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Hey everyone,
Today’s Market Pulse is about the certified pre-owned market, but the used market overall has seen some changes in the past month.
Find our latest update and hear from a dealer panel on used vehicle acquisition.
— CDG
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74%: Car shoppers interested in CPOs
81%: Shoppers familiar with CPO
72%: Initially shopped for a new or used vehicle and plan to switch to a CPO
86%: Middle-class buyers say CPO is a good way to buy a reliable vehicle at a more affordable price
(Sources: Cox Automotive 2026 Certified Pre-Owned Vehicle Study, and Santander Paths to Prosperity Q3 Survey)
CPOs are increasingly solving for affordability challenges
The average new vehicle MSRP reached $52,342 in September, according to Kelley Blue Book data.
And with that: New car prices have left 71% of middle-class buyers, with income between $55,000 and $167,000, feeling they are priced out of the new car market.
While new vehicles feel out of reach, CPOs are becoming a consideration for more buyers, with 86% seeing them as a good way to buy a reliable vehicle at a more affordable price, according to the Santander US Paths to Prosperity Survey.
NOTE TO DEALERS:
“It just continues to emphasize the affordability challenges that we're seeing with the cost of the cars, interest rate increases that we've seen recently, as well as the cost of insurance. And again, just the overall cost of living that has impacted the consumer. So they're having to make that decision to move to a used vehicle, maintain some of the features that are desirable, and still have reliable transportation to get to work,” explained Betty Jotanovic, President of Auto Relationships at Santander Consumer USA, on why many consumers are opening their options to CPOs.
Consumers are needing more clarity on how CPOs differ from new and used
Many shoppers have heard the acronym, but only 81% of shoppers know a lot about CPOs, which is down 6% in three years.
Opening up to options: Additionally, 31% of new shoppers open to CPO units understand how they differ from used. That number is 27% for used shoppers. Almost a quarter of new and used vehicle shoppers have not heard about CPO options until arriving at the dealership or visiting a dealer’s site.
Cox Automotive data shows 74% of shoppers are now interested in CPOs.
“Many shoppers have heard of CPO without actually knowing what certification is. And so it's funny, as new car interest has also dropped because of the pricing, and you look at how those things align, and it's like it needs to be a key, one of the legs of any strong franchise dealership's business. And if not, they have a real opportunity to lose a huge segment of consumers that they thought were already brand loyal to them. And education is where we need to close the gap as an industry.”
Jade Terreberry
Senior Director Planning
Cox Automotive
CPOs are presenting dealers with opportunities
Cox Automotive forecasts 2.6 million certified pre-owned sales for 2026, which is a decline of 1.8% from 2025. Inventory options for CPO have limited the sector in the past few years, but those concerns are waning with more late-model off-lease vehicles returning to dealers’ lots.
Catalyst IQ’s 3Q State of the Industry report showed an uptick to 223,000 CPO units, a high point for the year.
“About three years ago, coming out of the pandemic, there was just a shortage of qualified vehicles,” Terreberry said. “It seems that is loosening up now.”
Priced at a premium: CPOs also carry quite a premium versus used vehicles. Catalyst IQ data shows the average price for a CPO vehicle in Q3 was $40,600, which is up $1,400 since the start of the year. The CPO price is also bringing in $11,300 more than the average price for a used car and has an 8% higher turn rate.
The Cox Automotive data shows that 72% of new shoppers open to CPO expect to pay $40,941.
“If their new car volume is down because of affordability, there are often incentives and reasons both from the OEM and from the consumer retention side to have more alternative options in the certified space,” Terreberry said. “We really see dealers that are winning in the CPO space are measuring all of those associated revenue streams: F&I profitability, back-end profit, the ability to upsell wraparound extended service contracts and road hazard, wheel and tire, and maintenance packages.”
WHY IT MATTERS:
Terreberry explains the potential earning opportunities for dealers in the CPO market, with back-end revenues, “make it so they can be a little more comfortable spending the certification money on the front end because they now have enough data under their belt to know that the full life cycle picture of the deal, the vehicle, and the consumer makes it worthwhile.”
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Several dealers are enjoying success in the CPO space.
Here are some dos and don’ts they shared.
Do: Commit to the CPO program fully and get buy-in from your staff.
In July, Vanguard Kia in Arlington, Texas, sold a regional record 84 CPO units. General Manager Jason Villa credited the commitment to the program and understanding of the impact to the entire dealership.
“If we can sell a ton of CPOs, that just allows us to do more new car business because we can take in the trades,” Villa said.
Do: Make the investment in the CPO vehicle.
Villa noted there are costs to making the commitment to a CPO program. For example, his store spent an average of $2,482 to recondition a CPO vehicle in July, up from the average $2,021 spent on regular used vehicles. Kia also charges $599 to certify CPOs. He noted F&I runs $400 better on CPOs because warranties are less expensive.
“It’s only $400 more per car, which isn’t terrible… And then we get good value when we’re selling. People are obviously shopping for CPO like crazy. Most of our lenders give us a $2,000 extra advance for CPO. There’s a lot of help in that space when it comes to lending.”
Jason Villa
General Manager
Vanguard Kia
Do: Provide alternatives to the traditional CPO program for consumers.
The Cox Automotive study pointed out that it’s not just manufacturer CPO programs buyers are open to, with almost 20% of new and used converts open to dealership-provided certification and a quarter to third-party certification.
Devinder Singh Bains of Turlock Auto Plaza, in the top state market for CPO sales in California, offers a dealership-certified pre-owned program on his 25 to 30 CPO sales per month that is clearly communicated to the customer. He points out he’s making $500 to $1,500 more, which covers his added costs and recon.
“The customer actually doesn’t care as long as they’re being taken care of.”
Devinder Singh Bains
President
Turlock Auto Plaza
Don’t: Skimp on making sure you have the right mix of options on the lot for customers.
CPO shoppers are not brand loyal, with the Cox Automotive study showing between 65% and 72% likely to purchase an off-brand CPO. And 80% of those new car shoppers considering a CPO would visit another dealership to find the vehicle they want.
“Consumers will defect in a minute…Once they've set their mind that this is what they want and they realize that they can't afford new, but they want more than just a used vehicle, I think that number is 80% of consumers; they will switch dealerships to get the right CPO vehicle,” Terreberry said. “And that's where that market share swing is happening.”
In today’s market, CPOs present a chance to make additional profit on the front and back end for dealers.
But it takes a willingness to educate the consumer, commit as a staff, and find the right inventory mix to take advantage of the opportunity.
