Older Cars Now Qualify for Some Brands as U.S. CPO Sales Reach 8-Year Low

Sales of certified used vehicles in the US dropped to their lowest level in eight years in 2022 as dealers contended with stunted supply issues due to the pandemic, according to data from the Automotive News Research & Data Center. The drop marks a 9.4% decline from 2021, with certified pre-owned vehicle sales falling to 2.49 million in 2022. Additionally, sales of certified pre-owned vehicles rose in 2021, as off-lease vehicles came back into the market; however, dealerships had less supply of new vehicles to offer customers. Due to a shortage of new vehicles in 2022, fewer pre-owned vehicles were traded in, which led to a further decrease in certified used vehicles. Most automakers saw a decline in certified pre-owned vehicles sales in the first quarter of 2022. However, some automakers have expanded their certification parameters to increase inventory, including Hyundai and Ford.

While some dealers may have skipped certifying used vehicles due to additional costs, such as inspection and insurance, for some automakers and dealers, certifying used vehicles remains an important source of revenue. Gregg Ciocca, CEO of the Ciocca Dealerships of Allentown, PA states that customers are buying out their leases, which leaves dealerships not only with a missed chance to lease or sell a new vehicle, but also without the vehicle to certify and sell on the used-car lot. One way the dealership has grown its certified inventory is by keeping loaner fleets slightly longer and taking them out of circulation to presell them in the certified used business market.

Automakers that have expanded certification parameters have placed their own limitations on age and mileage, as well as the type of warranty a vehicle may receive. For example, Ford has launched a second-tier certification program, Blue Advantage, and now includes units with 120,000-150,000 miles in its program. The program has increased its dealership participation to approximately 1,500 dealers, up from 1,400 dealers in November 2021.

According to Ron Cooney, manager of Toyota Motor North America’s certified used-vehicle program, certified sales are unlikely to swing upward in 2023. Cooney stated that, although certified sales have been strong in Q1, they may level out in the next month or two. Manufacturers need to take steps to ensure that new and used supply chains remain stable so that they can respond quickly to changes in the market.