- The Washington Times - Friday, March 16, 2001

Automakers expect 2001 to be a big year for used-car sales, so they are beefing up their certified used-car programs, backing them with substantial marketing dollars.

Automakers believe a softer economy may prompt some buyers to shop for used instead of new vehicles. In addition, record car and truck sales in recent years, about a third of them leased, will yield a bumper crop of good used vehicles.

Ford's Lincoln-Mercury division has revamped its certified preowned program and expects to have more than 1,100 of its dealers enrolled and trained in selling certified used vehicles by spring.

BMW, which had a record year in 2000 for certified preowned vehicle sales, expects a slightly lower supply in 2001 because it has fewer vehicles coming off lease. "But look out in 2002," said Bill Bates, BMW's preowned marketing manager, "when it has a high number of leases reaching maturity, resulting in a large number of used vehicles possible for certification."

Mercedes-Benz restarted its Starmark brand last year with a major advertising blitz, which included a 30-minute infomercial. The automaker will keep up the advertising presence again in 2001, said Ray Dupell, department manager of preowned marketing.

Price is the major reason consumers buy used vehicles. Automakers, however, are finding used vehicles are not just popular with lower-income and entry-level buyers. Many buyers see buying used as a way to obtain a luxury vehicle at a value price.

Ford's Lincoln-Mercury division research indicated people who could easily afford a new luxury car frequently buy used ones because of the value.

Consumers discovered in the best-selling book, "The Millionaire Next Door," that many millionaires drive used vehicles.

"They don't see the value in a new vehicle because of the depreciation they are hit with in the first year or two of ownership," said Andy McKinnon, Lincoln-Mercury's fleet, lease and remarketing manager.

Lexus research shows the same. "About 48 percent of our certified preowned buyers intend to buy a used car because, in their minds, a new car depreciates substantially in the first couple years, and they consider themselves smart buyers because they've avoided that," said Marv Ingram, Lexus' nationally certified preowned and fleet manager.

Most automakers recognized the market of potential used-car buyers, which is far bigger than the pool of new-car buyers, and developed certified preowned programs in the mid-1990s. Now, all but a few manufacturers have instituted the programs that basically work the same way, though the details vary widely.

Generally, only late-model, low-mileage used cars and trucks with no history of major damage are even considered by manufacturers for certification.

The manufacturers then have a rigid inspection process of mechanical and cosmetic items that each vehicle must go through before obtaining certification. If necessary, repairs are made and scheduled maintenance performed. Once a vehicle is certified, it is covered by a warranty that extends beyond the original factory warranty. The warranty often includes the same features as a new-vehicle warranty, benefits such as roadside assistance.

Some automobile manufacturers affix a price sticker to the vehicle, much like the one on a new vehicle. It lists all of its standard and optional features, as well as the price. Some manufacturers offer an exchange or a money-back guarantee if a customer is not satisfied with a certified preowned vehicle. Several offer special financing, often loan rates that are the lower rate charged on new-car loans vs. the higher used-car loan rates. A number provide a vehicle history that proves the vehicle has not been in a major wreck.

Increasingly, automakers are creating Web sites specifically dedicated to their certified used-vehicle programs. Some allow the consumers to search real vehicles on dealer lots by simply typing in their ZIP code and calling up dealers within a certain geographic region. A few sites provide photographs of the vehicle, plus a look at its window stickers.

Buyers should be aware that they pay more for a certified used car than a regular used car.

"They pay more, but they get more by taking the risk out of buying a used car," Mr. Bates said.

Mr. McKinnon said: "You know that whatever happens you are covered under warranty, and the vehicle has undergone a more extensive inspection process than your typical used car on an independent lot."

MOTOR MATTERS


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