SAN DIEGO -
One of the key presentations at the CPO Forum earlier this week was with Arianne Walker, of J.D. Power and Associates, who discussed her company’s 2010 Used Vehicle Market.
She told the many dealers and other industry executives in attendance that the new-vehicle and used-vehicle markets are closely tied together. As the new-vehicle market has begun to bounce back, so too has the certified pre-owned market.
“As the new-vehicle market took a dip, the used market followed. We saw fleet sales go down and leasing was not doing so well either. That can make it very difficult to find vehicles to certify,” Walker said.
While CPO sales have bounced back, she said one thing the company is seeing is that on average, the vehicles are older.
This year, dealers are making about 16 cents on the dollar in return on investment. Walker said this is about half of what dealers were making last year. However she describes the current level as “a return to normal.”
“We do expect it to increase a bit going forward,” she pointed out. Ultimately, she expects ROI to come back in at about 20 cents per dollar into next year.
The buyers are becoming more and more aware of what the certified pre-owned program is and are more willing to spend extra for it, Walker highlighted. This also means that the dealer can pass some of the higher expense of the CPO program on to the consumer as well, she added.
By and large, consumers are now learning about CPO programs online rather than at the dealership, which Walker said is a big change from years past.
About 78 percent of CPO shoppers are using the Internet to shop. Meanwhile, about 70 percent of non-CPO shoppers are using the Internet to shop.
And of those CPO shoppers using the Internet, Walker said about 42 percent found the vehicle they ended up purchasing online. This is a 10-point increase from last year, she said.
“Dealer lots are no longer the primary way people are finding the vehicles they purchase,” she told attendees.
A lot of the independent auto-related websites are making it easy for shoppers to dig into the vehicles they want, Walker explained.
She suggested that dealers at least upload about 20 photos on each CPO model.
Walker went on to point out that Kbb.com tends to be the most useful site for consumers to find pricing information, whereas Edmunds.com tends to look more like the manufacturer site,
A lot of dealers are also turning to Craigslist, she noted. Compact vehicles tend to be most popular with consumers shopping this site, she said.
The near-new condition and low mileage on CPO models tend to be why most of these shoppers make this selection, according to Walker.
The key for dealership personnel is to “really help people to understand the value they are getting” when they buy CPO, she said.
CPO sales are also a strong way to build brand and store loyalty, Walker highlighted.