By on April 18, 2013

 

Certified pre-owned vehicles are rapidly becoming the favored new car alternative in the marketplace.

Sales for March 2013 are up over 21% from March 2012 to 190,065 units. Sales for the quarter were nearly a half million units to 497,647. Up nearly 10% from a year ago.

The following brands reached new CPO highs for this month

  • Ford
  • Lincoln
  • Chevy
  • Cadillac
  • Buick
  • GMC
  • Mazda
  • Volkswagen
  • Kia
  • Mini
  • Subaru

As a used car guy, albeit in the lower end of the market, I consider this great news. How about you? Would you be willing to recommend a CPO vehicle over a new car? If so, which CPO program and vehicle would be an easy recommendation?

 

 

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33 Comments on “Certified Sales Top 190,000 Units For The Month Of March...”


  • avatar
    GoesLikeStink

    That’s because a year ago used cars were very over valued. I bought a new car instead because the price difference was minimal. I was looking at Honda Fits that were the same price as new with 14000 miles on them. And new cars were being marked down at the same time. So I got a new Fiat 500c for the same price as a used Fit. And now I have a new convertible.

  • avatar

    What does CPO mean in the US? In Brazil there is a legal guarantee of 3 months when you buy a used car from a dealer or indie shop and has made CPO programs almost worthless. That guarantee is comprehensive and akin to a new car warranty. I honestly thought it was a scam until I bought the Ford Ka recently. Though the car overheated (for the 2nd time) and the head gasket needed work 3 days after the warranty expired, the dealer honored their part and paid up. When the mechanic lifted the gasket he also found that the valvetrain needed substitution. If I had bought the car from a private party, I’d would’ve been about 650-700 dollars poorer.

    Now, the dealers and shops say they’re only responsible for the engines and transmission and many consumers believe them. The law says differently. Due to this and the general reputation of dealers and used car salesmen in Brazil I had always bought my used cars from private parties. I was pleasantly surprised and in a similar situation in future , would not hesitate to buy from a dealer again.

    • 0 avatar
      hreardon

      CPO varies by brand on the details, but generally it means any vehicle that is under 100,000 miles and a certain number of years that the manufacturer recertifies and guarantees for a certain amount of time.

      Case in point, Audi will tack on an additional 2 years and up to 100,000 miles of warranty coverage from the original in-service date.

      • 0 avatar

        everything? Headlights, radio, finishing? Or major mechanicl systems (engine, transmission, AC) or minor ones (power window or wiper motors) only?

        BTW, thanks for the answer?

        • 0 avatar
          corntrollio

          I don’t think it’s always as comprehensive as the bumper-to-bumper original warranty, but for many manufacturers, it’s either very close or identical. Since hreardon mentioned Audi, their exclusion says the following, and it doesn’t seem unfair:

          Repairs already covered by the Audi Limited New Vehicle Warranty; this warranty is secondary to the Limited New Vehicle Warranty
          Radio and Navigation
          Tires
          Maintenance services and adjustments
          Wear items
          Damage or malfunctions due to lack of maintenance
          Damage or malfunctions due to misuse, negligence, alteration, accident, or fire
          Damage caused by the environment
          Cost of maintenance services

  • avatar
    Reino

    If a CPO is a 3-year old, 36k car then I’m not sure if it justifies buying over a new one. It really depends on the price.

    However, if it were a 5-year old, 60k car and less than HALF the price of a new one, then it might make more sense.

    • 0 avatar
      hreardon

      Reino -

      Exactly – and that’s why with recent used cars holding their value so well, CPOs really haven’t made too much sense. There are some really good finds to be head. Case in point, I’m looking at a 2011 A4 Avant Prestige with 20,000 miles in great condition that’s listing for $31,250 as a CPO. That car new stickered at almost $45,000.

  • avatar
    andyinatl

    VW CPO has longest bumper-to-bumper warranty at 24months/24K miles, which takes effect after original warrantly expires. So if you buy 2 year old VW, with 24K miles on it, you effectively have same length of warranty as if you bought a brand new one.

    Plus with CPO, you get ridiculously low interest rates, which in many cases match new car interest rates.

  • avatar
    CBZ32

    We purchased a CPO 08 Mazda 3 in 2011 for my wife and, so far, the CPO warranty has been worth it. A broken TPMS valve just after 36k and a leaking motor mount and oil pan leak both after the original 60k powertrain. All covered with no deductible and saved me two trips under the hood.

    On the other hand, we have been looking at CPO Dodges, but the paltry 3mo/3k extension to the bumper to bumper is much less than most competitors.

