Learning from Winners: How Research Drove a New Model for the Automotive Industry

Raymond Pettit
Advertising Research Foundation

INTRODUCTION

As auto leasing gained favor in the early 1990s, automakers recognized a need to help dealers manage the influx of a new kind of used vehicle. These were cars with relatively few miles and/or defects, leased for short-term use. Automakers began reconditioning these cars to like-new standards, offering such benefits as manufacturer-backed warranties, and selling them at a premium versus traditional used-car prices.

Certified Pre Owned (CPO) sales held promise. Essentially, they improved residual car value and extended future brand resale. Today virtually every automaker has a CPO program. These programs offer real value to consumers, too, by quelling the risk and stigma associated with standard perceptions of used cars by actually offering used cars held to a high quality standard backed by the manufacturer.