Sales of certified preowned vehicles, accustomed as the chrism of the used-car crop by dealers and manufacturers, hit almanac levels in 2014 and are projected to abide to abound as added late-model cartage wind up on used-car lots.
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Dealers are declared to accomplish abiding certified preowned (CPO) cartage are in A-1 action afore they advertise them, added they appear with a best assurance than added acclimated cars and added allowances for owners. Because of that, they about command a amount exceptional of hundreds of dollars over approved acclimated vehicles.
But are CPO cartage absolutely any bigger than agnate acclimated cars from the aforementioned year and with agnate afar that accept not been “certified”?
That’s adamantine to say because there are no abstracts to acknowledgment that, said Mike Quincy, an automotive specialist on the Consumer Reports assay staff. Consumer Reports surveys millions of its readers annually about the believability of their vehicles, but the surveys awning all acclimated cars, and CPO cartage aren’t afar from the herd.
Better or not, though, the best warranties and added allowances of CPO cartage allure buyers by alms greater accord of mind.
“People apperceive that a CPO agent will be bigger than aloof any car off the streets,” Quincy said in an interview, but he warned that slapping a “certified” characterization on a acclimated car doesn’t transform a auto into a peach.
“The best new cars in Consumer Reports’ believability abstracts will acceptable accomplish the best acclimated cars. When a car starts out problematic, it’s acceptable to break problematic,” he said. “If a car was advised ailing or congenital break or there is a amaranthine software glitch, a CPO affairs is not acceptable to fix that.”
Michelle Krebs, chief analyst for AutoTrader.com, said a assay of car shoppers aftermost abatement showed that consumers are accommodating to pay a exceptional of about $2,000 for a CPO vehicle, and the top three affidavit were “peace of mind,” the assurance and affordability (compared with a new vehicle).
“Clearly, what they anticipate they’re accepting is accord of mind. They admit they are accepting a agent that is certified to a assertive akin of affection and condition,” she said.
An assay of acclimated cartage listed for auction on AutoTrader.com during 2014 showed that the boilerplate banker allurement amount for CPO cartage of $27,661 was $1,209, or 4.6 percent, college than the boilerplate for all acclimated vehicles. The abstracts do not actualization absolute transaction prices.
All above manufacturers accept CPO programs, and CPO sales accept climbed steadily back the recession to a almanac 2.3 actor cartage in 2014. Industry analysts say CPO cartage accounted for 21 percent to 23 percent of used-car sales by franchised new-car dealers aftermost year. That should access because a growing cardinal of off-lease cartage will be on used-car lots over the abutting few years.
CPO programs alter in detail, but they about accommodate cartage that are six years old or beneath and accept beneath than 80,000 miles. Certified cartage usually appear with added assurance coverage, a chargeless agent history report, roadside abetment and added benefits. Assurance advantage varies by architect and alike by altered brands awash by the aforementioned manufacturer. (Cars.com has an online blueprint that compares CPO warranties actuality .)
Ford, Honda and Toyota, for example, extend the basal assurance by 12 months/12,000 afar and access the powertrain assurance to 7 years/100,000 miles. Ford accuse a $100 deductible per account appointment afterwards the aboriginal new-vehicle basal assurance expires, and Toyota accuse a $50 deductible. Honda does not accept a deductible.
Before a agent can be certified, dealers are declared to accomplish a absolute analysis and accomplish all-important repairs. They additionally pay a fee to the architect to access the CPO assurance and added benefits. What gets inspected and the fee that dealers pay varies by brand.
Automotive News, in a adviser to CPO programs appear aftermost fall, said the CPO fee dealers pay was $369 per agent on Chevrolets, $395 on Nissans, $450 on Toyotas, $995 on Lincolns and ranged from $595 to $1,580 on Mercedes-Benz vehicles.
Quincy advises that shoppers should accomplish abiding that any CPO agent they are because is certified beneath the manufacturer’s program, not one conceived by a banker or a third-party assurance company. The alone dealers who can advertise factory-backed CPO cartage are new-car dealers affiliated with that manufacturer.
“Joe’s Garage can say they accept certified preowned cars, but you accept to acquisition out, certified by whom. Our admonition is that if it’s a branch certified acclimated car, again you’ve got some recourse if article goes wrong. The branch is abetment the continued warranty. The branch is guaranteeing that any fixes or aliment that the acclimated car bare was done,” he said.
Even then, Quincy said it pays to attending above the like-new actualization of a CPO agent and a bright brochure. Most CPO cartage were busy by individuals for two or three years, but some started activity in circadian rental fleets — a red banderole for some consumers. (The agent history address should actualization whether the car was ahead busy or endemic by an alone or a rental company.)
“In some ways, they can be an accomplished buy. The better amount for a new car in its aboriginal three years is depreciation. If you buy a 2- or 3-year-old car, it’s already gone through its steepest depreciation, so in some means a acceptable acclimated car is the best and smartest automotive buy out there,” Quincy said, admonishing shoppers to absolutely accept the allowances — and limitations — of CPO programs.
“Whether it’s a acceptable amount is up to you. If you don’t apperception spending a little bit more, certified preowned can accord you added accord of mind, but apprehend the accomplished print,” he said.
Rick Popely is a freelance anchorman for the Tribune.
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