As automotive markets face rising affordability challenges and increasing competition for customer loyalty, industry analyst LGM has urged dealers and automotive brands to rethink their used vehicle strategies and focus more on Certified Pre-Owned (CPO) programs. This approach, experts say, can help improve customer retention while navigating a constrained economic environment.
The Changing Automotive Landscape
Automakers and dealerships are grappling with several challenges in today’s market:
- Rising Vehicle Prices: New car prices have surged, making affordability a key concern for consumers.
- Customer Retention Pressures: Retaining buyers in a competitive market requires innovative strategies.
- Inventory Limitations: Supply chain disruptions continue to impact new vehicle availability.
Against this backdrop, used vehicles and CPO programs are increasingly viewed as critical tools for both customer acquisition and retention.
Why CPO Programs Matter
Certified Pre-Owned programs offer several advantages for both dealers and customers:
- Trust and Assurance: Vehicles undergo thorough inspections and come with warranties, increasing buyer confidence.
- Affordability: CPO cars provide a lower-cost alternative to new vehicles, appealing to budget-conscious consumers.
- Customer Retention: CPO buyers are more likely to return to the same brand for service, trade-ins, or future purchases.
- Revenue Opportunities: Dealers can maintain profit margins through certified used vehicle sales while moving inventory efficiently.
LGM emphasizes that brands and dealers must lean into CPO offerings and market them effectively to attract new buyers while nurturing loyalty among existing customers.
Strategies for Dealers and Brands
To maximize the impact of CPO programs and used vehicle sales, LGM suggests:
- Enhanced Marketing: Promote CPO benefits and financing options through targeted digital campaigns.
- Transparent Pricing: Ensure used vehicles are priced competitively to appeal to value-conscious buyers.
- Customer Engagement: Use service visits, loyalty programs, and personalized communication to strengthen relationships.
- Inventory Optimization: Balance new, used, and CPO inventory to meet diverse consumer needs efficiently.
Industry Implications
As affordability pressures persist, the CPO market is expected to grow in importance. Analysts note that dealerships that adapt quickly by enhancing CPO offerings can gain a competitive edge, while those relying solely on new car sales may struggle to retain customers.
Conclusion
The automotive landscape is evolving, and dealers and brands must rethink used vehicle strategies to remain competitive. By leaning into CPO programs, they can address affordability challenges, improve customer retention, and ensure long-term growth in a challenging market. LGM’s insights underscore that strategic focus on certified pre-owned vehicles is no longer optional—it’s essential for sustaining profitability and building lasting customer relationships.