn rates are significantly reduced compared with those of used vehicles
- CPO vehicles have better penetration with captive lenders
- CPO pulls more new customers to the brand and secure higher loyalty, a statistic that increases when looking at a family of manufacturers compared with just the nameplate
- CPO also has benefits for the service department, as the CPO relationship funnels customers into a specific dealership’s service department, netting profits over and above the CPO warranty.
The bottom line of J.D. Power’s study is that certified vehicles may be tough to find, and they’ll continue to command high prices.
As a result, dealers are being more creative in securing used and CPO inventory. A panel of top CPO dealers following J.D. Power’s presentation discussed how their stores are reselling inventory that five years ago they may have chosen to wholesale. The importance of securing high-performing vehicles for their portfolio has also increased, as has being creative in merchandising, particularly when a vehicle is outside of a dealership’s “wheelhouse,” such as a Mazda dealership selling a Toyota that a customer brought to the dealership as a trade-in.
On Tuesday, much of the conversation focused on attracting and retaining CPO customers, as well as managing inventory to fulfill those customers’ needs. Mobile, social media and video are increasingly important ways of attracting customers, particularly as they relate to increasing transparency, a crucial consideration in marketing to the CPO customer.
According to a panel that included Marc Ray of Grogan’s Towne Chrysler Jeep Dodge, Bob Demers of MidWay Buick GMC, Kevin Nachbar of McCarthy Auto Group and David Simches of Balise Auto Group, dealers must communicate both the good and the bad about a vehicle, from the car’s differentiating features to its scratches and other blemishes, vehicle history as seen in CARFAX or Autocheck reports and a description of everything that your service department did to bring that vehicle up to speed. The panelists agreed that transparency will be rewarded with customer confidence and more CPO sales.