Do some Certified Pre-Owned vehicle owners become addicted?
Certified Pre-Owned (CPO) vehicles have become a major factor in all automaker’s sales. The premium brands in particular have built the CPO model into their leasing strategy and all parties, the automakers, dealers, and customers seem to have benefitted from the programs. A new report just released by AutoTrader shows that customer satisfaction is very high, and interestingly, buyers of CPO vehicles can become “addicted” to the value and freedom from worry that CPO cars offer.
CPO By the Numbers
Manheim Consulting, a leading wholesale vehicle auction and remarketing company in North America, says that about 2.1 million CPO vehicles were sold in the North American market in 2013. About 15 million new cars were sold that year. CPO sales could double within a a few years since dealer marketing has a direct and positive impact on CPO sales. In fact, some dealerships already have CPO sales to new ratios over 10%.
CPO Sales Go Up As Buyers Learn More
TrueCar found that 75% of new car buyers and 45% of used car buyer have a general idea what a CPO car program is. However, many don’t know its exact definition and benefits. When buyers are given a complete understanding of a CPO program TrueCar found that the number of new car buyers that would consider a CPO car went up from 59% to 84%. For used car shoppers, those who would consider a CPO car rises from 50% to 69% once customers are provided a clear definition of the program.
Why Do Buyers Choose Certified Pre-Owned?
TrueCar polled actual owners of CPO cars and found that the main buying motivation was “peace of mind.” That encompasses more than just “the warranty”, which was a separate category from freedom from worry. Also in the top 5 reasons was affordability. However, for millennials, affordability may be a higher motivator according to TrueCar.
Addicted to CPO
Addicted is a term we applied after reading TrueCar’s survey summary. Apparently, automakers and dealerships have found that certified pre-owned customers are very brand-loyal. 49% of CPO buyers are likely to buy a new car from the same brand. However, TrueCar says “…manufacturers and dealers must work diligently to help shoppers convert up within the first few purchases before they become set in a CPO buying pattern.”
Certified Pre-Owned vehicles can be a very good value in the eyes of buyers, and can offer a fixed cost of ownership over the length of the program’s bumper to bumper warranty. This statement is now backed up by data, rather than just conventional wisdom.