1. automotive and vehicles
2. certified pre-owned

W
hy all this
excitement about
selling CPO vehicles?
As an independent used vehicle dealer, you
are likely aware of the recent trend in the
automobile industry toward selling certified
pre-owned vehicles. The trend began with
manufacturer-backed programs for new vehicle
franchised dealers and has expanded into the
independent used car segment.
A vehicle is normally designated as “certified”
after undergoing a thorough inspection of key
components for both functionality and safety,
and completing the needed repairs and
reconditioning. Most CPO programs require that
the vehicle meets safety and mechanical standards and has a clean title, assuring the
potential buyer he is purchasing a safe and
dependable vehicle that is a step above a
typical used car.
The programs generally include a mechanical
breakdown warranty for a specific term and
most provide extended coverage options.
Being a certified dealer has definitely
improved our image and our credibility in
the marketplace, and we are beginning to
see an increase in repeat sales as well.
Victor Salvato, Auto Sales Outlet, Rochester, N.Y.
You might have found it difficult
to compete against dealers selling a
certified program, even with a price
advantage, because consumers seem
willing to spend more for a vehicle that
has been certified and comes with some
term of mechanical protection coverage.
So what are the advantages to you,
as an independent dealer, of selling CPO
vehicles? There are several:
• Offering a product and service
the car-buying public is eagerly
looking for.
• An enhanced image in your
community.
• Improved gross revenue and
increased profitability created by
the sale of more vehicles.
• The ability to compete with
franchise dealerships that offer
CPO programs.
• An edge on the competition.
• Increased customer satisfaction
and confidence.
CPO is very much the cutting edge
of the used auto industry. Sales are
growing rapidly. As reported in Auto
Remarketing, CPO sales reached 174,471
vehicles in March, the most certified
units ever sold in a month, according to
the latest numbers from Autodata Corp.
That closed the best quarter ever for CPO
sales – a record 454,944 vehicles sold in
the first three months of 2012, up 8.4
percent from the first quarter of 2011.
In its 2010 Used Vehicle Market
Report, J.D. Power and Associates found
67 percent of all used car buyers began
their purchase process planning to buy a
certified vehicle, and 21 percent of CPO
buyers were not originally looking for a
certified vehicle.
Given the obvious consumer interest
in them, it’s no wonder CNW Marketing
Research found certified vehicles turn
almost 20 days faster than non-certified,
with an average 24.8-day turn. CNW’s
March statistics also showed CPO sales
provide dealers with 12 percent to 17
percent additional profit – an average
of $2,274 per unit – versus the sale of
non-certified used vehicles. And that
premium has been rising steadily since
January 2011.
The market potential is huge. More
than 35 million used vehicles were
sold in 2011, but less than 2 million
were certified by manufacturer
programs. Independent dealers sold
22.4 million cars in 2010. An
independent dealer who chooses to sell
certified pre-owned vehicles can expect
to earn a larger share of that enormous
market and earn a higher percentage of
repeat customer sales as a result of the
higher level of customer satisfaction
with a CPO vehicle.
With three unique
plans under the NIADA
CPO program, dealers
will be able to select
the option that is right
for their market and
their customer base.
Victor Salvato, president of Auto
Sales Outlet in Rochester, N.Y., is an
independent dealer who has experience
offering a CPO program to his customers. Salvato said advertising
certified vehicles made an immediate
impact on his dealership in a variety
of ways.
"The quality and volume of the
responses to our advertising improved
immediately,” he said. “It was obvious
that we were reaching a higher quality
prospect who was interested in a higher
quality vehicle based on the customer's
perception of what a certified vehicle is.
We can thank the manufacturers and
franchise dealers for educating our
customers through their promotion of
certified vehicles.
“Not only have we sold more cars,
but our profits have increased as well.
Being a certified dealer has definitely
improved our image and our credibility
in the marketplace, and we are
beginning to see an increase in repeat
sales as well."
The New NIADA CPO Program
As an independent dealer, you might
have been wondering how you can
compete with the manufacturers’
established CPO programs.
NIADA’s answer is a partnership with
Warrantech, an AmTrust Financial
company, in the design and
administration of its new certified
pre-owned program. NIADA completed
extensive research with its dealer
members to assure that the program it is
providing is exactly what dealers want
and consumers expect.
The combined efforts of NIADA and
Warrantech, and the input of the dealers
consulted, have resulted in a program
that is innovative, marketable, flexible
and financially sound.
The NIADA CPO program is much
more than a 125-point inspection and
a warranty. The program is truly a
"selling system."
All eligible vehicles must be
certified, a requirement that insures the
integrity and credibility of the program.
