Using CPO to Address the New Vehicle Inventory Shortage

Jade Terreberry from Autotrader
May 25, 2021
Jade Terreberry
Couple shopping for pre-owned car at dealership

In our ongoing series about the global chip shortage and resulting inventory crunch, we’re outlining how auto dealerships can make an actionable plan for success when supply chain constraints are out of your control.  

The global chip shortage is affecting everything from cell phones to vehicles, with new car production slowing and even halting at some assembly lines. Experts predict that the shortage could continue for the next several quarters, and even well into 2022

But people don’t stop buying cars because there are fewer new cars available. 

The life events that drive vehicle purchases don’t stop because OEMs have new production constraints; new jobs, new babies, car accidents and sweet 16 birthdays all still bring new car buyers into the marketplace.  

So how can dealers continue to sell cars and plan for success when there are fewer new cars available to sell? 

It’s time to re-imagine your Certified Pre-Owned segment. Here’s how:

Get creative with how you think about CPO sales.

Train your sales team on how to have creative conversations about the value of certified pre-owned inventory. 91% of used shoppers view CPO as “good as new,”? so encourage your sales team to treat your CPO inventory as such. And with used car prices up 18% year-over-year, they’re worth more than ever right now.?

Most people buy new not just for that new car smell but for the peace of mind. Give your consumers that same peace of mind on the CPO cars you have available.

“Peace of mind in buying a pre-owned vehicle can be the same good feeling customers get when buying a brand-new vehicle.”

– Kyle Elder, certified VW and pre-owned director at Street Volkswagen of Amarillo in Amarillo, Texas

And with limited inventory, cross-shopping between new and certified is increasing rapidly, trending upward in this lean market. 

Rethink your CPO certification selection criteria.

Used vehicles continue to see a surge in demand, with prices up 12% vs. 2020 and available supply down significantly.? Over half of the eligible used vehicles for certification never get CPO status; by re-evaluating which vehicles you could certify, you will expand your inventory opportunity and gain a competitive advantage in this segment. 

Used Cars sign at local dealership

Offering a wide CPO selection is going to be an advantage, too, as 55% of CPO shoppers report that dealers having the make/model they want is the most important “must-have.”?

“Customers get to purchase a previously enjoyed unit with the level of security that comes with having extra warranty coverage on the vehicle at no additional cost to them, along with the extensive inspection that occurs during the process,” said Elder.

Remember why CPO is valuable for your dealership.

Brand loyalty

First, CPO drives brand loyalty, with 3 out of 5 CPO buyers returning to a brand they know.? In fact, in 2020 brand was the most important factor in a new car purchase decision, so using the power of the brand to keep customers engaged will continue to be important to long-term customer retention.?

“In the long run, CPO customers bring us back nicely serviced vehicles and the retention rate of buying another car from you is extremely high. Whether another CPO, used car or new car, the proven data shows us that selling a CPO has a high possibility of them visiting you again for another vehicle and creates a situation where everyone benefits,” added Elder.

By keeping these shoppers on-brand and in-market, you can also create opportunities for additional revenue post-sale including back-end extended service contracts, add-on protection products and warranty wraps.

Revenue opportunities

Speaking of revenue, you can create additional revenue opportunities with your service department. CPO drives more service traffic to dealerships, as these owners are more than three times as likely to service their vehicles at a dealership than non-CPO owners.?

And with tax returns and stimulus checks on the brain, people are ready to hit the road again. 11% of consumers plan to spend their third stimulus check on vehicle maintenance and repair,? so now is the time to focus on promoting and enhancing your fixed ops, especially among CPO customers.


For other tips and strategies for navigating tight inventory circumstances, check out my recent blog post on the chip shortage.

And remember, we’re here to help. 

Our studies have found that CPO shoppers visit significantly more automotive websites and find KBB.com and Autotrader sites more helpful than OEM and dealer sites in their shopping process.? Your local Autotrader Dealer Success Consultant has more ideas on how you can plan for success.