Spread The Word

To Succeed in the Lucrative CPO Market, You Need to Make a Commitment – and Make Sure Your Customers Know It

As many as 60 percent of all pre-owned customers are interested in seeing a certified vehicle, and the CPO market continues to grow – 2016 was the sixth consecutive year of record CPO sales.

Those statistics lead to an important question dealers should be asking themselves: “How can I get my share of that segment?”

It’s simple. Find a certified pre-owned program you like and start advertising.

When starting a certified pre-owned program, it is best to remember a saying I once read in a fortune cookie: “Who saw the antelope jump in the forest?”

That might sound silly, but it points out that while few of us will ever see an antelope jump in the forest, everyone can visualize it because they have read and seen pictures. No event can be widely known and accepted unless it is publicized with a message broadcast to the public.

That’s the message of that supposedly ancient Chinese proverb. If you want your program to succeed, you must be ready to broadcast your commitment loudly and constantly to everyone.

When deciding on a CPO program, the gains must be weighed against the costs. And the best way to achieve a positive in that equation is to make a full commitment to the program.

Your commitment needs to be accepted by everyone involved – your employees, customers and even the people you get your inventory from.

In order to broadcast that commitment, you must analyze why you are starting this project in the first place.

In the car business it is always about profit, which usually comes from selling more vehicles or making more on the ones that we sell. For dealers, that is the purpose of a certified pre-owned program.

The logical first step is to analyze what commitment you are making.

In some cases a dealer will be changing his market niche to a certified pre-owned inventory or elevating his inventory to more current models. Most dealers, though, will still be acquiring the same type of inventory, and will most certainly be getting it from the same places.

For them, the commitment isn’t to better cars or inventory. Rather, it’s to providing a better ownership experience for the customer.

CPO accomplishes that by backing what customers purchase in a manner that gives them the peace of mind that they did the right thing by buying the vehicle from the dealer that they purchased from.

That’s a long way of saying the commitment is just the right thing to do.

And if you are going to do the right thing, you might as well do it the right way. When looking at CPO, you need to have a program that follows three main criteria in governing the quality of the warranty.

First, you must have an administrator that has the capacity and desire to pay claims promptly. That is easily ascertained by looking at the administrator’s other customers. You’ll want to partner with someone who has partnered with the giants in your industry.

Second, the idea of CPO is to sell more cars and create more repeat business. That means the CPO program you commit to must have an unremitting drive to customer service.

Remember, the customers who interact with your claims administrator are going to be in what is for them a crisis situation. When it comes to encouraging repeat business, it’s here the difference in warranty companies is felt.

The third criterion is name recognition. Not simply because the name is recognized, but because the name is known or can be explained as synonymous with high ethics in the used car business.

Once you have found that, you’ll have something worth broadcasting.

When a dealer makes a commitment to any program, it is critical to the success of the program to broadcast it to the widest audience. The beginnings of success depend on how this project is presented to all parties.

Studies show that resolutions of any kind made in quiet are not as successful as those that are written, posted and told to as many people as possible.

Kevin Corley, owner of Second Chance Auto in Charleston, S.C., recently made the CPO commitment. He chose to use the NIADA Certified Pre-Owned program because it provided the necessary three criteria.

Since General Motors and Microsoft had done due diligence on the administrator, he felt he could trust it to pay claims. He found the principles NIADA was founded on mirrored his. And he saw the NIADA shield would be recognizable in his advertising media, helping to brand him as a certified pre-owned dealer.

Once Corley had made his commitment, he wanted to make sure that everyone knew what he now represented at his car lot.

“Kevin is so excited about representing this program,” said Mike Sims, an NIADA CPO program representative, “that we actually baked a cake.”

Corley demonstrated his commitment in a meeting with his entire company. In that meeting, he expressed his wish for the employees to embrace the program – and he capped the meeting with the aforementioned NIADA-themed cake.

He explained that when you start a program with a special event like the cake ceremony, the employees know it is different – and a very important.

