D Guide to CERTIFIED PROGRAMS

[Pages:9]Guide to

CERTIFIED PRE-OWNED VEHICLE PROGRAMS

Contents

Certified pre-owned vehicle industry review .........................................4 Certified pre-owned vehicle sales, 2005................................................5 Inspection checklist............................................................................................5

Acura, Audi, Bentley, BMW,

Cadillac, Chrysler group, ..........................................................................6

Ford Division, GM, Honda Division,

Hyundai, Infiniti, Jaguar ...........................................................................7

Land Rover, Lexus, Lincoln, Mazda,

Mercedes-Benz, Mercury.........................................................................8

Mitsubishi, Nissan Division, Porsche,

Saab, Saturn, Subaru...................................................................................9

Suzuki, Toyota Division,

Volkswagen division, Volvo..................................................................10 Index of terms ...................................................................................................10 Certified pre-owned vehicle sales, 2004 by month.......................11

Dear Automotive News Reader,

If you pay attention to the advertising and marketing campaigns that promote certified pre-owned - or CPO - vehicles, you know these are not ordinary used cars and trucks.

Certified vehicles are hand-picked and late-model, and have no major damage. The cosmetically and mechanically reconditioned vehicles are covered by a factory warranty.

To make these vehicles even more attractive, some captive finance companies offer low finance rates. Many certified warranties offer amenities such as roadside assistance. A few have policies that allow consumers a brief period to return or exchange a certified vehicle.

Virtually every major automaker has a certified used-vehicle program. The most recent is Subaru of America Inc., which started its program in spring 2005, dealers say.

CPO programs have gained prominence, and sales have continued to climb. From January through July 2005, certified usedvehicle sales rose 3.6 percent over the year-ago period.

This year's Guide to Certified Pre-Owned Vehicle Programs is our way of presenting the details of automakers' plans.

Comments? Please send them my way.

You may e-mail Arlena Sawyers at asawyers@

Sponsored by

3

G U I DE TO CE RTI FI E D PR E-OWN E D VEHICLE PROGRAMS

Ten years ago, certified used vehicles occupied a small space on a small number of dealership lots. Today, certified cars

The used vehicles he certifies are low-mileage, latemodel cars and trucks that have had no major damage, he adds.

and trucks are a distinct and important business

"We go by Ford's guidelines," Romines says.

line.

"They have qualifications

Certified used vehicles

on paint and tires. You

carry factory warranties. For a non-certified vehicle, Romines concedes, don't have to worry about

They undergo tougher "If it's got good tires on it, we couldn't care a nonworking taillight or a

inspections and more

less if they match or not. We don't check the transmission that slips.

mechanical and cosmetic

It's been checked from

reconditioning than other wiper blades, we don't check the brakes, and head to toe."

used vehicles, automak-

we don't check the radio."

For noncertified vehi-

ers and dealers assure

cles, Romines says, "If it's

buyers.

BOB ROMINES

got good tires on it, we

Sales of certified used

FORD, LINCOLN, MERCURY DEALER

couldn't care less if they

vehicles exceeded 1.5

match or not. We don't

million in 2004. From January though July 2005,

check the wiper blades, we don't check the brakes,

the industry sold 956,128 certified vehicles. That

and we don't check the radio."

figure represented a 3.6 percent increase over the

Mike Sullivan, a multifranchise dealer in Santa

year-ago period.

Monica, Calif., says he participates in the certified

Dealers make an average net profit of about

programs of seven automakers. He says he spends

$700 on certified vehicles, according to CNW

$600 to $800 to prepare vehicles for certification.

Marketing Research Inc. in Bandon, Ore. That com- That expense includes such things as making sure

pares with about $300 on noncertified cars and

tires match and removing dings from body panels.

trucks, CNW estimates.

Many customers, Sullivan says, are willing to pay

Although the details of certified used-vehicle

for the peace of mind that a factory warranty offers.

programs vary among automakers, the principles

For those who aren't, Sullivan says he offers mod-

are the same.

erate-mileage, noncertified vehicles that may have

Automakers impose limits on age, mileage and bumps and scratches.

condition for potential certified vehicles. They provide warranties and guidelines for inspections. Dealers decide which vehicles to certify and conduct the inspections.

