CPO Sales, New-Car Prices Hit Record Levels

The certified pre-owned sector just had its best year ever — again. With 2.34 million units sold — a 10.8% year-over-year increase — 2014 marked the fourth consecutive record-setting year for CPO volume, according to AutoTrader data released last week.

Off-lease vehicles, volumes of which are predicted to spike later in 2015 and into 2016, often end up in the CPO market. Manheim reported that wholesale values increased 2% in the fourth quarter of 2014, a reflection of strong demand for used cars. This demand may stem from new-car prices hitting a new record. Last month, new-car prices topped $34,000 for the first time ever, according to Alec Gutierrez, Kelley Blue Book’s senior market analyst for automotive insights.

“The growth rate in the U.S. auto market is expected to slow down and level off in 2015,” said Manheim Chief Economist Tom Webb. “The big question is whether automakers will be satisfied with their respective slice of the pie. If they aren’t satisfied and resort to heavy incentives, prices and profits will fall.”