J.D. Power Reports:Certified Pre-Owned Vehicle Programs Struggle to Establish Awareness and Value among Consumers

WESTLAKE VILLAGE, Calif. May 3, 2004; Despite the growth in certified pre-owned (CPO) programs, the concept of used-vehicle certification remains widely underappreciated by most consumers, largely leaving dealers to shoulder the responsibility of communicating the benefits of certification, according to the J.D. Power and Associates 2004 Used Vehicle Sales and Certification StudySM released today.

The study finds that most buyers of CPO vehicles do not start their shopping process in search of one. Even after the purchase, 60 percent of buyers say the primary reason they purchased a certified vehicle is simply because the vehicle they wanted happened to be certified. Sixty-three percent of buyers purchasing a certified luxury vehicle say they became aware of certification at the dealership. Among non-luxury buyers, 71 percent become aware at the dealership.

“Generally speaking, certification is good for consumers, good for dealers, and good for manufacturers,” said Dennis Galbraith, senior director of research for J.D. Power and Associates. “Executed properly, certification can increase buyer confidence and minimize buyer’s remorse. It can help move vehicles out of stores quicker, and it can improve resale values. Unfortunately, certification is not simple. It is a good concept with a huge communications challenge that is not yet being fulfilled by the industry.”

Currently, dealerships are faced with the communications burden because mass media promotions are not capable of explaining the full value proposition associated with CPO programs.

“Certification is bundled into the vehicle prior putting it on the showroom floor, meaning frontline salespeople, who are used to selling products consumers can see and touch, must demonstrate the value of something the customer may not fully appreciate, which is a challenge,” said Galbraith. “However, the Internet is a growing communication tool for CPO programs. Most major automotive Internet sites are now offering a distinct shopping category for certified vehicles, which offers an extended amount of information while allowing the consumer to quickly sort through and retrieve the information that is important to them.”

Although sales satisfaction with late-model used vehicles is not as widely measured as it is among new vehicles, the impact of sales satisfaction has serious consequences for manufacturers. The study finds that higher levels of buyer satisfaction with the selling processes can double the likelihood of the buyer recommending the brand and double the likelihood they will repurchase the brand.

“As buyers get older, they are less likely to find their used vehicle by driving around dealer lots and more likely to rely on relationships with dealerships and/or salespeople,” said Galbraith. “When the complete sales experience is handled properly, the dealership wins more than a sale; it wins a relationship that can result in many sales to come. Similarly, the manufacturer wins the kind of loyalty and advocacy among used-vehicle buyers that can improve resale values, making new vehicles more attractive as well.”

The 2004 Used Vehicle Sales and Certification Study is based on responses from approximately 12,700 used-vehicle owners who purchased a 1999-2004 model-year used vehicle.