Why certified pre-owned programs can give your dealership an edge.
Certified Pre-Owned Vehicle (CPOV) programs started with automotive original equipment manufacturers (OEMs) offering peace of mind to customers buying used vehicles. These vehicles typically come with an extension of the factory warranty. Initially, CPOV programs were limited to vehicles of the same manufacturer as the dealer franchise, leaving other makes uncertified.
Today, some OEMs allow certification of other manufacturers’ vehicles, broadening the scope of CPOV programs.
CPOV programs are now offered by various entities, including finance companies like Ally, providing alternatives for dealers looking for a single CPOV solution for all their dealerships.
Benefits of Offering CPOV Programs
Customer Assurance:
With rising vehicle prices, many new-vehicle buyers have been priced out of the market. CPOV programs help customers feel confident, knowing that their vehicle has passed an inspection and includes a limited warranty against covered breakdowns. This provides peace of mind for those seeking used vehicles, assuring them of extended coverage for unexpected repairs.
Broader Reach:
Offering CPOVs attracts customers who might hesitate to buy a used vehicle without confidence in its quality, which can help increase foot traffic and sales.
Profit Opportunities:
CPOV programs may provide additional profit through reinsurance. Effective vehicle reconditioning can help reduce the likelihood of claims, benefiting dealers financially.
Higher Valuation:
CPOV vehicles may qualify for better valuation and favorable finance terms, allowing dealers the opportunity to sell their customers protection products.
What Dealerships Should Look For
1. Reputation and Reliability:
Choose a dependable CPOV program to ensure trustworthy coverage and positive customer experiences.
2. Reinsurance Opportunities:
Look for programs offering reinsurance opportunities, providing an additional profit stream if claims are minimal.
3. Additional Valuation:
Check if lenders recognize the CPOV program, which may result in a higher vehicle valuation. For example, Ally provides an extra $1,000 in valuation for qualifying vehicles.
4. Comprehensive Coverage:
Ensure the CPOV program offers comprehensive coverage included with the vehicle. Limited coverage can lead to customer dissatisfaction. Check if customers can purchase additional coverage beyond the coverage that comes with the sale of the vehicle.
5. Clear Coverage Understanding:
Fully understand potential profits through reinsurance. This helps communicate benefits to customers and maximize profitability.
Choosing a reputable CPOV program with comprehensive coverage and reinsurance opportunities can enhance your dealership’s offerings and drive success.
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