Bob Romines, a Ford, Lincoln and Mercury dealer in Houston, Mo., says he typically grosses about $500 more on a certified used vehicle than a comparable noncertified vehicle.

Value for money

Playing by the rules

Factory representatives say they are confident that the dealerships that participate in their certified programs adhere to the guidelines they set. But they check to make sure.

General Motors provides training and help to its dealerships that sell certified vehicles, says Jeff Heichel, GM's director of used-vehicle activities.

At American Honda Motor Co. Inc., the certified

Customers pay $600 to $700 for certification, but they get their money's worth, Romines says.

program covers Honda and Acura dealerships. District parts and service managers check those

stores' service records and repair orders for certi- monthly sales record for the industry in July.

fied vehicles, says Dan Crowe, the company's cor-

GM sold 50,365 certified cars and trucks in July,

porate remarketing manager.

1.3 percent more than it sold in July 2004. That

The certified program of Toyota Motor Sales

was the first time any automaker sold more than

U.S.A. Inc. includes Toyota and Lexus stores. The

50,000 certified vehicles in a month.

company regularly assigns inspectors to visit deal-

From January through July 2005, the industry

erships that take part in the program, says Norm

sold 956,128 certified vehicles, a 3.6 percent

Olson, sales operations manager of Toyota

increase over the year-ago period.

Certified.

GM sold about one-third of those vehicles. It

The inspectors choose three or four vehicles at

retailed almost twice as many certified vehicles as

each dealership to test drive, Olson says. They

its closest competitor, Toyota Motor Sales U.S.A.

make mechanical and cosmetic inspections. They compare repair orders with actual repairs.

"We see reconditioning as an

Up and up

Sales of certified used vehicles continue to increase

Inc. GM's top-selling month in 2004

was October, when it sold 47,519

investment, not as an expense," Olson says.

Jeff Abel, dealer principal of Miller

year

2001 : 2002: 2003:

sales

685,410 1,283,153 1,474,811

certified vehicles. Toyota had its best month last year in July, with sales of 25,123 certified cars and trucks.

Toyota in Manassas, Va., says the

2004:

1,580,814

Last year GM sold 533,205 certi-

company's inspections ensure that 2005:

956,128* fied units. That was 12.2 percent

dealerships follow the rules of the certification program. Abel's dealer-

*January - July sales Source: Autodata Corp. and Automotive News Data Center

more than it sold in 2003. Toyota's certified sales declined in

ship was Toyota's seventh largest

2004, to 272,829 vehicles ? a 1.4

seller of certified used vehicles last year. Business percent drop from 2003.

is so brisk, he adds, that the store's certified opera-

Overall, annual sales of certified vehicles have

tions have a separate building.

more than doubled since 2001. That year, the

Volkswagen of America Inc. flags dealerships

industry sold 685,410 certified vehicles. Last year's

that have a large number of warranty claims on cer- total was 1,580,814 sales.

tified used vehicles in the first 30 days after sale.

In addition to GM and Toyota, Ford Motor Co.,

Says Patrick McFall, VWoA's certified preowned corporate sales manager: "If you do the inspection the way you're supposed to do it and the reconditioning the way you're supposed to do it, generally there should be no claims in the first 30 days."

DaimlerChrysler AG and American Honda Motor Co. Inc. have sold more than 100,000 certified vehicles annually.

Volkswagen of America Inc. and BMW of North America LLC each topped 70,000 sales of certified vehicles in 2004.

Sales keep growing

Mitsubishi Motors North America and American

Sales of certified used vehicles in the United

Suzuki Motor Corp. started certified pre-owned

States have continued to grow this year. GM set a vehicle programs in 2004.