Once he had announced the program to his people, Corley immediately wanted to get the word out to his clients. So he broadcast the announcement of his new program on his number one marketing tool, Facebook Live, from which he can broadcast his entire operation to the customers – from coming off the truck through make-ready to on the lot.

The result?

“We had 363 likes from broadcasting the cake ceremony in a matter of minutes,” said Corley. “The thing is, if they are watching on Facebook Live, they are in the market to buy a car, whether they know it or not.”

Second Chance Finance Manager Milan Edwards said the Facebook broadcasts make a big impact on consumers.

“By the time customers watch a car go through the inspection process – the cleanup process, even pulling the car off of the truck – on the Facebook Live broadcast, they are ready to belong to something special,” she said.

“Since the store has been involved with NIADA Certified Pre-Owned, we’ve sold 26 vehicles. Nine of those were CPO deals that would have gone somewhere else had we not notified our constituents of our commitment to this program.”

Donald Holt, Edwards’ associate in the finance department, pointed out that only one of those nine early CPO sales was hesitant to extend the warranty protection with an extended service contract.

“And her husband was a mechanic,” he said. “Once they know the program, it is not selling to get them to do the upsell. It’s just filling out the paper work.”

Making sure the public knows about your commitment to their vehicle purchase is important in driving customers from the Internet to your car lot.

Having vehicles marked as certified pre-owned on your dealership website is a good start. A deeper dive is using a CPO program that coordinates with websites such as Carfax or eBay. When you post your CPOs and they show up at the top of the selection criteria because of certification, it allows you to charge into the growing millennial CPO market.

Dealers can also broadcast their commitment to CPO by emphasizing the program in their lot decorations.

“NIADA Certified is actually a full marketing program that allows the dealer to maximize exposure to the public of his certified pre-owned program,” Sims said, including numerous marketing materials to dress the lot for the success of the program.

Corley’s business partner Derrick Middleton said the pole banners provided by the NIADA program “create an atmosphere or excitement and tell the customer we have cars that have been given special consideration.”

And that excitement, combined with a strong CPO program, can give independent dealers a boost in their competition with franchise dealers for market share, said Natalie Suarez, national director of the NIADA program for administrator Warrantech.

“Those dealers who fully commit to a program such as this find that the more they promote the certified pre-owned concept, the easier it is to compete with the local new vehicle franchises for certified buyers,” she said.

“When they are part of the NIADA program and use their online and on-lot methods of marketing their vehicle as certified, dealers see an increase in all traffic – phone, Internet, appointment and walk up.”

Dealers who have been successful in implementing programs such as NIADA’s say it is extremely important to get the information out to your potential customers before they are looking so they know they can find a certified pre-owned vehicle on your lot.

And, they say, it is equally important to continue to broadcast the program’s benefits once the customer is on the lot.

Auction Direct USA is one of the nation’s largest used vehicle operations, with stores in Rochester, N.Y., Raleigh, N.C., and Jacksonville, Fla. In 2016, its managing partner, Todd Hoagey, was named NIADA’s CPO Dealer of the Year.

Broadcasting its commitment to NIADA Certified Pre-Owned has been incorporated into the dealership’s sales system.

When customers arrive at Auction Direct they are met by a salesperson who “walks their wall.” The wall shows the story of the store, including how and why Auction Direct adopted its marketing system. And it all starts with the commitment the store makes to the customer through the CPO program.

“Starting the sales process with the certified pre-owned explanation is integral in establishing a trust between us and our customers,” Hoagey said. “It makes it clear up front that this store is special and the customer can feel safe with our process.”

One way to advertise the program is to dress the cars on the lot to identify them as having gone through the 125-point inspection required for NIADA certification. That can be accomplished with windshield banners that are visible from the street, as well as mirror hangtags that remind customers the vehicle has been through a special process and therefore is provided with coverage that most pre-owned vehicles don’t have.

So who saw the antelope jump in the forest?

Almost no one. But through broadcasting the beauty of the event, everyone knows about it.
When you broadcast in all of your media – Internet, newspaper and radio/TV ads, on your cars, in your sales process – you can get that all-important bump in sales.

