After slow start, CPO car sales now up 2% year-to-date
After softness in the first two months of the year, certified pre-owned vehicle sales are starting to pick up some steam.
According to Wednesday’s Data Point report from Cox Automotive, there were 233,540 CPO vehicle sales in April, up approximately 6% year-over-year.
That follows nearly 3% growth in March, when 265,878 certified vehicles were sold.
Year-to-date CPO sales are up about 2% through April, with dealers selling 910,578 CPO units, Cox Automotive said.
All these gains come after a slow start to the year. There were 199,640 CPO sales in January, down from 203,024 in January 2018. February CPO sales came in at 211,520, compared to 212,116 a year earlier.
“This growth in CPO is in stark contrast to the weakness we continue to see with retail new-vehicle sales, which are down 4% for the year,” Cox Automotive analysts said in the report.
“Market trends such as rising interest rates, credit tightening and talks about tariffs have put affordability front and center,” they added. “As a result, consumers who may have purchased a new vehicle previously are now pushed into the used-vehicle market, and CPO offers them a compelling value proposition.”
Cox Automotive is expecting the CPO sales gains to continue into the spring season, with the certified market poised to reached its ninth straight record year.
Driving the strength is robust overall demand in used cars and strong off-lease volumes — specifically, Cox is expecting more than 4 million leases to mature in 2019.
Despite the sales growth, there is room for improvement.
In a separate Commentary & Voices report released Wednesday that shares data from the company’s 2019 Car Buyer Journey Study, Cox Automotive found that about two-thirds of the CPO buyers surveyed found their most recent car-shopping experience was either unchanged or worse than the last time.
“CPO buyers are significantly less likely than those who purchase non-certified used vehicles to say the experience has gotten better,” Cox Automotive said.
“One thing is for sure: Time spent at the dealership — three hours on average — remains a point of frustration among all buyers including CPO buyers,” analysts added. “The length of time buyers spend at the dealership continues to be rated the lowest in satisfaction, with only 32% of CPO buyers saying they are satisfied with how long the process took, and that’s a 6% drop from 2017.”
In general, Cox Automotive’s research found that buyer satisfaction starts to wane if the process goes longer than 90 minutes — and here’s the kicker as it relates to CPO: Those buyers are spending an overage of 90 minutes of negotiation and paperwork.
And those tasks have been the most aggravating for consumers in the four-plus years of Cox Automotive conducting the study.
But the company has one idea, in particular, in regards to where dealers could give the process a nice uplift.
“CPO buyers want to spend more time test driving vehicles and setting up the vehicle after purchase. They want to spend less time talking with salespeople and especially want to shorten the amount of time they spend negotiating and signing paperwork,” the report said.
“We see in our research repeatedly that dealers who offer a digital retailing option so that buyers can complete purchasing activities online instead of at the dealership in-person tend to achieve higher satisfaction with the dealership experience.”