Some of the auto industry's best deals are suddenly popping up in the growing used-vehicle market, according to an article by Joe Miller in the Detroit News.

In their efforts to get new customers and at the same time sell off a glut of off-lease vehicles, automakers increasingly are fighting for used-vehicle customers.

Their weapons are "certified-used" programs that market reconditioned vehicles -- typically one to four years old -- with extended warranties and sometimes even roadside assistance.

And now, several manufacturers are upping the ante on the incentive game by pumping money into subvented loan rates, a tactic only seen in the new-car market until now.

Honda Motor Co. and General Motors Corp. this summer have advertised low 5.9-percent financing for their certified-used cars and trucks. Toyota Motor Corp. and Ford Motor Co. have offered similar rates.

While not quite as attractive as the no-interest financing recently offered on new vehicles by struggling brands such as Lincoln and Buick, the low rates on used vehicles have surprised industry experts, according to Miller's Detroit News article.

Not long ago, car companies paid scant attention to the used-vehicle market despite its size -- annual sales are nearly three times the size of new-vehicle sales. They left the market to their own new-vehicle dealers, used-vehicle chains and independent mom-and-pop dealers. Financing was left to banks and credit unions.

But faced with an onslaught of vehicles coming back from leases, automakers and their captive finance arms -- General Motors Acceptance Corp. (GMAC), Ford Motor Credit Co., etc. -- have entered into the used market in a big way over the past few years through certified-used programs and competitive loan rates.

Boosting demand for off-lease vehicles means boosting their value. That helps automakers offer more competitive lease deals on their new vehicles, since leases take into account how much the vehicle should be worth at the end of the lease.

Automakers, to their delight, are discovering that certified-used vehicles can bring in new entry-level customers to their brands.

Honda dealers through July of this year sold 69,777 certified used vehicles, twice as many as in the year-ago period. Toyota dealers through June sold 90,542 certified used vehicles, up 14.3 percent over the year-ago period.

GM and Ford have stepped up their certified-used programs this year. Ford reworked its program and launched a national campaign. GM added more dealers to the program and now expects to quadruple annual GM Certified sales from 30,000 in 2000 to 120,000 in 2002.

DaimlerChrysler AG's Chrysler Group says its certified-used program is still in the works.

Some dealers have been skeptical of the automakers' efforts to get into the used market. But manyt have been won over after seeing certified programs helping their business.

Certified programs can offer good deals for consumers, but not every time, according to consumer advocates, who recommend that even if a car is backed by an automaker's certified program, the buyer should always have the vehicle checked out by a third party.

Consumer advocates also warn that certified programs aren't free. Automakers and dealers have to cover their expenses for extending the warranty and reconditioning the vehicle, and that's tacked onto the sticker price. But the added costs for consumers could decrease as competition in the used-vehicle market heats up, according to Eric Anderson, an analyst who rates certified-used programs for IntelliChoice Inc. in Campbell, Calif.

Buying a 1-to-4-year-old vehicle -- particularly a used luxury car -- is getting cheaper as automakers try to sell their off-lease vehicles by cutting loan rates. Some examples:

Avg. interest rates

Jaguar 6.05

Volvo 8.5

Mercedes-Benz 9.98

Saab 10.31

Subaru 10.31

Honda 10.52

Volkswagen 11.07

Toyota 11.58

Source: J.D. Power and Associates. Based on dealership data from April 1-July 22.

Segment increases

New-vehicle sales may be fading, but franchised new-car dealers are seeing their used-vehicle sales continue to rise. Here's second-quarter sales and prices:

Year - Units sold - Avg. price

1997 - 2,953,343 - $12,173

1998 - 2,958,380 - $12,583

1999 - 2,997,796 - $13,209

2000 - 3,094,729 - $13,695

2001 - 3,151,481 - $13,974

Source: National Automobile Dealers Association (NADA)

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