“Once customers know about this program, why would they shop anywhere else?” Second Chance Auto’s Milan Edwards said.

The key is making sure your potential customers know about the program and your commitment to their ownership experience. That includes consistent messaging and using identifiable logos that flow throughout your advertising, allowing you to be successful by branding yourself as a dealer customers can count on.

For more details about Warrantech feel free to visit: https://warrantech.com/blog/may-2017/spread-the-word/

AmTrust Financial Services, Inc. Reports First Quarter 2017 Net Income

AmTrust Financial Services, Inc. (Nasdaq:AFSI) (“the Company” or “AmTrust”) today announced first quarter 2017 net income attributable to common stockholders of $22.6 million, or $0.13 per diluted share, compared to $84.0 million, or $0.47 per diluted share in the first quarter 2016. For the first quarter 2017, operating earnings was $55.7 million, or $0.32 per diluted share, compared to $122.9 million, or $0.69 per diluted share, in the first quarter 2016. Net income and operating earnings in the current year were impacted by catastrophe losses of $16.4 million after-tax ($25.3 million pre-tax), or $0.10 per diluted share.
“We achieved record gross written premium of $2.3 billion, driven by continued organic growth and contributions from prior acquisitions in our Small Commercial Business and Specialty Risk and Extended Warranty segments. Strong service and fee income and investment results also contributed to higher revenue, up 13.6% over the first quarter a year ago,” said Barry Zyskind, Chairman and Chief Executive Officer, AmTrust.
“Operating earnings of $55.7 million, or $0.32 per diluted share, reflect several items including primarily the impact of catastrophe losses related to wind and hail events in the personal lines business of Republic Companies, which is included in our Small Commercial Business segment, prior year adverse development related to one discontinued general liability program in our Specialty Program segment, higher professional service fees of approximately $17 million, and a higher effective tax rate compared with the prior year period. The first-quarter 2017 combined ratio of 95.6% includes approximately 2.1 percentage points related to the catastrophe events and 1.6 percentage points of prior year reserve development, resulting in an underlying combined ratio of 91.9%.”
First Quarter 2017 Results
Total revenue was $1.4 billion, an increase of $171.5 million, or 13.6%, from $1.3 billion in the first quarter 2016. Gross written premium was $2.3 billion, an increase of $333.2 million, or 17.2%, from $1.9 billion in the first quarter 2016. Net written premium was $1.3 billion, an increase of $123.4 million, or 10.1%, compared to $1.2 billion in the first quarter 2016. Net earned premium was $1.2 billion, an increase of $148.3 million, or 13.8%, from $1.1 billion in the first quarter 2016. The combined ratio was 95.6% compared to 91.9% in first quarter 2016.
A summary of Q1 results is listed below along with a link to the earnings release.
First Quarter 2017 Highlights
• First quarter gross written premium of $2.3 billion and net earned premium of $1.2 billion, up 17.2% and 13.8%, respectively, from the first quarter 2016
• First quarter service and fee income of $137.5 million, up 6.7% from the first quarter 2016
• First quarter net income attributable to common stockholders of $22.6 million, or $0.13 per diluted share, compared to $84.0 million, or $0.47 per diluted share, in the first quarter 2016
• First quarter operating earnings of $55.7 million, or $0.32 per diluted share, compared to $122.9 million, or $0.69 per diluted share, in the first quarter 2016
• First quarter combined ratio of 95.6%, compared with 91.9%, in the first quarter 2016
• First quarter catastrophe losses of $25.3 million (pre-tax), compared to $2.0 million (pre-tax) in the first quarter of 2016
For more details about Warrantech feel free to visit: https://warrantech.com/blog/may-2017/amtrust-financial-services,-inc-reports-first-qua/

How To Beat The High Cost Of Appliance Repair

It’s inevitable. No matter how well your home appliances are built, at some point they will reach their life expectancy and stop working. So can you afford to be without yours for long? Do you have a backup plan in place? And, more importantly, do you have enough money saved up to cover the repair or replacement?

