BLOOMFIELD HILLS, Mich. -

Thirty-five percent of the used vehicles sold retail in the U.S. by Penske Automotive Group during the second quarter were certified pre-owned models.

That’s according to a quote from the retailer’s chairman, Roger Penske, published in a transcription of the dealer group’s quarterly conference call last week by Seeking Alpha that can be found at:
http://seekingalpha.com/article/1592082-penske-automotive-group-management-discusses-q2-2013-results-earnings-call-transcript.

How does that compare to the overall industry?

Well, even in these most rollicking times ever for the certified pre-owned market, CPO sales have only accounted for less than 12 percent of used sales among franchised dealers, based on figures from Autodata Corp. and CNW Research.

There were 548,676 certified units sold during Q2, according to Autodata, which said this was “easily the best quarter ever.” Data provided by CNW in early July indicates that franchised dealers sold 4.63 million used vehicles in the second quarter.

Combining the Autodata and CNW figures, the CPO penetration of franchised dealer used sales would be about 11.8 percent.

Granted, CNW’s numbers for franchised dealers are higher than the figures calculated by TrueCar (about 3.3 million units) and Edmunds (2.76 million).

But either way you slice it, Penske appears to be beating the overall franchised dealer market in terms of CPO penetration.

For instance, Edmunds calculated the Q2 CPO sales total at 548,821 units. With its data indicating franchised dealers sold 2.76 million units, the certified market’s share would be close to 20 percent — not even three-fifths of Penske’s CPO penetration.

Comparatively, at Lithia Motors — one of the six other publicly traded dealer groups — roughly a quarter of U.S. used retail unit sales are CPO, says vice president of finance and controller John North. At Sonic Automotive, it’s at 30 percent, according to the company.

When asked by Auto Remarketing in the days after the call about the drivers to high certified penetration, Penske executive vice president of investor relations and corporate development Tony Pordon said: “Our CPO business is being helped by our brand mix, as we are 96 percent foreign nameplate and 69 percent luxury.  

“After leasing took a step back during the recession, it began returning in 2010 and those cars coming off lease help the CPO business,” he continued. “We expect that to continue.”

It’s this strength in off-lease volume that Kelley Blue Book senior market analyst Alec Gutierrez finds is helping push such high certified share for large dealer groups like Penske, Sonic and Lithia, as well as record certified sales results in the industry as a whole.

Though he believes the 35-percent CPO penetration that Penkse experienced in Q2 is much more the exception than the rule, Gutierrez was “not surprised” to hear such high numbers.

In today’s market, certified has become quite a viable option for many consumers, he said.

These shoppers are looking for the peace-of-mind and warranty a new car would provide, but with new-car transaction prices at record highs, Gutierrez says “certified makes a perfect alternative.”
 

Joe Overby can be reached at joverby@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.