Sponsored by

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CERTIFIED PRE-OWNED VEHICLE SALES

7 months '05 vs '04

Ranked by 7 mos. '05

GM Certified* Cadillac Saab Saturn GENERAL MOTORS Lexus Toyota Division TOYOTA MOTOR SALES U.S.A. Acura Honda Division AMERICAN HONDA Ford Div., Lincoln, Mercury Jaguar Land Rover Volvo FORD MOTOR CO. Chrysler group Mercedes-Benz DAIMLERCHRYSLER Audi Bentley Volkswagen division VOLKSWAGEN OF AMERICA BMW Infiniti Nissan Division NISSAN NORTH AMERICA PORSCHE MAZDA MITSUBISHI SUZUKI HYUNDAI

TOTAL CERTIFIED

*Includes Buick, Chevrolet, GMC, Oldsmobile and Pontiac Source: Autodata Corp. and Automotive News Data Center

7 mos. '05

262,635 23,005 5,246 19,132 310,018 27,557 139,207 166,764 21,602 116,083 137,685 94,553 10,778 4,732 18,816 128,879 62,972 26,980 89,952 13,609

149 29,682 43,440 43,150 1,031 26,204 27,235 3,300 3,179 2,335

109 104

7 mos. '04

256,338 20,277 5,296 24,114 306,025 25,310 137,094 162,404 18,086 97,045 115,131 96,523 9,761 3,881 15,998 126,163 58,415 34,167 92,582 13,653

134 32,629 46,416 42,405 2,482 24,133 26,615 2,654 2,032

190 ?

108

956,128

922,725

2004 estimated

Percent change

2.5 13.5 ?0.9 ?20.7 1.3 8.9

1.5 2.7 19.4 19.6 19.6 ?2.0 10.4 21.9 17.6 2.2 7.8 ?21.0 ?2.8 ?0.3 11.2 ?9.0 ?6.4 1.8 ?58.5 8.6 2.3 24.3 56.4

? ? ?3.7

3.6

7 mos.'05 share

27.5 2.4 0.5 2.0 32.4 2.9 14.6 17.4 2.3 12.1 14.4 9.9 1.1 0.5 2.0 13.5 6.6 2.8 9.4 1.4 0.0 3.1 4.5 4.5 0.1 2.7 2.8 0.3 0.3 0.2 0.0 0.0

100.0

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CERTIFIED PRE-OWNED VEHICLE CHECKLIST

airbags safety belts antenna steering wheel audio alarm & navigation systems carpet floor mats heat

engine fluids and filters leaks fans

frame chassis shafts exhaust system transmission transaxle

major damage from rust or natural disaster paint body panels bumpers/fenders hinges

VIN match

Interior

vent AC defogger defrost lighter power outlets trim mats headliner seats

head restraints power windows security codes moonroof sunroof convertible top horns interior lights ashtrays glove box

Underhood

wires hoses belts mounts

radiator pumps tanks battery

Underbody

differential transfer case tires and wheels joints clutch bars

bushings suspension steering brakes hoses lines

brackets doors hood deck tailgate molding grille

Exterior

trim roof rack wheels wheel covers windows and windshield outside mirrors

Vehicle history

service bulletins

recalls

engine performance indicator lights gauges

carpet trim

Road test

noise and vibration squeaks and rattles cruise control

transmission and clutch operation steering and suspension

Trunk/luggage compartment

weatherstripping

jack

spare tire

dashboard illumination vanity mirror sun visor fuel and trunk release odors

alternator ignition system starter

calipers cylinders pads shoes rotors drums

wipers exterior lights door locks remotes

scheduled maintenance

brakes/ABS

tool kit

5

Program name/Top executive

Acura

Acura Certified Pre-Owned Vehicles Dan Crowe national remarketing manager pre_owned

No. of dealers

in program/ Total new-car

dealers

Dealer fees

Dealer criteria

Vehicle criteria

Warranty details

Is there a

Is the

warranty warranty Return/

deductible?/ transferable?/ exchange

cost

fee

program

150-point inspection

264/

$405 Dealers sign a

6 model years or newer 60 months/62,000 miles from original in-service date

264

participation agreement Less than 80,000 miles Powertrain 84 months/100,000 miles from original in-service date

12 months/12,000 miles after new-car warranty expires

Powertrain 36 months/50,000 miles after new-car warranty expires

No/$0

Yes/$0

3 days, exchange

only

Audi

Audi Certified Pre-Owned

265/

Jo Obloy

265

national sales manager Audi Certified Pre-Owned

certified

$950$1,375

Audi franchised dealer in good standing

300+-point inspection 5 model years or newer Less than 70,000 miles In-service at least 4 months or 4,000 miles

24 months after new-car warranty expires 100,000 miles from original in-service date roadside assistance

