As U.S. CPO sales fall to 8-year low, some brands make older cars eligible
For some automakers, certified used-vehicle sales rose in 2022. Company executives who spoke with Automotive News partly attributed the gains to increasing the pool of used-vehicle inventory eligible for certification.
Some automakers offer more customer-facing and dealer-facing incentives that help boost overall sales, said Ben Bartosch, a manager of CPO solutions at J.D. Power. But some automakers also have circumvented a used-supply inventory problem by expanding certification parameters, he added.
Hyundai Motor America’s certified sales rose 24 percent to 95,962 in 2022. Fred DePerez, Hyundai’s senior vice president of global product line management, told Automotive News that gain was partly fueled by the fact that Hyundai in February 2022 allowed for more vehicles to be certified.
What Hyundai constitutes as certifiable inventory changed to include 6-year-old vehicles or vehicles with up to 80,000 miles — one year or 20,000 miles more than what was previously allowed, DePerez said.
“To me, that was the biggest thing because all of a sudden your inventory pool increases significantly from what the dealers had to deal with the inventory issue,” DePerez said.
Hyundai also dropped the “Hyundai certified pre-owned” designation from its program in favor of “Hyundai certified used” after the company saw research that indicated customers understand that terminology more than CPO, DePerez said.
Those changes were set in motion, DePerez said, because the automaker saw a chance to leverage the used-vehicle market as economic uncertainty began to seep in because of COVID-19.
“It kind of creates this need for value,” DePerez said.
Automakers that have expanded certification parameters place their own limitations on age and mileage and what type of warranty a vehicle may get.
Ford launched a second-tier certification program, Blue Advantage, in 2021. Inventory is backed by warranties under two certification levels: gold and blue. General Motors launched CarBravo, its own solution for scaling used inventory, in January 2022.
“One of the recent enhancements we just did was we increased for Blue Certified; it now includes units in the 120,000 to 150,000 category on miles,” said Christopher Thornton, manager of U.S. sales strategy at Ford Motor Co. “We’re expanding that opportunity in terms of what our dealers are able to sell, increasing to a larger percentage of their used inventory.”
About 1,500 dealers now participate in the Blue Advantage program, Thornton told Automotive News. That’s up from roughly 1,400 in November.
It’s fair to say some dealers may have chosen to skip certifying used vehicles in 2022 due to additional costs, such as inspection and insurance, Thornton said.
Dealers “may think ‘OK, what benefit am I getting out of that by adding that certification fee? I don’t need to go through that. I can still sell the unit,’ ” Thornton said. “But then that’s where we come in and talk to those advantages.”
Hyundai’s DePerez also noted used cars became more scarce in 2022 as leasing rates fell and more customers kept their vehicles for affordability’s sake.
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