According to Home Advisor, the average cost to repair an appliance is $170. But prices can vary greatly once you include such variables as the make, model and age of your appliance, as well as parts, labor and applicable service fees. For more accurate pricing, you can visit Home Advisor’s site to search by location or use the figures listed below as a rough estimate of what you might expect to pay per appliance.

Average Repair Costs

Air Conditioner $200-400
Clothes Dryer $100-400
Dishwasher $100-200
Furnace $100-130
Microwave $75-150
Range/Oven $400-700
Refrigerator $200-400
Washing Machine $120-500
Water Heater $90-110

Now consider your own budget. If you have enough money set aside to cover all of the above, then you’re probably not too concerned. However, a recent survey by GoBankingRates showed that 69% of all Americans have less than $1,000 in savings. So if you fall in that category and suddenly find yourself without something as important as your refrigerator, the problem can go from bad to worse. There’s the added stress of having to spend your time being forced to go out to eat and the increased frustration of losing even more money due to food spoilage.

So how do you avoid this scenario? “While some maintain consumers should put aside cash for repairs and replacement of essential electronic products or appliances, it is not possible or practical in today’s economy,” says Timothy J. Meenan, Executive Director of the Service Contract Industry Council. “An extended warranty [service plan] can help consumers manage unanticipated, unbudgeted expenses.”

It’s worth noting that just one service call can more than make up the price of an extended service plan. That fact alone makes it worth owning one. But when you consider that an extended service plan also provides you with added peace of mind, immediate assistance and may even cover ancillary damage such as food loss, suddenly it becomes an invaluable, yet inexpensive plan to help you manage the welcomed inevitable.

Want to know more about the benefits of owning an extended service plan? Visit our site or call us at 800.833.8801.

For more details about Warrantech feel free to visit: https://warrantech.com/blog/april-2017/how-to-beat-the-high-cost-of-appliance-repair/

Dealerscope Warranty Roundup: 2017 Goals & Strategies

Sean Stapleton, president & CEO of Warrantech, recently spoke with Dealerscope magazine as part of a discussion on upcoming company initiatives. The following is an excerpt, providing a brief glimpse of what Warrantech has in store for 2017 to help businesses increase their extended service plan offerings and give customers the most value for their money and a worry-free shopping experience. 
Warrantech has developed a revolutionary new customer loyalty program for its partners that is designed to generate both recurring protection plan revenue and long-term customer retention.
The program allows retail partners to offer their customer base customized protection bundles for major appliances, mobile devices and connected living products owned by the customer, regardless of where the product was purchased. Partners have the ability to offer their customers monthly product protection subscriptions designed to enhance the customer’s experience with a full menu of features including 24/7 tech support and seamless repair/replacement solutions.
The program can be customized to provide disappearing deductibles for services or products provided to customers under the plans procured through the participating partners, thereby incentivizing customers to remain loyal to the partner retailer. Moreover, the rich data from the program can be monetized to help deliver targeted and personalized product offerings to customers based on their recent program usage.
Look for the full article in the March 2017 issue of Dealerscope or online at http://bit.ly/2mKB0iJ   
And be sure to keep up with us on FacebookTwitter and LinkedIn so you can learn more about our innovative products and services as they become available.

Warrantech Partners with Encompass for Sourcing and Procurement of Parts and Product replacements