  • avatar
    DC Bruce

    As the owner, for 10 years, of a CPO BMW, I think it’s a nice way to buy a used car. Let’s face it, other than with private party deals, there is no way you’re going to take a potential used car purchase to your mechanic for an inspection, or have access to repair records. And the warranties you get from used car dealers are pretty pathetic. Especially if you’re buying a somewhat unreliable and expensive to repair European car that’s run through most of its new car warranty, a CPO is pretty useful. CPO terms vary widely, and some of the best are BMW’s and VW’s. In fact, some VW dealers are selling current model year cars as used CPOs, giving the buyer a better warranty than he would get on the same car brand new. Can’t beat that. On the other hand, some CPOs — like Ford’s — are hardly worth the trouble and definitely not worth a price premium

    • 0 avatar
      corntrollio

      “other than with private party deals, there is no way you’re going to take a potential used car purchase to your mechanic for an inspection”

      Not true. I’ve done a pre-purchase inspection on a dealership used car before. Repair records, definitely not though — the dealerships try to set those on fire, as far as I can tell. You may get some info if the car has been dealership-serviced (and sometimes independent mechanic-serviced) via Carfax.

  • avatar
    corntrollio

    Are former rental cars sold as certified pre-owned? They tend to be very recent models and have reasonably low mileage (sometimes 25K or below), so it seems like they’d qualify if there isn’t an exclusion factor.

    I went to a local Chevy/GMC dealership, and they had a big row of ex-rental Suburbans with low mileage. The prices weren’t great (for ex-rentals), but the salesmen definitely try to steer you to them, which makes me wonder if there are spliffs involved.

    • 0 avatar
      andyinatl

      I think they do. I’ve come across a number of Mazdas that had rental history and were being sold as CPO.

    • 0 avatar
      Kyree S. Williams

      They probably have large profit-margins as opposed to new Suburbans…

      • 0 avatar
        corntrollio

        Almost all used cars have higher profit margins than new cars.

        The question is whether the ex-rental vehicles have larger profit margins than other used cars. I’m not sure I had a large enough sample size to tell, but anecdotally it seems like ex-rentals sell for cheaper than non-rentals, all else equal. It’s quite trivial to figure out if a car is an ex-rental these days, but there are probably some clueless buyers who overpay.

        • 0 avatar
          akitadog

          I got a ’99 Olds Intrigue ex-rental w/ 22K miles that was about 8 months old for a little over $15K. New was about $22.5K. I thought it was a steal.

          • 0 avatar
            Kyree S. Williams

            Right. 22,000 miles is a *lot* for eight months’ worth of driving, but most modern cars—European luxury ones being the exception—are built to withstand that kind of use, so long as they are maintained.

    • 0 avatar
      krhodes1

      I really don’t see much difference between buying an ex-rental and an ex-lease car. Both tend to suffer a bit from “not my car” syndrome.

  • avatar
    sitting@home

    CPO seems like a total scam to make a second buyer pay new car depreciation all over again. A 3 year old vehicle is worth 50-60% of MSRP so if you pay anything over that then the moment you drive off the lot you’ve lost money and you’re gambling that something big WILL go wrong and the dealer will have to foot the bill. Not every BMW drops its transmission the minute it’s out of original warranty so the dealers are amortizing the costs of the few that do with all the fools who pay for CPO.

    • 0 avatar
      th009

      Gambling that something will go wrong (and that someone else should pay for it) is the whole point of insurance policies. And that’s what an extended or CPO warranty is.

      • 0 avatar
        krhodes1

        IMHO all you are doing with any extended warranty is pre-paying for repairs that may well not happen. All extended warranties, even CPO programs are immensely profitable. They are carefully crafted to not cover things, and especially CPO programs force you to go to the dealer, where the insanely inflated costs make you think you got a bargain by purchasing the warranty. The worst is when you take the car in for work which ends up getting denied coverage – you are then often stuck paying a nice “diagnostic charge” and then paying the overpriced dealer to fix the car, because they already have it apart.

        You would likely have come out ahead putting the money in the bank when you buy the car and using it to pay as needed. You may well have money left in the end. The other issue is the REAL expenses start well after any CPO coverage ends, at the 120-150K mark.

        • 0 avatar
          th009

          That’s basically self-insurance. It’s done by governments and larger corporations as routine practice, as an individual it involves rather more risk (which some people are happy with, others not).

  • avatar
    philadlj

    The CPO Civic I bought last May is a better car than the 2012 Civic, for a much lower price.

    Going CPO wasn’t about not being able to afford a brand-new car. It was about not liking what was brand-new!

