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.
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