LAWRENCEVILLE, Ga., Jan. 04, 2017 (GLOBE NEWSWIRE) — Encompass Supply Chain Solutions, Inc. (“Encompass” or “the Company”) a leading provider of 3PL and 4PL solutions for a diverse range of replacement parts and finished goods, today announced it has been selected by Warrantech, an AmTrust Financial Services Company and one of the country’s largest extended warranty administrators, to help provide parts and product procurement in support of Warrantech’s extended warranty service objectives.
Encompass will provide repair parts to the Warrantech service network, or replacement products in the event parts are not readily available or repairs are not economically feasible. The Company’s highly-seasoned Purchasing team will leverage its global network of vendors to support multiple product categories, including Consumer Electronics, Home Appliance, Heating and Cooling, Computer, Imaging, Mobile Devices and others.
Encompass Purchasing will be focused on creating a world-class service experience for Warrantech’s customers and the brands it supports, while helping to manage costs, decrease turn time and positively impact severity.
Encompass expects to reduce expensive buyouts to consumers. As Encompass President and CEO Robert Coolidge noted in a recent blog post, the use of gift cards or other means for warranty reimbursement to consumers versus repair or replacement is costly to warranty companies and raises the risk of brand displacement for manufacturers.
“In our ongoing mission to help our clients be more successful, we aim to curtail the industry practice of compensating consumers with gift cards to replace a defective product,” said Coolidge. “This can lead to brand displacement and decreased customer satisfaction as end users are now being tasked to find another product. Manufacturers should want to do whatever it takes to keep their brand in the customer’s home and maintain low repair costs.”
To provide hands-on service to Warrantech, Encompass will embed a dedicated team of Encompass employees within the Warrantech infrastructure, as well as inside key partner facilities – a practice that Encompass has deployed with other strategic partners with great success.
“Working side-by-side with Warrantech on site will enable Encompass to more efficiently resolve issues and eliminate communication gaps to help expedite customer claims resolution,” said Ariel Gorelik, Chief Operating Officer, Warrantech.
About Warrantech
Warrantech is a subsidiary of AmTrust Financial Services, a multinational property and casualty holding company that is rated “A” (Excellent) by A.M. Best Company for their financial strength and stability. An innovative, technology-driven company, AmTrust brings its financial strength to Warrantech, enabling it to offer a unique, bundled approach that includes both underwriting and administration. This creates transparency and visibility to information that enables customers to change and create plans that are both highly customized and profitable.
About Encompass Supply Chain Solutions, Inc. 
Encompass is a market leader in forward and reverse supply chain management and high-tech repair services for a diverse and expanding range of consumer electronics, computer, major appliances and imaging products.  Encompass provides end-to-end solutions for OEMs, retailers, independent dealers and third-party administrators.
Encompass manages all stages of the product lifecycle, including finished goods and replacement parts logistics, board repair and product refurbishment services, returns management, asset value recovery and eco-friendly disposal. For more information, please visit encompass.com and encompassparts.com and follow us on Facebook, LinkedIn and Twitter.

Extended-Service Contracts Help Build a Comfort Zone – and Long-Term Relationships – with Customers

