Julie Dunning, president and Owner of Dunning Toyota, gets a ceremonial Samurai sword from Yoshi Inaba, executive chairman of Toyota Motor Sales USA, to commemorate the recent renovation to Dunning Toyota in Ann Arbor on Wednesday. (Mark Bialek / Special to The Detroit News)
Ann Arbor —When Jose Ortiz of Ypsilanti bought his 2010 Matrix at Dunning Toyota here in December, Toyota Motor Corp. became the first automaker to sell 4 million certified used vehicles, marking a major milestone in the program it pioneered back in 1996.
On Wednesday, Toyota executives honored Ortiz and refunded his purchase as they celebrated what has become an enormously important — and profitable — sales channel for the company.
“It’s almost a business in itself,” said Yoshimi Inaba, executive chairman of Toyota Motor Sales USA Inc. In fact, he told The Detroit News that if Toyota Certified Pre-Owned vehicles were a separate brand, it would have outsold 27 other nameplates in 2013, booking almost 370,000 sales in the United States last year.
That was more than either Mercedes or BMW sold new.
Certified pre-owned vehicle programs require dealers to inspect trade-ins and lease returns to make sure they are still in good shape, then offers customers a new warranty on those used cars and trucks.
“It’s the perfect avenue to attract new customers to the Toyota family so that we can migrate them into new cars,” Inaba said, adding that most are first-time Toyota buyers. “It assures them that Toyota quality is maintained.”
Bill Fay, head of the Toyota division for Toyota Motor Sales in the United States, said the program also is a boon for the company’s credit arm.
“They have a much more active channel for their off-lease vehicles,” he said, adding that this boosts residual values and allows Toyota to offer more aggressive lease terms. “It also means that dealers can be much more aggressive in taking trades.”
Toyota is hardly the only player in the certified pre-owned segment.
“It started out as something for luxury brands like Lexus, but now you’re seeing it spread out across all the volume brands,” said Kelley Blue Book analyst Karl Brauer, who agreed that these programs offer many benefits to automakers, dealers and consumers.
“It helps the image and the reputation of the car company. You’re giving the impression that our cars are built so well we can cover them beyond the original factory warranty,” Brauer said. “It’s also is a way of keeping people in the family. It improves that long-term relationship with the consumer. And it’s become another form of competition between brands. I’m sure all these programs are paying for themselves and profitable.”
Julie Dunning of Dunning Toyota said the certified pre-owned vehicle does also helps dealers like her.
“It very much strengthens the dealership and the brand,” she said. “It’s like its own little department.”
Inaba presented Dunning with a ceremonial samurai sword Wednesday to commemorate the opening of her remodeled store. The company also donated $18,093 — the price of Ortiz’s Matrix — to Alpha House, a local shelter for homeless families.
Detroit auto show
When: Industry preview continues today. Show open to public Saturday through Jan. 26.
Where: Cobo Center, Detroit
Hours:9 a.m. to 10 p.m. daily except Jan. 26, which has a 7 p.m. close
Tickets: $13 adults; $7 ages 65 and older; $7 ages 7-12; ages 6 and younger get in free. Available at www.naias.com or at the door.
Charity Preview: Friday. Tickets $350, $340 of which is tax deductible. Call (888) 838-7500 or order online.
Coming up: Find a full guide to the public days at the North American International Auto Show in today’s Drive section.