GM Poised for Record Year in Used-Car Sales

NEW YORK – Tracking 4% ahead of the 450,000 certified used vehicles it sold last year, General Motors Corp. is poised to set a new sales record in the segment in 2007, says Paul Pejza, manager of GM’s certified used-vehicle program.

In total, about 42.5 million used vehicles will be sold this year, Pejza predicts.

Last year, franchised dealers sold 14 million used cars, including 1.6 million certified used vehicles. Private individuals sold 14.5 million used cars in 2006. Pejza says sales of certified used vehicles have skyrocketed 132% since 2000.

By 2010, used-vehicle sales will total nearly 50 million units, Pejza forecasts. GM aims to sell 500,000 preowned vehicles by then.

GM stresses a no-worry concept for customers who purchase certified used vehicles. To qualify, a vehicle must be no more than 5 years old and pass a 117-point inspection.

GM’s U.S. retailers are not required to participate in the auto maker’s certified used-vehicle program, but more than half of the 7,000 U.S. dealers do, Pejza says.

GM’s vehicle warranty is fully transferable to certified used cars, and the auto maker foots 100% of warranty costs, Pejza says. The auto maker does not warranty or certify other brands of used vehicles taken in under dealer trade-ins.

The certified program has raised residuals on GM vehicles a little more than $1,000, Pejza says, while residuals on certified used luxury vehicles have climbed by $1,600.

Although GM has reduced sales to daily rental fleets, it has put higher content into rental vehicles, thus driving up residuals, Pejza says.

Dealers get their used vehicles from trade-ins, off-lease units, closed auctions and company vehicles. All the vehicles are posted on more than 300 websites, including autotrader.com and cartrader.com.

Hudson Pontiac-Buick-GMC in Poughkeepsie, NY, is one of GM’s top 25 leading sellers of cross/utility vehicles in the auto maker’s northeast region. The dealership sells 400 used vehicles annually, half of which GM certified. Last year, the dealership sold 700 new vehicles.

President Michael Mullaney says 87% of certified-used-car customers are more likely to return to buy new vehicles.

“If I don’t have a strong used-car business, I can’t have a strong new-car business,” he says.

Used- and new-vehicle sales represent 25% of the dealership’s revenues, Mullaney says, while 35% of profits are derived from service and 15% from auto-parts sales.

Mullaney says he runs a Carfax history report on every used vehicle posted on the dealership’s website.

The dealership spends an average of $900 per car for reconditioning before offering a vehicle for resale. Fullsize GMC Sierras, Chevrolet Silverados and midsize SUVs are the dealership’s most sought after vehicles.