These programs are an “acknowledgment that the used-car business is in an unprecedented era of challenge with respect to used-vehicle acquisition,” said Brian Finkelmeyer, senior director at Cox Automotive.
Ryan Hall, executive manager at HGreg Nissan Kendall outside Miami, said Nissan’s expanded CPO program will help retailers dealing with lean new-vehicle supply.
“I don’t think Nissan would be going down this path if new-car inventory was healthy,” Hall said. “This is about keeping people coming to the store because our new-car supply is cut in half.”
CPO programs can be profit drivers, boosting transaction prices and sales turnover.
According to J.D. Power, in the first quarter of 2022, the gross profit on a CPO vehicle from a mainstream brand was $587 higher than on a non-CPO vehicle.
CPO transaction prices were $1,095 higher than for non-certified cars, and CPO vehicles sold 10 days sooner.
Finkelmeyer said Nissan’s limited warranty on nonbrand vehicles is a “relatively low-risk profit opportunity” for the automaker.
“CPO warranties cover the transaxle and transmission,” he said. “How often do we have catastrophic transaxle failures?”
The expanded CPO program including non- Nissan vehicles could help franchised dealers compete with big independent retailers such as CarMax and Carvana.
“It gives us much better footing against the retail startups and puts us in a position of strength,” Slade said.
Even so, with elevated prices for used vehicles at auction, dealers might be hesitant to pay extra for certification.
“If I’m paying $20,700 [at auction] for a car that retails for $20,000, do I want to add another $400 to certify the car?” Finkelmeyer said.