Automakers eye EV CPO programs

As EVs make up a larger share of new-vehicle sales, leading to more in the used-car market, automakers are considering how to add them to existing certified pre-owned vehicle programs. Certified pre-owned (CPO) vehicles typically sell faster compared with non-certified used cars, Ian Hunter , vice president of sales at JM&A Group , told Auto Finance News . . JM&A runs a JD Power -backed CPO program that allows dealers to certify used vehicles outside of the manufacturer's brand. American Honda , which has a robust CPO program , plans to offer certified EVs down the line when Honda enough used battery electric vehicles (BEVs) reach the pipeline, Dan Rodriguez , director of auto remarketing and fleet operations at American Honda , told AFN . Honda’s first all-electric SUV, the 2024 Prologue, launched this year. “It is part of our strategy, and we will have a CPO product for our BEV units,” Rodriguez said. Leasing could be a driver of used EV supply and of future CPO EV programs, he said. Of EVs purchased in the second quarter, 46.6% were leased compared with 21.7% in Q2 2023, according to Experian ’s Q2 State of the Automotive Finance Market Report, published Sept. 5. . Nearly 37% of EVs were financed in Q2 while 16.6% of EVs were purchased with cash. “We want to make sure that we can take old Hondas to build new Hondas. . What we're doing with leasing and educating everybody as far as this being part of the cycle is going to help us set the stage for doing that for the future,” Rodriguez said. “As we go into battery electric cars, it becomes more critical, because those resources are scarce, and we want to have a nice pipeline for [BEVs] while still being conscious of the environment.” EVs are also being added to JM&A’s JD Power CPO program as they continue to make up a larger portion of total new-vehicle sales, Hunter said. . EVs made up 8.4% of new-car purchases in Q2, according to Experian. . Experian did not break out EV market share for Q2 2023, but industry data shows EV share hovered around 7% a year ago. EVs “are going to be coming back, whether it be trade-in or coming across the auction lane, so there's going to be a desire and a need for CPO vehicles,” Hunter said. “We talked to some of the EV entrants, and they are planning CPO programs as they go into their new-car sales. . They believe that to be a part of what they’ll want.” The $4,000 federal tax credit for eligible used EVs also will likely bolster sales of certified used EVs, Hunter said. . JM&A is working to build out EV CPO warranty options for manufacturers that the company works with, considering what service contracts should be included and whether battery warranties would be transferable to the next owner, he said. “When we talk about EV programs, there's got to be collaboration and creativity because those warranties are a bit different. . The battery warranties are longer-term from the manufacturers,” Hunter said. “Understanding what comes with [an EV] CPO is going to be something that everybody's going to have to educate themselves on and be ready from a product perspective to make sure that the value is consistent with what's being provided from the OEM warranty.” EV sales increase EV sales continue to gain momentum, with American Honda, Ford Motor Co. , Hyundai Motor America and Kia America reporting large upticks in EV and hybrid sales in August . . American Honda’s electrified sales rose 44% year over year to a record 35,886 units. EV incentives also reached the highest level this year in August at 13.3% of average transaction prices compared with about 12% of ATP in July, according to Kelley Blue Book data published Sept. 10. . The average transaction price of an EV was $56,575 in August, down 1.2% YoY. Tesla continued to lead the top 10 EV models purchased in Q2 with the Model Y at the forefront, followed by the Model 3 — a combined share of about 46%, according to Experian. Ford ’s Mustang Mach-E was third at 4.4%. Tesla’s Model Y and Model 3 were the top two leased EV models in Q2, making up a combined 30.7%, followed by the Hyundai IONIQ 5 at 6.5% of the market, according to Experian. Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 7-9 at Wynn Las Vegas. . To learn more about the 2024 event and register, visit www. .AutoFinanceSummit.com.

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