Bentley

Bentley Certified Pre-Owned Kim Airey sales manager, New & Pre-Owned

154-point inspection

36/

$2,590 Dealers trained and 7 model years or newer 3 model years and newer receive one year/unlimited mileage

36

certified meeting CSI

3-7 model years recieve one year limited warranty

standards, must meet

roadside assistance

all preperation audits

Yes/$50 Yes/$150 None

No/$0

Yes/$30

Dealer option

BMW

Certified Pre-Owned BMW Bill Bates manager, Pre-Owned sales certified

Cadillac

Cadillac Certified Pre-Owned Kim McGill director of retail development, Cadillac

Comprehensive inspection

340/

$850- Dealers sign a

5 model years or newer 24 months/50,000 miles after new-car warranty expires

340

$1,195 participation agreement Less than 60,000 miles roadside assistance

1,100/ 1,500

$1,000

Available to all Cadillac dealers; participation is voluntary

110+-point inspection 5 model years or newer Less than 50,000 miles

6 years/100,000 miles from original in-service date

Yes/$50 Yes/$0

Dealer option

No/$0

Yes/$0

None

Chrysler group

Five Star Certified Pre-Owned Vehicles Ray Fisher vp fleet and remarketing

2,215/ 4,100

Note: Total new-car dealers as of January 2005. Dealer fees consist of per-vehicle certification fee, initiation fee, advertising fee and warranty fee.

$295$395

Must be a five star dealer

125-point inspection 6 model years or newer Less than 65,000 miles

3 months/3,000 miles from date of certified pre-owned vehicle purchase; powertrain 8 years/80,000 miles from original in-service date

Sponsored by

Yes/$100

Yes/$0

Via CARFAX

Source: Automotive News Data Center

6

Program name/Top executive

No. of dealers

in program/ Total new-car

dealers

Dealer fees

Ford Division

Ford Quality Checked Certified Pre-Owned Program 2,239/

$395

Mike Dennis

3,790

manager certified pre-owned Ford/Lincoln Mercury



Dealer criteria

Compliance test required

Vehicle criteria

Warranty details

115-point inspection 4 model years or newer Less than 50,000 miles

Powertrain 72 months/75,000 miles from original in-service date roadside assistance

Is there a

Is the

warranty warranty Return/

deductible?/ transferable?/ exchange

cost

fee

program

Yes/$100 Yes/$0

None

GM

GM Certified Used Vehicles* Jeff Heichel director, GM used vehicle activities ,

*Buick, Chevrolet, GMC, Oldsmobile and Pontiac

3,700/ 7,000

Honda Division

Honda Certified Used Cars

985/

Dan Crowe

1,008

national remarketing manager

certified

$115$135

110+ point inspection

Dealers sign a

6 model years or newer

participation agreement Less than 60,000 miles

New-car warranty extended to 39 months/39,000 miles from original in-service date; 3 months/3,000 miles after new-car warranty expires

150-point inspection

$349

Dealers sign a

6 model years or newer 48 months/48,000 miles from original in-service date

participation agreement Less than 80,000 miles 12 months/12,000 miles after new-car warranty expires

Powertrain 84 months/100,000 miles from original in-service date

No/$0

Yes/$0

3 days/ 150 miles

No/$0

Yes/$0

None

Hyundai

Hyundai Certified Pre-Owned Matthew Keueger national sales manager

120-point inspection

674/

$884

Dealers sign a

4 model years or newer 6 years/75,000 miles from original in-service date

674

participation agreement Less than 48,000 miles roadside assistance

No/$0

Yes/$0

None

Infiniti

Infiniti Certified Pre-Owned Mark Igo vp & general manager Infiniti division

142-point inspection

181/

$895

Dealers sign a

6 model years or newer Basic and powertrain 36 months from purchase date/100,000 miles

Yes/$50 Yes/$0

None

181

participation agreement Less than 70,000 miles roadside assistance

Jaguar

Jaguar Select Edition Certified Pre-Owned

175/

CJ O'Donnell

175

executive vp remarketing and sales



Note: Total new-car dealers as of January 2005. Dealer fees consist of per-vehicle certification fee, initiation fee, advertising fee and warranty fee.

