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Certified pre-owned sales are growing, and they give F&I managers a fresh opportunity.
CPO customers get a shiny, like-new car at a lower price than they’d pay for a new vehicle, and F&I managers get a chance to offer them the warranty wraparound products, service contracts and appearance packages that keep vehicles in like-new condition.
U.S. sales of CPO vehicles were 1.6 million this year through July, up 4.1 percent compared with the 2015 period, according to the Automotive News Data Center.
For the F&I department, CPO sales are the “midpoint between a brand-new vehicle and a used vehicle,” says Rick Kurtz, senior vice president for distribution at F&I product provider Protective Asset Protection. “It’s like a new vehicle, but the coverage tends to be shorter term and sometimes less comprehensive,” he said.
George Angus, president of F&I consultant Team One Group, believes used vehicles gained a new image with certified sales. “The used-car department has become in some ways like the new-car department with the sale of CPO vehicles,” he told Automotive News. “CPO vehicles come with a warranty from the factory, so the service contracts are sold much the same way as [they are with] new cars.”
Miller: Bring customers back
And CPO vehicles are prime candidates for warranty wraparound products, says Margot Miller, corporate director of finance at Mills Auto Group in Fort Mill, S.C. “It’s an easier sell to customers,” she said. But it’s important for F&I managers to offer CPO buyers maintenance products, too, she added. Those products get customers back into the store, and dealers can be confident that vehicles have been maintained properly if customers trade them in later.
John Stephens, executive vice president of dealer services at EFG Cos., agrees that a product that wraps around the manufacturer’s warranty is a “great upsell.” F&I managers should also learn customers’ driving habits and needs and form the presentation around them, emphasizing the products that make sense with their priorities and lifestyle, he added.
“When they’re taking a CPO off the floor, we [remind customers that] this vehicle today is showroom-ready, but for the next three to five years, we can protect your vehicle” with products such as paintless dent repair and tire-and-wheel protection, Stephens said.
A CPO customer, like a new-vehicle customer, is a “value buyer,” he said. “They want to make sure they get a new-car-type feel and coverage,” so they will embrace appearance packages and other products that keep their vehicles looking like new.
Service contracts are great products for CPO vehicles, too, says Dwayne Wiggins, F&I University trainer at American Financial & Automotive Services. CPO wraparound products mirror new-vehicle protection, “but with the advancement in technology, service contracts give F&I managers a great opportunity to protect customer technology,” he said.
CPO vehicle sales make the F&I department stronger, says Matt Woods, director of training and development at Service Group.
F&I managers are “really helping customers understand what kind of coverage [they] get when they buy,” he said. That helps F&I managers show that they are customer advocates. They are explaining to customers how a particular add-on product “can protect their investment, instead of saying, “Hey, buy this.'”
If F&I managers pitch products with the mindset that they are providing a service to the customer, Woods said, they will be successful.
Growing CPO volume offers F&I opportunities
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