By Desiree Homer
Re-evaluating How You Market Your Certified Pre-Owned Inventory
As we started off the month, new vehicle inventory numbers were in decline by nearly one-third compared to this time last year. The temporary stalling of the production lines is expected to continue to affect the availability of new cars through the end of the year. Some experts suggest the pickins’ will be slimmer before the industry sees any real rebounds. Additionally, the manufacturer incentives are dwindling, meaning there is an immediate spotlight on certified pre-owned units. For some dealers, this car-buying pivot is uncovering just how sound, or strong their CPO strategies really are.
CPO Programs Usually Enjoy a Backseat Position
Most certified used programs work as secondary means to revenue. Some reports say they have steadied at a 23% holding pattern for franchised dealers over the last four or so years. But as the new, post-pandemic consumer temperature is changing, and off-lease inventory has continued to grow substantially in recent years, there is a unique opportunity. Automotive News says now is the CPO’s “time to shine.” In a time when every sale matters, predicting where dealers can meet their buyers head-on has never been more ideal. The once secondary CPO focus now presents a real opportunity for a value proposition.
What Dealers Learned from the Recession of 2008
Looking back at lessons learned from 2008, more than eight out of every ten cars sold were used models. Based on the recent buying trends, many of which are represented as online transactions, point to a similar attraction to used inventory. Edmunds reports used vehicle browsing traffic has boomed. And many of those searches were reportedly sorted by CPO preferences. While today’s economic climate is the result of an elected shutdown measure versus the financial crisis of 2008, one thing is certain. When Americans are strapped for cash, or experiencing hardships, they often turn to certified pre-owned vehicles to meet their needs.
Re-evaluating the Bench Strength of Your CPO Strategy
Developing and strengthening the efforts to promote those nearly new vehicles could become the priority for many dealers. Sustaining and profiting in the coming months means, as Mike Boyd of iReconCars said in a recent Dealer News Today podcast, “dealers better be honed in.” When car buyers are financially limited by the terms of new vehicles, and lack of 2020 models right now at all, they’ll look to buy the newest vehicle they can afford. Consider spending time with your CPO strategy in terms of marketing and inventory promotion. Develop a message that speaks to those customers who need cars, but may fall short in paying for a new model. Arm your sales and used management staff with the tools they need and let them shine.
The stars (and data) are aligning to showcase the importance of a CPO platform. The gap in new versus used pricing has never been wider, and averages suggest a $15,000 variance. For the financially burdened, car-buying public, the certified pre-owned units have never been more attractive.