CARY, N.C. -

The numbers are not yet final, but it appears 2021 will not end up as a record year for certified pre-owned vehicle sales.

However, there will likely be a best-ever 3.0 million certified vehicles sold in 2022, in what is expected to be the finale of peak CPO.

That’s according to Cox Automotive analysts who shared their analysis on CPO and other areas of the used-car industry in a wide-ranging conference call Friday around the latest Manheim Used Vehicle Value Index.

Kayla Reynolds, who is the economic and industry insights manager at Cox Automotive, said that over the course of autumn, the certified pre-owned market went from appearing like it would beat the 2020 and record 2019 sales volumes, to a market slowing down from the omicron variant of COVID-19 and the ongoing pandemic..

Last year’s certified sales tally is still likely to beat the 2.6 million units sold in 2020, but reaching the 10th record year in the past 11 doesn’t appear likely, Reynolds said.

Chief economist Jonathan Smoke added that certified sales “lost ground” toward the end of the year, but stressed that the segment “fits a very important sweet spot,” in the market.

With many automakers cutting back on car models in their lineups, CPO has proven to be an effective entry-level product to bring consumers into the brand.

“It is the best alternative to a new vehicle. It's something that's a win for the manufacturers … a lot of manufacturers have moved away from sedans and affordable entry-level product,” Smoke said during the call. “So, in fact, many manufacturers are focusing on CPO as a strategic segment that they monitor very closely to introduce people to their brands.

“Consumers who have good credit and qualify for certified pre-owned loans, basically see substantially better terms and lower rates,” he said. “That makes a big difference in their payment that more than compensates for the higher price of a certified pre-owned unit, so it's a win for the consumer, it's a win for the manufacturer, and it's a win for the dealers because on average, they actually are commanding a higher price and higher margin even with the certification costs.”

But while the demand for CPO is strong, the well may soon run dry on worthy supply.

In fact, the number of off-lease vehicles (which tend to be prime candidates for CPO programs) entering the wholesale market is likely to fall from 4.0 million in 2021 to 3.9 million in 2022 and then drop to 3.3 million for 2023. The forecast for 2024 is 3.5 million.

“Off-lease vehicles are normally the largest source of commercial vehicles sold at auction. While the total number of leases scheduled to terminate remain near record highs, the number making their way into auction sales channels are at record lows,” Manheim Consulting vice president Kevin Chartier said during the call.

“This is due to the incredible surge in resale values and the corresponding increases in the equity positions of the terminating lease vehicles. Normally, 60% or more of the terminating leases find their way into the wholesale used-vehicle market,” Chartier said. “However, with today's tremendous equity position, the vast majority of these vehicles are being purchased at lease termination and prior to entering the wholesale market, leaving less than 15% of the normal volumes heading to the auction in the fourth quarter of the year.”

Lower supply, particularly for the CPO-friendly off-lease variety means this year is likely the last record year for the market.

“We’re a little bit down on lease maturities. So there’s enough volume to give us a record in 2022 and that's what we're forecasting,” Smoke said. “But it’s probably going to be the last year we can set a record, because the declining lease maturities going forward after 2022 is going to make that much harder to pull off. But we definitely see the demand and the supply there for one more year.”