$1,050

Available to all Jaguar dealers

140-point inspection 5 model years or newer Less than 60,000 miles

72 months/100,000 miles

Sponsored by

No/$0

Yes/$0

None

Source: Automotive News Data Center

7

Program name/Top executive

Land Rover

Land Rover Certified Richard Beattie executive vp remarketing and sales

No. of dealers

in program/ Total new-car

dealers

Dealer fees

Dealer criteria

Vehicle criteria

Warranty details

140-point inspection

165/

$680- Available to all

7 model years or newer 12 months/12,000 miles after new-car warranty expires

165

$1,250 Land Rover dealers Less than 75,000 miles

Is there a

Is the

warranty warranty Return/

deductible?/ transferable?/ exchange

cost

fee

program

Yes/$100 Yes/$50

None

Lexus

Lexus Certified Pre-Owned Marv Ingram national CPO sales manager cpo/index.html

Lincoln

Lincoln Premier Certified Pre-Owned Mike Dennis manager certified pre-owned

211/

$845 None

211

161-point inspection 7 model years or newer Less than 60,000 miles

36 months from date of certified pre-owned vehicle purchase 100,000 miles from original in-service date

1,157/ 1,365

$595

Compliance test

required

141-point inspection Current model year + 4 previous model years Less than 50,000 miles

72 months/75,000 miles from original in-service date

Mazda

Mazda Certified Pre-Owned John Sellers national manager, used vehicle remarketing cpo.mazda-

100-point inspection

367/

$1,198 Dealers sign a

5 model years or newer 12 months/12,000 miles after new-car warranty expires

700

participation agreement Less than 62,000 miles Powertrain additional 36 months/38,000 miles on vehicles

purchased after Jan. 1, 2003

Mercedes-Benz

Mercedes-Benz Certified Pre-Owned Program

320/

Keith May

320

senior vp of sales



$595$1,595

130+-point inspection Dealers must meet 6 model years or newer training and performance Less than 75,000 miles criteria

12 months after new-car warranty expires 100,000 miles from original in-service date

No/$0

No/$0

None

Yes/$100 Yes/$0

None

No/$0

Yes/$0

None

No/$0

Yes/$0

Exchange 7 days/ 500 miles

Mercury

Mercury Certified Pre-Owned Mike Dennis manager certified pre-owned

1,157/ 1,984

Note: Total new-car dealers as of January 2005. Dealer fees consist of per-vehicle certification fee, initiation fee, advertising fee and warranty fee.

$395 Compliance test required

115-point inspection Current model year + 4 previous model years Less than 50,000 miles

Powertrain 72 months/75,000 miles from original in-service date

Yes/$100 Yes/$0

None

Sponsored by

Source: Automotive News Data Center

8

Program name/Top executive

Mitsubishi

Mitsubishi Certified Pre-Owned Program Dan Kuhnert senior vp sales

No. of dealers

in program/ Total new-car

dealers

Dealer fees

Dealer criteria

Vehicle criteria

Warranty details

123-point inspection

171/

$199- One-time enrollment 5 model years or newer Choice of 10 years/100,000 miles or

562

$499

fee of $595

Less than 60,000 miles 6 years/72,000 from original in-service date

Is there a

Is the

warranty warranty Return/

deductible?/ transferable?/ exchange

cost

fee

program

No/$0

No/$0

None

Nissan Division

Nissan Certified Pre-Owned Jerry Foley vp parts and service certified

Porsche

Porsche Approved Certified Pre-Owned Vehicle Program Kevin Harvey national manager pre-owned vehicles

Saab

Saab Certified Mark Dysarz retail operations specialist

985/ 1,071

$349 None

208/

$1,495- None

208

$1,595

142-point inspection 6 model years Less than 72,000 miles

Powertrain 36 months/100,000 miles from original in-service date

Yes/$50

No/$0

None

100+-point inspection 8 model years or newer 6 years/100,000 miles from original in-service date Less than 100,000 miles 24 months/100,000 miles after new-car warranty expires

No/$0

Yes/$0

None

110-point inspection

209/

$1,195 Dealers sign a

4 model years or newer 72 months/100,000 miles from original in-service date

248

participation agreement Less than 60,000 miles roadside assistance

No/$0

Yes/$50

None

Saturn

Used Cars from Saturn Terry Vaughn retail strategies/used car coordinator saturn/showroom/usedcars

Subaru

Subaru Certified Used Car Program n.a. n.a.

