Selling Certified Pre-Owned vs Used Vehicles: A Guide for Dealerships

A photo of a white luxury SUV in front of a black sign that says "Pre-owned Luxury Cars"

The strategies for selling certified pre-owned vs. used vehicles in general are very similar, but it’s helpful to understand why certified pre-owned (CPO) vehicles may be especially alluring to customers seeking a great car at a great price. But what does certified pre-owned mean, anyway, and how do you source more for your customers?

What does certified pre-owned mean?

A CPO vehicle is a used car that has undergone thorough inspection and reconditioning before resale, backed by the manufacturer. Dealerships sell CPO vehicles to offer used-car shoppers a fully vetted car at a lower cost than a higher-priced, brand-new vehicle. They may also carry perks like 24-hour roadside assistance, extended warranties, and special financing rates.

What is the difference between certified pre-owned vs used vehicles?

All CPO vehicles are used, but not all used vehicles qualify to be certified pre-owned. CPO vehicles tend to be newer and have fewer miles on them, versus all used cars that can be in any condition or age.Guidelines to qualify as a CPO differ depending on the make of a vehicle. For example, Toyota’s CPO program will accept vehicles that are up to 7 years old with less than 85,000 miles. But Audi will only sell vehicles that are 5 model years or newer with no more than 60,000 miles. A CPO does not always operate better than other used vehicles or have fewer maintenance needs, but many people value the certification from the manufactuer and potential extended warranties. Consumer Reports has found CPO vehicles have about 15% fewer problems than their non-certified counterparts.Of course, the inspections, repairs, and certification come with costs. A Cars.com analysis found CPO vehicles costed about 4.1% more than their non-certified counterparts. For many shoppers, the peace of mind is a worthwhile investment.

The oncoming shortage of certified pre-owned vehicles for sale

Automotive News recently reported that finding used vehicles to certify will be a large challenge for dealerships over the next two years.The COVID-19 pandemic and chip shortages slowed new vehicle production in 2020-2021, meaning fewer, younger used cars are available now. There are also many vehicles with open recalls, which make them ineligible to be CPO. And of course, people are holding on to their vehicles for longer. (Data from the S&P Global Mobility study found the average age of vehicles is up to a record 12.6 years.)What does a certified pre-owned shortage mean for dealers? Certified pre-owned vehicles outperform the overall used-vehicle market, according to research from Cox Automotive. 2023 CPO sales exceeded 2.6 million units in 2023, up 6.6% from 2022. And 24% of all CPO sales were luxury vehicles. Clearly, buyers are on the hunt for CPO vehicles, but the number of cars eligible for certification is about to fall. That will put additional pressure on dealers to communicate effectively with former buyers, facilitate more trade-ins, and attract used cars in great condition for their inventory.Some automakers are trying to combat this challenge by expanding the pool of vehicles eligible for certification, but dealers will need to jump on opportunities to acquire off-lease inventory (cars that have been returned to a dealership after a lease ends to be sold as a used car). Video is of course a great tool for selling more vehicles, but it can also be used to source more of the cars people want to buy. This will be crucial for CPO cars.

Using video to increase your CPO inventory

Knowing this dearth of CPO-eligible vehicles is coming, dealerships can prepare to bulk up their inventory and be a trusted seller of hard-to-find, CPO vehicles. Using video is a fantastic way to connect personally with customers and encourage them to trade up or check out your options.

Update your lease process

Dealers should adopt a follow-up process for when someone’s lease is about to expire. Ideally, they would send personalized videos like the one below, but they can also set up automated videos to remind people of great deals and options. Let them know their vehicle may be worth more than they expect and see if they would like to trade in!

Introduction Video & Lease End Options | Forbes Waterloo Toyota

Inventory showcase

Video is a great way to showcase your inventory. If you have a new lead, a customer you haven’t heard from in a while, or a buyer whose lease is almost up, inventory showcases can entice them to think about their next vehicle.

Prioritize long-term relationships

It’s a mistake to see a closed sale as the end of the relationship with a customer. Say thank you, request reviews and referrals, check in on milestones, and remind of repairs and updates with video. This feeds those customers back to the top of the funnel and increases the chance they’ll return to trade up or shop with you.

Conclusion

Using video is an unexpected but effective way to increase your CPO inventory and boost sales. Your customers may walk away with an upgrade, and you’ll have an in-demand used vehicle to sell. It’s a win-win.Implementing this technology at your dealership is easy. Covideo’s suite of solutions works across all departments of your dealership for maximum impact—and it’s so easy to use. Reach out and see a 15-minute demo today.

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Selling Certified Pre-Owned vs Used Vehicles: A Guide for Dealerships

What does certified pre-owned mean?

What is the difference between certified pre-owned vs used vehicles?

The oncoming shortage of certified pre-owned vehicles for sale