More Consumers Jumping on the Certified Pre-Owned Bandwagon


used cars

McLEAN, VA--June 17, 2014: Certified pre-owned (CPO) sales should surpass 2013's all-time high of 2.1 million vehicles this year, says the National Automobile Dealers Association (NADA) Used Car Guide in the May edition of NADA Perspective, a monthly industry trends report.

After growing rapidly at the beginning of the 2000s, CPO sales experienced incremental gains in the years that followed. Hindered by higher costs and limited awareness, CPO sales increased by a marginal 200,000 units from 2003 to 2011, and deliveries consistently fell between 1.5 and 1.7 million units over the period.

"Sales for certified pre-owned vehicles really began to take off in 2012, due in part to recovering auto demand and an increased awareness of CPO vehicles among the more value-conscious post-recession consumer," said Jonathan Banks, executive automotive analyst of NADA Used Car Guide. "As consumer awareness continues to grow and late-model supply increases, CPO sales are on pace to hit another record this year."

Already in 2014, CPO sales through April are up 11% from last year and well ahead of the 3% rise in new and used vehicle sales. Per NADA Used Car Guide's used vehicle supply forecast, late-model supply is expected to grow 8% in 2014 and another 9% in 2015. Combined, the 17% increase through 2015 will act as an additional catalyst for CPO sales.

Brands experiencing the largest increases in late-model supply have also realized some of the biggest gains in CPO sales. For example, NADA estimates that late-model supply for Kia and Subaru grew by 17% and 13% in 2013, respectively, figures exceeded only by VW's 20% rise. Kia and Subaru were also at the top of last year's leaderboard for non-luxury CPO sales growth, as deliveries for the two increased by 72% and 45%, respectively. CPO sales for VW rose by a more modest 9% in 2013.

With demand and supply now moving solidly in the right direction, CPO vehicle sales should achieve meaningful growth over the next few years. Cultivating consumer understanding of CPO benefits will play a lead role in dictating how quickly and how high certified sales grow.

Many shoppers are unaware that CPO vehicles are rigorously reconditioned to factory standards and come with an extended warranty. CPO affordability is also a concern, but NADA's analysis shows that actual CPO premiums are lower than those considered tolerable by consumers in a recent AutoTrader.com study.

"To maximize growth, manufacturers will need to enhance marketing efforts that clearly outline CPO benefits to consumers," said Banks. "Having a better understanding of CPO premiums should help certified consideration as well. To help with this, shoppers can go to nadaguides.com to get a realistic idea as to what CPO costs are by brand and model."

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