150-point inspection

440/

$330- Participation included Premium Certified:

Premium Certified: 48 months/50,000 miles

440

$660 in franchise agreement 4 model years or newer from original in-service date

Less than 60,000 miles Certified: Limited powertrain, 90 days/3,000 miles

Certified: Any model year

or mileage

No/$0

Yes/$35

Return 3 days/ 150 miles

152-point inspection

12 to 36 months/100,000 miles powertrain from date of certified pre-owned

n.a./

$199- Dealers sign a

5 model years or newer vehicle purchase, if purchased outside the original new-vehicle warranty Yes/$50 Yes/$0

None

581

$830 participation agreement Less than 80,000 miles 6 year/60,000 miles from original in-service date if vehicle is purchased

within the original new-vehicle warranty

roadside assistance

n.a.= not available Note: Total new-car dealers as of January 2005. Dealer fees consist of per-vehicle certification fee, initiation fee, advertising fee and warranty fee.

Sponsored by

Source: Automotive News Data Center

9

Program name/Top executive

Suzuki

Suzuki Certified Used Car Program Tim Finley national fleet and remarketing manager

No. of dealers

in program/ Total new-car

dealers

Dealer fees

28/

$889

538

Dealer criteria

Vehicle criteria

Warranty details

Is there a

Is the

warranty warranty Return/

deductible?/ transferable?/ exchange

cost

fee

program

Dealers sign a certification agreement

144-point inspection 5 model years or newer Less than 70,000 miles Must pass CARFAX title history check

12 months/12,000 miles from date of certified pre-owned vehicle purchase No/$0 Powertrain 72 months/100,000 miles from original in-service date roadside assistance

Yes/$0

None

Toyota Division

Toyota Certified Used Vehicles Al Smith corporate manager - Toyota certified certified

1,145/ 1,211

160-point inspection

$375 Must be a franchised 5 model years or newer Powertrain 72 months/100,000 miles from original in-service date

Toyota dealer

Less than 65,000 miles roadside assistance

Yes/$50 Yes/$0

Dealer option

Volkswagen division

Volkswagen Certified Pre-Owned

746/

Patrick McFall

746

VW CPO process leader

vwcertified

$450$1,250

Volkswagen dealers in good standing

112-point inspection 5 model years or newer Less than 75,000 miles

24 months/24,000 miles from CPO sale date

No/$0 Yes/$150 None

Volvo

Volvo Certified Pre-Owned North Holbrook manager commercial sales volvocars.us/_tier2/preowned

340/

$950- Volvo dealers in

347

$1,195 good standing

130-point inspection 4 model years or newer Less than 80,000 miles

6 years/100,000 miles from original in-service date

No/$0

Yes/$0

None

INDEX OF CERTIFIED PRE-OWNED VEHICLE TERMS

Certified pre-owned vehicle A previously owned vehicle sold with the original manufacturer's certification that the vehicle is in optimal condition. Manufacturers base vehicle selection on age, mileage and a rigorous multiple-point inspection process. Age, mileage and inspection criteria vary by manufacturer.

Certified warranty details Most certified pre-owned warranty programs transfer and extend the existing new-car warranty terms or add additional terms and mileage. Warranty coverage varies by manufacturer.

Warranty deductible The amount the owner is responsible for when repair work is performed under CPO warranty. Numerous manufacturers do not require a deductible.

Transferable warranty If the owner of a certified pre-owned vehicle sells the vehicle and it is within the warranty period, the new owner may be eligible for a transfer of the warranty. Some manufacturers require the new owner to pay a transfer fee.

Vehicle criteria To be considered for certification, a vehicle must be a recent model year, have limited mileage and pass a multiple-point inspection process. Each manufacturer has its own set of requirements.

Point inspection A comprehensive vehicle inspection to ensure that the vehicle is in excellent working order. The point inspection is a list of the parts of the vehicle that are examined. Each manufacturer has its own inspection list, but most are similar. All inspections are performed under strict manufacturer guidelines.

Roadside assistance Most certified pre-owned programs offer free roadside service while the vehicle is under warranty.

Return/exchange Some manufacturers allow for a limited time period in which a customer can return or exchange a vehicle.

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