The following is an excerpt from an article by Jeff Crider, which appeared in the 2017 Jan./Feb. issue of RVBusiness. The full article can be found at: http://bit.ly/2m9hhac
“The quality of RVs in general has improved, but there are more and more gadgets,” said Joe Suttera, Warrantech’s vice president of specialty products. “From a warranty standpoint, there is certainly a lot more risk than there ever has been when it comes to these units.”
The continued growth of the RV industry in 2017 is good news not only for the nation’s RV manufacturers, aftermarket suppliers and retail dealers, but also for the companies selling extended-service contracts to this emerging wave of RV consumers.
   In fact, the extended-service-contract business is booming, companies told RVBusiness, due to this sustained increase in the sales of new and used towable and motorized RVs.
   Indeed, the industry is currently experiencing its eighth consecutive year of growth, with wholesale shipments of new RVs expected to increase 4.4% in 2017 to 438,000 units, according to projections by Richard Curtin of the University of Michigan’s Consumer Survey Research Center.
   That continuous flow of new- and used-vehicle sales creates huge opportunities for dealers to sell their customers extended-service contracts, the cost of which is typically added to the vehicle loan at the time of purchase.
   Regardless of whether their RV is new or used, consumers want to have peace of mind knowing that unexpected repair costs will be covered when their vehicle’s warranty runs out. While manufacturers provide different types of warranties to cover things that can malfunction in the mechanical and living areas of an RV, warranties only last for specific periods of time. Extended-service contracts have been designed to extend warranty protections for additional periods of time with varying levels of coverage and cost.
   Extended-service contracts are also available to cover things that are not typically covered by factory warranties such as roadside assistance, tire-and-wheel coverage and paint-and-fabric coverage.
   Millennials, in particular, are in tune with the latest innovations in technology and they want it to work.
   Extended-service contracts can cover these items after the warranties expire to give consumers peace of mind with their RV purchases, regardless of whether they have new or used vehicles.
   Bill Gilman, senior vice president of sales for Warrantech, an AmTrust Financial Company based in Bedford, Texas, said there were more “fit and fitness issues” with RVs back in 2007 when the RV industry was struggling through the Great Recession. The downturn forced many RV manufacturers out of business. But while the quality of today’s RVs has significantly improved from 2007, Warrantech and other extended-service contract providers see plenty of potential risks to cover.
   “The quality of RVs in general has improved, but there are more and more gadgets,” said Joe Suttera, Warrantech’s vice president of specialty products. “Now you’re covering 50-inch flat-screen TVs, full walk-in showers. From a warranty standpoint, there is certainly a lot more risk than there ever has been when it comes to these units.”
   As one might expect, companies that provide extended-service contracts closely monitor their claims reports so that they can price their contracts accordingly. They also monitor feedback from RV dealers and periodically either update their extended-service contracts to cover new products or develop entirely new types of extended-service contracts for dealers to sell.
   Extended-service contract companies offer a variety of educational programs and increasingly sophisticated electronic programs to expedite contract sales and claims processing.
   But the time to make the initial pitch to consumers is in the F&I process when they’re purchasing their new or used RVs. That’s when dealers have an opportunity to educate their customers so that they know the differences between warranties and extended-service contracts.
Warrantech Automotive, an AmTrust Group Co.
Bedford, Texas
Product offering: Warrantech markets exclusionary and stated extended-service contracts using the CampersEdge brand name. The company covers motorhomes valued at up to $5000,000 and with up to 100,000 miles. It also covers towable units valued at up to $150,000 and that are up to 15 years old. The company also offers specialty contracts for RV technical assistance; 24/7 roadside assistance; windshield repairs; painting and interior; tire and wheel coverage; as well as key/remote replacement coverage. Warrantech also provides Towbusters coverage with 24-hour emergency towing, roadside assistance, lost key and lockout service, map routing assistance and theft as well as hit-and-run protection. The company also offers guaranteed asset protection (GAP) coverage.

With NIADA CPO and the Internet Creating a Level Playing Field, Independent Dealers’ Low Overhead Gives Them an Edge in the Used Car Market

