Paul Pejza Manager, GM Certified Used Vehicles
Toward the end of 1996, General Motors Corp. launched its GM Certified Used Vehicles (GM CUV) program. This program was designed to build consumer confidence in used cars sold by GM dealers, while helping keep shoppers within the various GM brands. Although it started inauspiciously – only 30,000 certified vehicles were sold in 2000, the year the program was modified based on dealer feedback – GM Certified showed enough promise for GM to put its resources behind it. Now the company typically sells 30,000-plus GM Certified Used vehicles every month, translating into approximately 500,000 vehicles in 2007. In this Q&A, Paul Pejza, manager of the GM Certified Used Vehicles program, talks about the factors behind that growth and what will continue to drive it in the future.
Q. How does GM view certified vehicles as a class?
A. When we first started out in 1996, certified vehicles were simply another flavor of our used vehicle business, sort of an enhancement, if you will. But we quickly saw that they were very different in terms of the behaviors they inspired in shoppers. We now view certified as a third channel of vehicles for dealers to use, with its own set of parameters and requirements.
Q. How do certified shoppers compare to those in the other two channels?
A. From the customer surveys we’ve done, certified purchasers tend to have higher incomes and education levels than those who purchase regular used vehicles, but they lag slightly behind new purchasers in those categories. They do tend to be on the upward trend in terms of income, though, so we view today’s certified purchasers as tomorrow’s new-vehicle buyers.
Q. That data seems to be right in line with the Experian Automotive/Cars.com study. Would you agree?
A. Definitely. I’ve seen the study results, and they certainly validate both what we’ve been able to learn internally through our customer surveys and through outside firms such as J.D. Power and Associates and R.L. Polk. Our experience is that certified buyers are 26 percent more likely to purchase a new GM vehicle later on down the line – evidence both of the step-up value certified provides and the brand loyalty it builds. They’re also much more likely to bring their vehicles back to the dealership for service than regular-used-vehicle purchasers.
Q. What has been the driving force behind your program’s success so far?
A. I think it’s a combination of elements. One is that we’ve worked very closely with our 12-member dealer work group to continually refine the program and make it more attractive to both dealers and customers. We’ve made a huge effort to educate both groups to help them understand the benefits. Participating dealers who fully engage in the program realize higher gross profits, faster turns, increased customer loyalty and return business. Their customers get the peace of mind that comes with the purchase of a fully inspected and reconditioned low-mileage vehicle backed by the manufacturer and the dealer, often at financing rates like those offered on new vehicles. We’ve also continued to upgrade our offerings. In 2007, we introduced a five-year/100,000-mile powertrain limited warranty with 24/7 roadside service and courtesy transportation on all GM Certified Used Vehicles. We’ve also put a lot of digital marketing muscle behind it.
Q. Where has your marketing focus been?
A. When we started out, it was with TV and radio spots as well as newspaper advertising. Now, the majority of our budget is focused on digital. Internet advertising is the key, especially for certified and new-vehicle shoppers. As I said before, both groups are more affluent and educated, meaning they’ll research a vehicle more thoroughly before coming to a store. Internet advertising gives us the perfect opportunity to sell the vehicles individually as well as to educate the customer on the benefits of certified overall.
Q. How are you promoting GM Certified online?
A. One thing we’re doing is working with third-party sites such as Cars.com to reach our customers where they begin their shopping experience. We have banners and hot links there touting our certification program, with a click-through to our own redesigned GMCertified.com site. We are also encouraging our dealers to use those same banners and buttons on their own sites so customers become familiar and comfortable with the program. We’re even giving them co-op dollars specifically assigned to promoting certified vehicles. We devote significant time and resources to train our dealers on how to most effectively market and advertise their certified inventory on the web, including best practices such as posting multiple vehicle photos, highlighting vehicle options and including a call to action for shoppers.
Q. Has it been successful?
A. Yes. The numbers tell the story. The GM Certified Used Vehicles program, which includes Chevrolet, Buick, Pontiac and GMC vehicles, has been the industry’s No. 1-selling manufacturer-certified brand for six consecutive years. And Chevrolet was the top-selling single-line make certified brand for the fourth year in a row in 2007.
Q. How has dealer adoption been?
A. We think it’s been excellent. More than half our dealers are now on board, and we were able to sign up another 675 dealers in 2007. It just keeps growing.
Q. What about the customers who walk into the dealership with all this data in hand already?
A. They’re sometimes much more educated about the vehicle than the sales consultant. They know what they want, they know what they’re willing to pay. Now they just need some reassurance and validation. We train dealers on how to identify those customers and sell them what they want. Our program includes web-based, IDL and in-dealership training to help them achieve a higher closing rate.
Q. How do you combat the dealer-specific programs?
A. That’s one of the major reasons we began offering the five-year/100,000-mile powertrain limited and three-month/3,000-mile bumper-to-bumper warranties. Only franchise dealers selling vehicles certified by GM can provide these factory warranties. Consumers who search for certified vehicles on Cars.com will see only manufacturer-certified used vehicles, not dealer-certified vehicles. And only enrolled GM Certified dealers can have their certified inventory listed for free on 300-plus websites, offer customers free Carfax vehicle history reports and GMAC rate incentive support. That’s pretty powerful when you think about it. What’s the No. 1 concern of customers purchasing a used vehicle? They don’t know where it’s been or how it’s been maintained. It’s not like a new vehicle that just rolled off the assembly line. Offering a warranty that’s as good as the one on new GM vehicles is a huge vote of confidence on our part and a huge weight off the purchaser’s mind. It takes a lot of the caveat emptor out of purchasing a pre-owned vehicle.