Hardison’s TIPS – April 21, 2021 – IS BUYING A CPO VEHICLE WORTH IT?
The used car industry is full of options, which can be overwhelming and downright confusing. Even after you’ve decided what type of car you want, you still have many possibilities to consider, many of which have to do with vehicle features and quality.
A common differentiator in used vehicle sales is the Certified Pre-Owned mark. In recent years, Certified Pre-Owned (CPO) vehicle sales have risen. These vehicles seem like a good option for consumers, but what does the CPO sticker actually mean? What are the pros and cons of purchasing a CPO vehicle? Is the price of the CPO designation worth the benefits provided? If you’re shopping for a car and don’t want to pay the CPO premium, can you replicate the CPO benefits on your own less expensively? These are all questions we seek to answer below.
What Is A Certified Pre-Owned Vehicle?
Certified pre-owned, or CPO, is basically a marketing term developed by the automotive industry to make used cars easier to sell by offering consumers peace of mind benefits. Edmunds.com reports that CPO accounts for 20.4% of franchised dealer used car sales and is on the rise. CPO vehicle benefits include inspection, reconditioning, and certification by either the original manufacturer or the dealer. In addition, CPOs typically carry some form of extended warranty coverage to give the consumer added comfort in their purchase. The certified warranty will cover the vehicle for a certain number of months or miles after the original warranty expires.
You should note, however, that not all CPO programs are created equal. Factory-backed CPOs are the best because they carry manufacturer-specific inspection and reconditioning requirements, will offer a built-in warranty backed by the original manufacturer, and are available only at authorized franchise dealerships.
Dealer-backed CPOs typically also include warranty-like coverage in the form of an extended service contract. However, inspection requirements and terms depend on the selling-dealer, not a stringent manufacturer requirement. Either way, it’s important to review each manufacturer’s or dealer’s certification programs before purchasing so you fully understand the terms and coverage. For example, Cars.com offers a great overview of manufacturer CPO programs.
How Much Does CPO Cost?
While CPO vehicles provide legitimate benefits to consumers, they command a premium price compared to non-CPO cars. According to CNW Research, the price consumers are paying for CPO benefits is $2,800, which is the average amount more that dealers make on CPO cars compared to their non-certified counterparts.