  • avatar
    cRacK hEaD aLLeY

    I think it depends on what you are buying. The German stuff, sure, that 27,500 Avant will be worth $7,500 at midnight on the day the CPO warranty expires. So that $20,000 warranty is worth every dollar – people are buying it.

    I was in Kauai, HI in December. Anyway, I was talking to the guy that was fixing the roof of the shack I rent there. The guy works 3 jobs (handyman, airport agricultural inspection and rental car counter). I asked him what was the deal with the huuuge barge LOADED with cars sitting at Nawiliwili harbour for almost 4 days. There were hundreds of Sentras, Altimas, Suburbans, Buicks, Escapes, Taurus, a few Jaguars Frontiers, Calillac Escalade… all sitting on the barge for 4 days then gone overnight during a squall. The exit from Nawiliwilli harbor with the open-ocean tug was epic. Anyway, turns out those cars were collected from all Hawaiian Islands and were being sailed to San Pedro harbor, where they will be placed on land transport and moved to the Midwest to be sold on auction as CPO.
    Man-oh-man if one ever knows the amount of abuse those rental cars take in Hawaii… the dirt roads, salt, sand, beer, barf, wet seats and that red dirt. It’s all wiped-off clean! Once the cars go trough the processing center there is NO speck of red dirt left unless you look at things like inside door panels. Even the caked-out red dirt in the manifolds is (somehow) removed. And everything is basically unaware that nice Altima spent 18 months in car-hell warping its rotors and dragging its bottom from the top of Waimea Canyon to the end of the beach at Barking Sands. Not to mention a few squalls with windows open.

    • 0 avatar
      corntrollio

      Unless they look at Carfax…

      I’ve driven rental cars off-road in Hawaii briefly through nothing too serious — I doubt it makes too much of a difference vs. mainland rentals. There also aren’t that many places to hoon in Hawaii either vs. mainland rental cars.

      By the way, why would you care about warped rotors on a CPO car? They would have been replaced.

  • avatar
    APaGttH

    When you look at a CPO checklist, and then look at the “by the book time” dealers are told it should take, you don’t need to be an expert to figure out that a NASCAR pit crew couldn’t crank through list X in time Y with Roger Penske himself moving them along with a cattle prod.

    CPO is just a scam for many (not all dealers, many) and the ones who cut corners and just go, “ehhh good enough,” hurt the ones who want to do right. So they cut corners to compete, and CPO becomes – meaningless.

    If you’re looking at a CPO car it’s simple. Check the fluids. If they aren’t new – run – run for your life because they didn’t go “by the book,” on setting it up. Another one is if the cabin air filter is easy to get to, give that a check (or the engine air filter if it is just a couple of clips away). Dirty? Run for your life.

    When “certified” means you self-certify, it usually is meaningless.

  • avatar
    Mandalorian

    It seems like CPO are just more costly used cars. In today’s market used car prices are pretty high. With vehicles like the 20k Dodge Grand Caravan, it makes more sense to buy new.

  • avatar
    Nicholas Weaver

    A few years ago, CPO was a great deal: I bought my 2006 S2000 as a CPO in 2008 with 30K on the odometer, and the CPO warranty additions (+paying for a Honda extended warranty) got me 70K miles of warranty coverage for an OTD cost of less than 2/3rds of what new would have cost. And I was even able to get it in the color I wanted.

    Now? It depends on the car. IN the past couple of years, new cars have depreciated SO much less that the CPO savings are often very little. The wave we are seeing now is a bunch of lease returns, as 2-3 years ago the makers started hyping these lease deals.

    Since CPO cares make more money than not, its no wonder CPO sales are up: there are simply a lot more CPO cars out there that HAVE to be sold.

  • avatar
    stevelovescars

    It depends on the car and the price, like others have said. A few years ago, my father wanted a new Buick Lucerne. I suggested he look at a CPO. He is not a car enthusiast and as such would never contemplate looking at a private party sale (which I prefer). He bought a 21k mile car with the slightly extended GM CPO warranty for $18.5. The or original MSRP was near $36k a mind the car literally looked and drove like new. At the time, I couldn’t even find independent dealer or FSBO listings that beat the price… And for my dad it gave him the warranty an easy transaction he wanted. It worked well for him.

    I figure if the price of the car is equivalent to a similar condition used example elsewhere plus the value of an extended service agreement, then ok… Problem is that some dealers ask a LOT more than that. As a car guy, I have a sick love of the hunt for the right car. I know what to look for and prefer to talk to the previous owner. I see little value to buying a used car from a dealer, ever, except perhaps for easier financing (definitely one big benefit of CPO… My dad even got 0% financing IIRC).


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