The dealer selects one of three limited
warranty terms that are complemented
by flexible and affordable wrap-around
and extended coverage options for the
consumer.
With three unique plans under the
NIADA CPO program, dealers will be able
to select the option that is right for
their market and their customer base.
The options include:
• A three-month/3,000-mile limited
warranty that includes 36 months/
36,000 miles of engine and air
conditioning component
coverage.
• A six-month/6,000-mile limited
warranty that includes 36 months/
36,000 miles of engine and AC
component coverage.
• A 12-month/12,000-mile limited
warranty.
The NIADA CPO limited warranty
options include coverage of engine, air
conditioning, turbocharger or supercharger, automatic and manual
transmission, transfer case, drive axle,
steering components, select electrical
components and seals and gaskets.
For more consumer choice and
confidence, the NIADA CPO limited
warranty options can be supplemented
by adding the extended NIADA Total Care
or the NIADA Total Care Plus coverage,
which includes front and rear suspension,
brakes, fuel system, cooling system and
additional electrical components.
“In re-tooling the NIADA CPO
program, we recognized independent
dealer business models vary widely and
that we had to offer additional CPO
options to specifically meet the
operational demands of our dealers,”
NIADA chief operating officer Steve
Jordan said. “Warrantech’s successful
track record with independent auto
dealers, varying product offerings,
world-class claims operation, nationwide
sales footprint and long-term
commitment to support the success of
our dealer members made the
partnership decision easy to make.”
The program is easy to sell,
provides coverage from day one and a
solid benefits package, day one rental
coverage (no minimum shop time),
simplified pricing, low-cost surcharges
and eligibility guidelines that are very
generous – current plus 14 model years
and 100,000 miles at time of sale.
The program is supported by a
wealth of top-quality marketing and
merchandising materials to promote
the program throughout the dealership,
all proudly displaying the familiar logo
of NIADA.
An NIADA-backed CPO program
adds even more credibility for dealers
who choose to market it. NIADA brings
the strength of nearly 20,000 members
nationwide, the stability of 66 years of
experience and the dependability of
being the dealers’ voice to regulators,
suppliers and, most importantly,
consumers.
Warrantech’s successful
track record with
independent auto
dealers and long-term
commitment to
support the success of
our dealer members
made the partnership
decision easy to make.
“Warrantech is honored to have
been selected by the 66-year old NIADA
as its CPO program administrator,”
Warrantech CEO Sean Stapleton said.
“We applaud the time-honored tradition
of excellence NIADA member dealers
observe, including their adherence to a
strict code of ethics. We feel that
commitment mirrors Warrantech’s
dedication to excellence and drive to
provide superior products and
continued quality customer service.”
NIADA, with the support and
participation of the state independent
dealer associations around the country,
is excited to make this program
available to its member dealers.
Warrantech and AmTrust
In selecting Warrantech/AmTrust
as the administrator of the program,
NIADA has partnered with a worldclass provider of warranty products
and administrative services. For more
than three decades, Warrantech has
been the solution for manufacturers,
retailers, dealers, distributors and
other sales organizations seeking
increased profitability, enhanced
market differentiation and long-term
customer loyalty.
Those clients include Volvo, Mazda,
General Motors, Ford, Chrysler, Sony,
Samsung, Panasonic, PepBoys and many
more familiar names.
AmTrust, rated "A" Excellent, FSC IX
by A.M. Best, fully insures the NIADA
CPO program, adding the
financial strength and security
necessary to protect the dealers who
market the program and the consumers
who are protected by the product.
Warrantech provides a state-of-theart claims center that houses more than
300 experienced claims adjustors. All automotive adjustors are ASE-certified
technicians with an average tenure of
more than 10 years with the company.
Claims service highlights for the CPO
program include:
• Instant credit card payment.
• Repairs can be completed at the
selling dealership or sublet to
any licensed shop or franchised
dealer.
• Multiple, convenient methods of
submitting claims.
The NIADA Certified Pre-Owned
program is designed to give dealers
more options to better serve their
customers, allow them to compete with
manufacturer CPO programs and provide
them with a competitive edge against
other used car dealers in their
marketplace that do not offer a CPO
advantage.
If you are interested
in marketing the new
program or just want
more information,
please call
(877) 310-0288
or email
automotivesales@
amtrustgroup.com.
Patrick Reed is Business
Development Manager for
Warrantech/AmTrust Group in
Bedford, Texas. He has more
than 35 years of automotive
industry experience, focusing
on vehicle service contracts.
He can be reached at
[email protected] or
(817) 785-6248.