Last year was one of the best retail sales years in car business history. And looking forward, sales in 2016 and beyond should benefit from the wave of full employment, low interest rates and low fuel prices to continue knocking down strong years. So where does the independent operator fit into this sales boom? How do owners in this segment of the market maximize their dealership value?
   As new car franchises hit record numbers, the trend creates opportunities for independent sales organizations. But the question is: How can you capitalize on those opportunities when they are presented?
   The Internet allows independent dealers, no matter how small, to compete on an even playing field with mega-franchises.
   It is important to know that new car franchises look for one-to-one new-to-used sales. They’re currently running at about .02-to-one used-to-new, according to NADA data.
   With used car prices at an all-time high, according to Edmunds.com, and new car dealers renewing their efforts to conquest used car customers, independent operators needs to be prepared for the future — not only to gain market share, but to keep what they have.
   On the Internet, the small operation is the same size as the largest dealer. If an independent operator takes advantage of his opportunities while diminishing his competition’s added value, the independent dealership can compete very well with new vehicle showrooms.
   When looking at how to best capture a percentage of sales generated from the big-box retailers, it is always wise to examine the advantages and disadvantages of your position versus local new car dealerships.
   The biggest and most obvious difference is the facility. New car franchises are required by their OEMs to meet certain specifications in order to remain a franchisee.
   Those cathedrals to car sales look great and attract customers, but in the final analysis add nothing to the value of the vehicle purchased. In addition to that zero value, the future and present state of the auto industry relies heavily on Internet sales, which makes these structures almost obsolete.
   The costs of building and maintaining the facilities at most franchise lots are astronomical. And because the new car business is so competitive, the franchise stores’ profits from their new vehicle departments are minimal. That means the costs must be paid for through used car sales, the service department and increasingly higher profits in service contracts.
   The overhead advantage works in favor of the independent used car dealer.
   This is the best news for independent dealers. A small lot can be just as spectacular as the largest franchise on the web.
   If the independent dealer can get his message out to customers, he has a chance to take one or two new vehicle customers and some used customers from a larger dealership.
   One very important statistic to keep in mind is that a new car purchaser will consider a used vehicle instead 59 percent of the time – if the used vehicle is certified.
   That creates an opportunity for a used car dealer to capture new car business.
   It means if the new car market consists of 1,000 people per month in your area, 590 of them would look at a good certified pre-owned vehicle. Attracting 1 percent of those customers through the Internet translates to six vehicle sales a month.
   The great change that the Internet has brought is a larger marketplace and a greater opportunity for used vehicle operations to cash in.
   Unfortunately for new car franchises, the Internet really serves to drive profits down in the new vehicle world because of the competitive advantage it gives the customer.
   A new vehicle at one lot is no different than the one down the street. Customers can locate and negotiate its purchase at multiple lots, pitting one franchise dealer against the other and putting the customer in a power position.
   Not so with used vehicles. They are all different because of miles and vehicle condition, which makes location a much more important factor in the shopping experience.
   That is why eBay retailers like NIADA president Frank Fuzy of Century Motors of South Florida can get customers from all over the country. The shopping those customers do is powered by the way a vehicle looks and the way it is described on the Internet.
   If a vehicle is clean and in front-row-ready condition — featured with an appealing background, shown from all angles inside and out, badged with vehicle certification, and presented with a limited warranty and an explanation of the meaning of CPO — an independent with the smallest lot will be able to compete for a customer’s attention against the largest retailers.
   Many small operations don’t put the effort into the photos they post on the Internet. They need to realize it is the equivalent of the showroom of the ’60s and ’70s and should be thought of as a display case.
   Large dealer groups put a huge emphasis on their web display in their marketing efforts, making sure that the vehicles and the ambience of the background appeals to visiting customers.
   Typically, social media is where customers first see a CPO program’s commitment to quality. If customers don’t feel the program meets a high standard, they will not feel safe doing business with that dealership.
   Participating in CPO programs offered by organizations like NIADA announces your commitment to integrity and allows your website to display certified units, which shows your commitment to the customer and the industry.
   But simply being a member of such a program is not enough. You need to broadcast what that membership means so customers become informed enough to tell the difference between an NIADA member and other car lots.
   Another thing to keep in mind is new vehicle dealerships really have little advantage in inventory. They might carry more units than a smaller store, but independents should be able to be more responsive to the customer’s needs.
   Everybody pays the same price for automobiles. Whether it’s purchased at the auction, traded in for a new vehicle or bought wholesale, a car is worth what it’s worth.
   The real advantage for a dealer is the ability to have vehicles certified by a national source. Usually, that means a factory certification program administered by a manufacturer that has invested millions of dollars into creating a certified market. In doing so, it has created a niche in the customer base for people who have a prejudice toward buying a vehicle that is certified and will not look at anything else.
