Chrysler Group LLC is aiming to help its dealers sell more new Jeeps, Dodges, and Fiats by offering company-backed warranties on used cars from the competition.
The Detroit automaker rolled out a program this week that will let dealers award certified pre-owned status and the associated warranty to select cars from rival manufacturers. Chrysler first made the "Diversified Certified" program available to its Fiat dealers, but it is expected to expand to all dealerships within 60 days.
"It's a good time to do this because Chrysler is growing so fast on the new-car side. We're finding from our dealers we're taking in a lot of competitive-make vehicles," said Eric Swanson, Chrysler's head of certified pre-owned vehicles.
Chrysler has been increasing its market share in recent months, and officials are hopeful the program will help dealers earn even more "conquest sales," the term for an auto company luring a loyal buyer away from another company.
According to data from the National Automobile Dealers Association, Chrysler's market share rose to 11.6 percent in February. That's up from 11 percent in January and from 9.5 percent in February, 2011.
Although the label should help dealers sell used cars, the real target is new-car sales. Knowing they'll be able to sell a potential trade-in as certified pre-owned will allow dealers to offer more money for trade-ins and seal more deals, Swanson said.
Industry followers say the strategy makes sense.
"In theory, what Chrysler is saying is absolutely correct. If a Chevy comes in and the [dealer] knows he can sell it as Chrysler-certified on his used sales lot, he would be willing to spend a little more money on it," said Stu Zalud, director of dealer services for the NADA Used Car Guide.
Though many individual dealers have offered extended warranties on their used cars, Chrysler says it's the first manufacturer to give rival makes company-backed, certified pre-owned status. Mr. Zalud predicts other manufacturers will eventually follow suit.
The certification will only be available on vehicles from the 2008 model year and newer with fewer than 48,000 miles. Nearly all common makes -- Honda, Toyota, Ford, and Chevrolet -- are included, although there are exceptions for diesels and hybrids and some higher-end luxury models. Certified cars will carry a five-year, 60,000-mile full-mechanical warranty.
Dealers have the option of participating, but Ralph Mahalak Jr., owner of Monroe Dodge Chrysler Jeep Superstore in Monroe, called it a "no-brainer."
"We really need it right now because we've been taking in some tremendous trade-ins -- all kinds of off brands, Fords, GMs, imports," he said.
Mahalak's auto group includes a Fiat dealership in Florida, which started the program Monday.
Officials at Yark Fiat in Sylvania Township, the only Fiat dealership in metro Toledo, said Tuesday they're still weighing the program.
"The program is so new, we haven't really had a chance to mull it over and the advantages for our facility," sales manager Travis Dupont said.
Many buyers like certified pre-owned cars because they get vehicles that have met a certification process and are backed by manufacturers' warranties.
Dealers like them because certified pre-owned cars typically sell for more than similar used cars without the certification.
Zalud said consumer interest in them seems to be growing.
"The perception is, and rightfully so, it's a car that is likely to have less exposure for some kind of catastrophic problem," he said.
Although Chrysler would rather see buyers put themselves in new or certified pre-owned Chrysler products, officials feel confident that building relationships with buyers who chose other manufacturers will eventually net new-car sales from within Chrysler Group.
"We get that customer to come back to our service department, we'll get them back to sell them a new car," Swanson said.
The automaker would not give any projections on how many dealers it expected would participate or how many vehicles it expects to certify.
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