The 4Ps of the Certified Pre-Owned Market

When you’re shopping for your next Used car, you may see “Certified” advertised on thousands of Pre-Owned vehicles. Dealerships are eager for your business, as the U.S. Certified Pre-Owned market has seen tremendous growth over the last decade.

Total CPO sales

Yet, as sales plateaued to 0.10% Y-O-Y increase in 2017, dealerships may be proactive in advertising Certified models to accelerate growth. To improve your Pre-Owned shopping experience, consider the 4Ps of Marketing (product, price, place, and promotion) when narrowing down your purchase consideration set.

Product

Auto brands tout Certified vehicles as cars that endure extensive pre-retail checkups. Most brands will have over 100+ point inspection requirements that feature re-conditioning, driving, and electronic testing. The certification process and the additional cost to provide warranties lead to the manufacturer’s promise of a “like” new vehicle.

As new vehicle prices continue to rise, as I mentioned in my previous blog post, CPO cars provide a less expensive alternative. If you’re on the fence about what brand to purchase, also consider the top 10 selling Certified Pre-Owned brands from 2016.

2016 CPO sales

Price

During my near 6-year stint at the dealership level, 5 of those years were spent in the pre-owned department. It seemed that year by year, the Certified Pre-Owned negotiations became much more difficult. It wasn’t because I couldn’t provide a great experience (why would I start this blog), instead the struggle was educating customers about the lack of profit available in vehicles.

Automotive News reported the U.S. light vehicle dealerships lost $2 of net profit per used vehicle and luxury used car dealers lost $197 per vehicle.

Place

When negotiating price, please consider the place where you plan to finalize a purchase. The quality of dealership plus the number of skilled technicians could give top-selling dealers a leg up when pricing vehicles in the market.

Also, pay close attention to online inventory or a salesperson who is a slick talker. If you find a Certified Pre-Owned vehicle at a non-manufacturer dealership – you should look away. For example, if you find or are told about a “Certified” Ford F-150 at a Chevrolet dealership, you can’t fall for that trick. A manufacturer’s service departments should be equipped to re-condition vehicles.

Promotion

You should stay alert to Certified Pre-Owned events throughout the year. These are usually monthly sales programs to drive traffic to dealerships and boost sales for brands. As a consumer this is important as you can obtain lower interest rates, additional maintenance options, and highly motivated salespeople.

As you continue your Pre-Owned search, here are some questions to ask yourself and the dealer during your journey:

Product

What is the difference between the new and Certified Pre-Owned warranty coverages?

How well was this car maintained?

Was this car a lease return?

Price

How much more am I spending for a Certified car versus a non-Certified car?

How much will it cost me if I don’t buy Certified?

What was this car’s original MSRP?

Place

Where can I take my purchase for service following my purchase?

Why is the certification process better at X dealership, than Y dealership

Promotion

When is the best time to buy a car?

What benefits/savings do I receive during the CPO event?

One comment

  1. Dina Driva

    Omg – just read this entire article- thought this dude writing it actually was in the business! Great Job Nelson – well written. My Man 👍👊😄

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