The U.S. used car market is running hot during this year of the pandemic, and Honda wants to grab a bigger share of the business away from the likes of CarMax and Carvana, two of the leaders in the “previously owned” segment.
Honda already has seen significant growth in demand for its Certified Pre-Owned, or CPO, business that focuses on select, recent-vintage vehicles carrying like-new warranties and other features – for a price premium. Now, it also wants to boost its share of the 3 million used Hondas each year that don’t fall into the CPO category, two-thirds of which aren’t sold through Honda dealers.
“With the continued rise in new-vehicle prices, the first vehicle purchase for many buyers will come from the used-car market, and our upgraded website makes this process more simple and enjoyable,” said Dan Rodriguez, manager of auto remarketing at American Honda. By having its franchised dealers pick up more of that business
Where CPO programs typically focus on used vehicles of around one to four years old, Honda’s new program will target models that have been in use as much as a decade, Rodriguez said during an online interview.
Older vehicles naturally tend to cost less, making them more appealing to younger buyers, many purchasing their first vehicles, said Rodriguez, so the goal of the “pre-owned initiative” is to get them familiar with not only Honda products but Honda dealers. That increases the odds they will come back the next time, he said, for a CPO model and “then come back for a new Honda.”
Virtually every automaker today offers a certified pre-owned vehicle program. The specifics may vary a bit from brand to brand but the basics are largely the same. Relatively recent models, typically one to four years old, go through extensive checks and, where needed, maintenance and repairs. They also carry features such as like-new warranties. All that comes at a price, however, a CPO vehicle running anywhere from several $100 to $1,000 or more compared to a similar, non-certified model.
By reducing the “buyer-beware” factor in purchasing used, CPO programs have become a win for brands like Honda, and for their dealers, helping them capture a much larger share of near-new vehicle sales than in years past.
Now, Honda wants to target those on a more limited budget, especially young, first-time buyers. The new program is, for now, a work in progress, explained Rodriguez. The first step is to begin listing non-certified products on its corporate website, much as it already does with CPO vehicles. This should make it easier for potential buyers to track down the exact Honda product – and price – they want. And it more directly mirrors what companies like CarMax and Carvana have been doing as they try to transform the used car market.
Looking forward, Honda hopes to add still more features “leveraging” some of the processes– such as the 182-point inspection – that vehicles go through when they’re put into the CPO program.
Rodriguez wouldn’t go into specifics, “But over the next year,” he hinted, “we’re going to be working on a couple extra things that I’m not prepared to talk about right now, but that’ll make the program a little more robust and attractive to consumers and our dealers.”
The new used-car initiative will pay off in several ways, or so the automaker hopes. Demand for used cars this year has remained far more robust than the new vehicle market, in part due to the strained economy, but also because pandemic shutdowns have left dealers short of inventory. They’ve been able to make up some of the financial hit by focusing on previously owned products.
For Honda, the program aims to keep its dealer network healthy while also ensuring that a higher percentage of those today buying one of the marque’s used vehicles will stay loyal and return, eventually, for a new Honda.