This Week in Car Buying: Kelley Blue Book offers CPO pricing; Penske bets on used cars; Porsche Experience delivers; Higher credit scores sought
Recognizing that Certified Pre-Owned (CPO) sales are accounting for a growing share of used vehicle transactions, Kelley Blue Book has added a CPO component to its roster of Price Advisor tools, which will enable shoppers to better evaluate their options in the marketplace. KBB estimates that 2.7 million CPO vehicles will be sold this year alone.
The CPO Price Advisor, which is now available on KBB.com and participating dealer websites, is based on recent certified vehicle sales transactions updated on a weekly basis and adjusted for local market conditions and seasonal trends. The new Price Advisor displays a CPO Fair Market Range and CPO Typical Listing Price, which will help build credibility between dealers and shoppers through its realistic certified vehicle pricing expectations.
“With the CPO market continuing to grow year-over-year due to increased consumer and dealer demand for CPO inventory, the new CPO Price Advisor will play a critical role in assuring consumers they are making the best decision possible during the vehicle shopping process,” said Mike Sadowski, general manager for Kelley Blue Book. “In an effort to provide consumers with the information they need to make a confident buying decision, Kelley Blue book has enhanced the consumer’s ability to discover what represents a fair price in their location. Ultimately, this will create a more transparent and confident car-shopping experience between consumers and dealers.”
The CPO Price Advisor, in addition to being market-reflective and backed by actual transaction data, presents information on specific year, make, model and trim combinations with three different pricing zones, white, green and red. The white zone shows pricing below the CPO Fair Market Range and may in some instances reflect excess inventory or perhaps an unpopular color. The green Fair Market Range shows what most people are paying for these vehicles, while the red zone, shows pricing above that and indicates that the vehicle may have exceptionally low supply with high demand.
Penske bets on used cars
Penske Automotive Group is looking to expand its CarSense used car operation by opening points in three new markets over the next 18 months. The first will be in Phoenix, where it is looking to spend $3 to $4 million on the facility, which will be built off a predelivery and inspection center owned by the company there.
The two other sites may be in New Jersey and Pennsylvania, but no specifics were given by Chairman Roger Penske, according to a report in Automotive News. CarSense was purchased by Penske early last year and has five stores in Philadelphia and Pittsburgh. The company also owns CarShop, a used car dealer network in the United Kingdom.
With a flood of lease cars coming back to the market and four strong years of sales means that there will be an unusually large crop of late model, low mileage used vehicles coming to market. Clearly, Penske is positioning his company to take advantage of what could be a booming business. While Penske is looking at expanding his used vehicle operations to other international markets like Spain and Germany, he told the trade paper that “There’s so much white space in the U.S. and U.K. right now.”
Porsche Experience delivers
Building on a customer delivery program at the Porsche Experience Center located next to the company’s Atlanta headquarters, Porsche is now offering buyers the opportunity to take possession of their new vehicles at the recently opened Los Angeles Experience Center. The Atlanta Center has delivered more than 500 vehicles since it initiated deliveries there in 2016.
“In a digital world, our brand embassies in Atlanta and L.A. are real, physical places where people can drive and feel the brand,” said Klaus Zellmer, president and CEO of Porsche’s U.S. unit. “Introducing the New Vehicle Delivery Program in L.A. is another touch point to personalize the ownership experience.”
The delivery process includes a 90-minute session on the driver development track at the Experience Center in a model that matches the delivery car. Owners also get an in-depth orientation with a delivery specialist, lunch for two at Restaurant 917. Deliveries are done once daily from Tuesday through Friday with reservations limited and scheduled by appointment. The New Vehicle Delivery program is an option that can be selected by the owner when buying the vehicle through a Porsche franchised dealer and the cost ranges from $385 to $875 depending on model. The first car delivered in L.A. on February 20 was a Porsche 911 Turbo S.
The L.A. Experience Center is one of five globally. In addition to Atlanta, Porsche has the facilities in Leipzig, Germany; Silverstone, England, and Le Mans, France. To date, the two U.S. facilities have attracted more than 160,000 visitors.
Higher credit scores sought
Higher interest rates and pickier lenders could make the cost of new car loans higher and the availability scarcer. The Federal Reserve of New York has noticed an uptick in average credit scores for new car buyers, hitting a 6-year high in the fourth quarter of last year.
The median score for new car loans is now 707, up two points since the third quarter of 2017 and the highest since 2011. The weakest borrowers have an average credit score of 575, also up two points over the same period. Credit scores range from 300 to 800, with scores below 520 considered to be subprime.
The higher scores reflect tighter standards, which also may reflect higher transaction prices and greater risk on loans. The New York Fed’s survey of senior loan officers show about 12 percent of banks are somewhat raising their standard as opposed to just 3 percent who are loosening them. S&P Global Ratings reports that some subprime lenders are also raising their standards.
Mercedes is set to bring its updated 2019 Mercedes-Benz C-Class to the Geneva Motors Show. In addition to styling tweaks, it features an expanded roster of driver assists.
The wraps have come of the 2019 Volvo V60 station wagon, which adheres more to traditional wagon styling than the SUV-influenced look of the larger V90 Cross Country.
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