Franchised Dealers Were Big Winners In Q2 Used Car Sales
|   Tuesday, September 02, 2014
Though used-car sales were up 1.6 percent for the year, the second quarter was disappointing as overall used-car sales were down 5.4 percent for the quarter.

According to Edmunds.com, franchised dealers were the only winners in the second quarter used-car race, gaining a healthy 7.4 percent increase over last year. This is on a year-to-year basis. On s quarterly basis, franchised dealers also were ahead scoring a two percent sales increase over the first quarter.


Franchised dealers are the standard dealerships that are familiar landmarks in every town. For example, a Chevy dealer is franchised by Chevy, while a Toyota dealership is franchised by Toyota. The owner/dealer obtains the land, buildings and equipment needed and then obtains the franchise or franchises he wants. A dealer can hold multiple franchises in the same model lines, but in different parts of the market. The same dealer can also hold multiple franchises of different models across the market.

As long as the dealer meets the numbers promised per quarter, the factory will supply the cars that are ordered. If a dealer fails to meet his numbers for a quarter, the factory may change his allotments of vehicles so that instead of receiving the hot-selling cars, he is likely to receive a small allotment of hot cars and a larger allotment of slow-selling models. The dealers that meeting their numbers will see their allotments of hot cars increase.

Edmunds noted that the average price of sales climbed four percent in the quarter to $16,781, year to year. The quarterly comparison between Q2 2013 and Q2 2014 also shows a hike of 3.9 percent.

More buyers seem to be taking advantage of the warranties that come with certified pre-owned (CPO) vehicles, noting that sales of CPO vehicles had increased to 20.4 percent, up from last year's 16 percent, or 4.4 percent.

Why are used-car buyers taking advantage of CPO vehicle programs? It is because CPO cars offer a measure of security over non-CPO vehicles. Each CPO program offers the buyer the security of at least a year's worth of warranty coverage. Some offers two years worth of coverage and just about all of them offer extended coverage on the drivetrain components. This is a far cry from the days when used-cars were sold as-is with only limited state consumer law warranties that usually range from one to three months.

CPO vehicles offer the protection of:

Thorough inspections of from 100 to 150 points, depending on the particular warranty program. Factory-trained technicians conduct the inspections.
Repairs that bring the CPO vehicles up to showroom-ready condition. Some even offer "like-new" condition, although the majority of programs stop at "showroom ready." For example, most Honda dealers will replace the internal timing belt, as a matter of course, in a CPO car. This is despite the fact that they don't have to replace the belt until the odometer ticks over to 105,000 miles. It is good business sense to replace the belt sooner than later as it insures reliability.

In addition, CPO dealers may replace all the tires if they are approaching their limits or if the tires are heavily worn by age that brings on a condition where the bead edge and tread rubber becomes brittle and pulls away from the tire carcass. This is also known as dry rot. Tires may or may not fail with dry rot and dealers, to be safe, replace them.
At least 12 months warranty coverage on the vehicle and up to seven years or 100,000 miles on the powertrain components. If the vehicle is relatively new and has original warranty left, the CPO warranty is added to the end, extending coverage.
PHOTO GALLERY
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