How to Meet Certified Pre-Owned Market Demand

A recent report from Edmunds.com highlighted that certified pre-owned (CPO) sales are at an all-time high, accounting for nearly 21% of total used car sales at franchised dealerships. CPO retail prices are also at near-record levels as the average one-year-old CPO model sold for almost $30,000, up 5.7% from last year, according to the same report. This expanding segment provides dealers with a great opportunity to capitalize on consumer demand but also comes with the challenge of sourcing quality CPO supply.



Although stocking from auctions is an option, not knowing these vehicles’ service histories—as well as the possibility of paying more than desired in the lanes—presents a challenge. As an alternative, many dealers are finding great success using targeted data mining to source CPO inventory from existing customers.

These service drive and outbound campaign strategies allow for a consumer-centric experience while also creating a less competitive sourcing channel. In addition, dealers often have complete access to service records, which helps ensure they acquire a CPO-eligible vehicle. Lastly, combining data mining with enhanced credit data allows for service-not-sold conversion directly from your service lane.

The net result is CPO supply that drives sales, as evidenced by testimonials from two successful dealers. A Honda general manager in New York said, “I don’t have to go to the auction. I take all trades from our data mining opportunities, about 65 to 70 vehicles a month . . . prime trades to have pre-owned products that sell in our market.” Meanwhile, the customer retention sales manager for a North Carolina Ford dealership reported, “This strategy has been instrumental in us becoming the No. 3 Ford store in the U.S. in CPO sales volume.”

Successful data mining strategies drive trade-in volume, CPO acquisition, and new car sales with targeted execution in five ways:

  1. Identifying ideal trade opportunities by daily monitoring of each customer record, and calculating the impact of trade values against current market factors like rebates and incentives.
  2. Bringing existing customers back into the market earlier than they otherwise would have been, which helps ensure you keep them your customers.
  3. Providing customer-specific transaction details. This includes details about customers—such as equity position in their vehicle, contract or lease end, and key credit facts—to help intelligently communicate attractive offers to buy their current vehicles and sell them new models for about the same monthly payment.
  4. Increasing trade-in unit volume by upgrading the dealership’s existing customers to newer vehicles. This can mean from 10% to 20% additional trade-ins per month.
  5. Increasing service customer trade-ins from the 30% to 40% of customers who are serviced-not-sold.

Given its ability to search thousands of customer records in seconds, data mining software can be the CPO marketing tool that most differentiates a dealer. With consistent use of this tool, you can keep your used lot stocked with the right vehicles to meet consumer demand.

Brian Skutta is CEO of AutoAlert, Inc., North America’s premier data mining, lead generation, and sales opportunity provider. Skutta brings to AutoAlert more than a decade of leadership in helping auto dealerships sell more vehicles and retain more customers. He has a proven history of successfully managing innovation and growth, most recently at VinSolutions and Autotrader.com’s Trade-In Marketplace. Reach him at brian.skutta@autoalert.com or visit www.autoalert.com.

Brian Skutta

1 Comment

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    Mike Sommers June 08, 2015

    It is even tougher in Canada with a soft exchange rate to the US dollar. US dealers are looking North to stock their lots in the states.

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