Despite Supply Issues, Certified Pre-Owned Cars Still Popular

Posted on 16. Jul, 2012 by in Auto News

How much would you pay for a certified pre-owned vehicle? CPO programs overtake check and late-model car, an extension of the warranty period and sometimes off the funding. But they cost more up front. Take a popular used car like the 2009 Toyota Corolla LE with 50,000 miles. Uncertified examples on Cars.com have an average list price of $ 13,955. Certified listings now average $ 14,433 – an extra $ 478, or 3.4%.

Which is at the bottom. In April, said CNW Marketing Research, the average certified vehicle offered $ 2,206 more than a regular used car, from $ 1,562 a year earlier. It's enough to make a premium buyers think twice.

But CPO cars remain popular. Sales totaled 754,950 through May, according to Automotive News. This is an increase of 4.9% compared to a year ago, and it represents the highest year-to-date CPO sales in the nine years of publication archives. CNW says the average certified car takes just 25 days to sell, compared to almost 42 days for a non-certified used cars. A new car took 53 days to sell on average in June.

"There are some fatigue perhaps among consumers," JD Power and Associates' Joe Derkos said. Derkos directs consulting and analysis for the Power Information Network Group. "There is potential for this bubble to burst, but we see no evidence of this bubble burst -. Or a bubble for that matter Used prices are high, but they have been around for some time high."

And expect a lot of certified cars to see at your local dealer: Inventory is "easy from where we a year ago," he said.

Even as CPO cars cost more, it is a "healthy divide" between them and new car prices, said Derkos. (In fact, a, new Corolla LE has an average Cars.com list price of about $ 19,000 or about $ 4,500 more than the CPO 2009s.) But aggressive new-car incentives could upend that. CPO and send to new car buyers

By May CPO cars accounted for about one in every 20 cars sold, according to Automotive News and CNW. That's about even with last year's figures, despite a Chief CPO source – Leasing – drying out during the recession. The process works like a well oiled machine: would you lease a new car, they go for two or three years, and then turn it back to inspect would be an A car dealer and pick up the car, an extension of the warranty period and sell it as CPO. But this cycle is interrupted in the late 2000s as a Free Falling residual values resulted in a lease collapse.

Recover as new-vehicle sales, leasing is stabilized, but it is time for it to improve the long-term care company – called "off-lease" vehicles – for CPO programs. JD Power analyst Thomas King told Auto Remarketing. A publication for the used car market industry that lease rates are at about a fifth of all new cars since the spring of 2011 returned Last month, said CNW leasing accounted for 26.9% of all sales, up from 24.6% a year ago. Dealer will not turn these returns in certified vehicles to mid-2013.

Yet it seems not for some automakers role. Toyota has the highest percentage of CPO vehicles – 164,151 or 21.7% of total CPO Industry – And it expects higher inventory until next year.

"Was carried out due to a very aggressive leasing program in the second quarter of 2010, we expect a very significant increase in certified stocks in 2013," spokesman Sam Butto said by e-mail. "We can expect that some stocks flat after 2013, but nothing of importance."

Certified Sales at Hyundai are up 71.8% through May and CPO manager Jose Froehlich noted that additional lease returns should be to increase the availability in the next spring. Honda spokesman Chris Martin said the automaker CPO sales are up 7% year-to-date through June, thanks to "steady growth (not just this year) off-lease vehicles returned to the dealers." But GM "not predict record levels for the end of this year," said spokeswoman Meganne Arens. "Stock levels similar to last year, the numbers are."

Other major automakers declined to comment on CPO inventory, but Cars.com data suggest suggest Volkswagen, Honda and Toyota have the richest mix. Consider CPO inventory on Cars.com as a percent of all cars 10 years old or newer:

  • Volkswagen: 25.2%
  • Honda: 24.5%
  • Acura: 24.0%
  • Toyota: 24.0%
  • Lexus: 20.0%
  • Audi: 17.9%
  • Mercedes-Benz: 17.7%
  • BMW: 17.2%
  • Buick: 16.4%
  • Lincoln: 16.1%
  • Subaru: 15.5%
  • Chevrolet: 14.7%
  • GMC: 13.9%
  • Mazda: 12.5%
  • Hyundai: 12.1%
  • Nissan: 11.1%
  • Ford: 9.2%
  • Cadillac: 7.9%
  • Jeep: 7.5%
  • Infiniti: 6.6%
  • Dodge: 6.3%
  • Chrysler: 5.6%

Source: Cars.com data as at 11 July 2012. Inventory is a percentage of CPO cars to all used vehicles from 2003 to 2012. Fiat, Kia, Mini, Mitsubishi, Ram, Scion, Smart and Suzuki have no CPO inventory on Cars.com.

Why the constant inventory? In short, car dealer found ways to work around the problem. They are certified and more cars – and not necessarily lease returns – as buyers trade them in. In many cases, they are pushing former buyers in earlier trading.

"You knew, did [the lease collapse], and they got their tactics ready for them," said JD Power Derkos. "If you own your vehicle, I think you may have received a flyer from your dealer to ask you to come and trade in."

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