By Mia Bevacqua
Lease penetration – the percentage of new vehicle leases versus new vehicle sales – is at 29.6% through August, according to a new study from Cox Automotive. That suggests a healthy supply of around 2.5 million vehicles will eventually re-enter the market as used or certified pre-owned (CPO) offerings.
And that’s a good thing because CPO sales are up, too. In Q3, demand for CPO vehicles increased by 4.7% compared to Q3 2018. For the whole year, CPO sales have climbed 2.4%, with 2.1 million vehicles being sold through September. By comparison, new car sales were down 1.1% overall this year.
Toyota, Honda and Chevy gobble up the biggest piece of the pie. Combined sales from the three automakers account for almost a third of all CPO transactions.
“The wholesale and used-vehicle markets have been able to absorb the volumes of off-lease units returning to market driven by a strong used retail demand, particularly for high-contented vehicles,” says Cox Automotive. “Certified pre-owned sales especially benefit from the ample supply of off-lease inventory which provides an attractive selection of nearly-new vehicles eligible to be certified.”
Despite the dip in new car sales, 68% of CPO shoppers say they would be open to purchasing a new vehicle. Truck buyers were the most likely to make the switch; 53.4% say they’d consider buying new.
But the significant price difference between CPO and new may be holding some consumers back. The average price of a CPO vehicle is $27,737 compared to $37,325 for a new vehicle. As things are, plenty of buyers still choose to save a couple of dollars with a CPO. Since 2016, there’s been a 25% increase in CPO shoppers.
Rising auto repair costs may be one of the reasons CPOs continue to gain popularity. According to AAA, average repair costs rose 8.9% per-mile compared to last year. CPO vehicles provide reliability on par with a new car without the burden of a new car price tag.