The big news in Certified Pre-Owned vehicles is … well, there isn’t much news
In fact, sales are a bit flat. Automotive News reports Certified Pre-Owned sales dropped 3.2 percent in July (the latest data available) from July 2016, while in the first seven months this year sales rose just 0.6 percent compared to 3.5 percent a year ago. Some dealers are saying CPO sales’ record streak could be ending. This is odd when you consider that cars are flowing back to dealer lots from customers who leased them in ever-increasing numbers. Doesn’t that mean CPO vehicle sales should be growing? What’s going on here?
One guess is simply that the CPO market reflects the new-car market: Crossovers are hot, passenger cars, not so much. Toyota, the CPO sales leader so far this year, is a perfect example. The automaker says a big chunk of off-lease vehicles coming back to the market are passenger cars. “Similar to the new-vehicle market, CPO is also seeing light-truck demand increasing,” Scott Heyer, Toyota’s sales operations general manager, told Automotive News. Conversely, demand is strong for Certified Pre-Owned RAV4s, Highlanders, Tacomas, 4Runners and Sequoias. No surprise.
General Motors, second in CPO sales this year, is seeing a near-6 percent decrease, while third-place Audi is down 1.1 percent.
Another theory is the CPO industry needs to do more to raise consumer awareness of the products and their value — and market them accordingly, especially to younger buyers. That means perhaps piling on more incentives. Again, the CPO market reflects the new-car market. Autotrader’s manager of industry insights Zohaib Rahim told Automotive News automakers prefer new-vehicle sales to CPO sales and spend incentive dollars accordingly, which also contributes to CPO sales flattening. In fact, a Michigan-based Cadillac dealer told Autoweek he has decided to temporarily suspend spending money to certify off-lease vehicles that aren’t Cadillacs. He says the return on his investment just isn’t good enough right now.
And finally, a third supposition is that CPO’s growth over the last few years might have been due to more mainstream brands entering the CPO market. Most brands are in the CPO business now, so naturally growth would slow at some point.
Autotrader’s Rahim is still positive about CPO, figuring it is all going to come full circle: As new sedans are replaced with new crossovers and SUVs, eventually those will be coming off lease and, he figures, CPO customers will have more light trucks to pick from, helping CPO sales catch up — and rise.