   Certified vehicles now make up 65 percent of the used vehicles sold by franchise dealers. That means any car lot that does not have some certification program is only going to be a viable alternative to 35 percent of the used vehicle market.
   So how do you certify your vehicles?
   There are really three ways — through the factory, a dealer-branded program or a third-party program.
   Factory dealerships are strongly encouraged to certify every vehicle through their OEM’s programs. While those are very good certifications, there is no proof customers put any more credibility in those programs than they assign to third-party or dealer-branded programs.
   Customers know they want certified even though they may not be fully aware of what that means. What customers are really looking for is tangible evidence that the certification is meaningful and that there is a credible program behind it.
   Factories have spent millions making customers aware of certification and the value of a certified vehicle. They have even tried to tie certifications to new vehicle franchises.
   But that can work to an independent dealer’s advantage.
   Factory programs are very specific as to what is certifiable, making their certified vehicles cost more in reconditioning than the average trade-in. And OEM programs get into distinguishing between vehicles with or without matching tires or if they have factory-installed floor mats, when customers really just care about the vehicles being mechanically sound.
   A customer might not be buying a certified vehicle because the program has a limited warranty attached, but a limited warranty offers proof, from the customer’s point of view, that the certified vehicle should command a higher price.
   Customers feel if the entity issuing the certification is also backing it with a limited warranty, that entity must believe in the certification process.
   To be a credible certification program, there has to be reputable company paying the bills for customer repairs. A strong financial backer, along with coverage that protects customers from the fear of buying someone else’s problem, offers the peace of mind customers are looking for when they decide to purchase a certified vehicle.
   Factory stores are forced or strongly encouraged to go with factory-backed certification programs. But recently, more and more progressive dealers like Huntington Honda in Long Island, N.Y., have elected to venture off with their own dealer-branded programs.
   Groups like this have seen how the high costs of factory programs have limited their profits without providing a significant benefit over other nationally recognized programs.
   The best known and most respected of the nationally recognized certification programs outside of the OEM brands is the NIADA Certified Pre-Owned Program.
   Frank Fuzy credits the NIADA CPO program for giving him the credibility that has helped him sell vehicles on eBay.
   Frank is the king of eBay sales – he sells more cars on eBay using the program than any other dealership. At the 2015 NIADA Convention and Expo, Fuzy said he hopes more stores don’t start using the NIADA CPO program because he competes nationally on the Internet and believes the program gives him an advantage he doesn’t want to give up.
   Teaming with NIADA removes the biggest advantage a new car franchise has. Statistics show that 65 percent of all people buy a car where they get it repaired. So when your customers are using your warranty, you can direct them to the service department where you want them to have their repairs completed.
   The NIADA CPO Program allows independents to bring customers into their service area, creating another profit center as the warranty pays for retail parts and labor.
   The greatest equalizer in the history of the car business is the Internet. When automobiles are presented on the Internet with NIADA CPO certification and a limited warranty, they stand out from the fog and clutter of vehicles advertised on the social media outlets.
   The dealer or independent operator who knows how to take advantage of the social media setting will be able to excel in the new environment we find ourselves in.
   For example, when Fuzy advertises on the Internet that he certifies his vehicles with the NIADA CPO program, he gains an advantage in several ways.
   First, his organization is saying it has an agreement with a national organization that was founded on ethical business practices. Plus the program is backed by Warrantech, a wholly owned subsidiary of AmTrust Financial, which is A+ rated and accredited by the Better Business Bureau.
   That gives Fuzy’s customers peace of mind and an affordable program that provides rental vehicle benefits, towing and trip interruption coverage equal to or better than most megastores.
   Using a program like NIADA’s allows an independent broker to take advantage of the cost of maintaining the lot he has as opposed to a new car franchise’s Taj Mahal.
   Simultaneously, it allows for more gross profit and faster turn of inventory while alleviating the risk that a customer assumes.
   Risk is what drives the used vehicle industry. The more risk a customer is willing to accept, the less the vehicle will cost. A 12-year-old vehicle with 100,000 miles is much less expensive to purchase than a new vehicle because of the risk in ownership.
   That risk is mostly due to repair costs, which can be offset with a CPO program like the one offered by NIADA.
   Many experts foresee a golden age in vehicle sales over the next 10 years, with predictions that average annual new vehicle sales will reach 17.5 million. Sales of that volume would make it the best sales period in the history of the auto industry.
   Independent used vehicle operations that take the time to position themselves at the top of the pyramid and are prepared to take a portion of new car franchises’ business will find this a very profitable period.
   By partnering with the right organizations and following through with what you promise, you can use the next 10 years to establish your dealership as a dominant force in the market.