Why do certified used vehicles cost more?
In recent years, used vehicle certification programs have proliferated, and practically all automakers now offer certified pre-owned (CPO) vehicles through their dealership networks. Additionally, national used vehicle dealers offer their own type of certification and independent auto insurance companies have certification programs that are not affiliated with those offered by the major automakers. This article pertains only to those CPO programs offered by the original equipment manufacturer (OEM).
As a general rule, any used vehicle sold through an OEM CPO program will cost more. There are several reasons why such vehicles are the most expensive on the used car market. This article explains why CPO vehicles cost more than those that are not certified.
Reason 1: Vehicle condition
CPO vehicles must meet certain criteria regarding their overall condition, mileage and age in order to be eligible for a CPO program. Any vehicle that does not meet these criteria cannot be sold as a CPO vehicle through an OEM CPO program. Generally speaking, only used vehicles that are in flawless condition, have low mileage and are only a few years old are eligible for an OEM CPO program.
Reason 2: Vehicle inspection
If a used vehicle meets the criteria regarding its overall condition, mileage and age, its vehicle history report is checked to make sure there are no hidden defects. If the vehicle history report is clean, the used vehicle is thoroughly inspected by the dealership and any worn parts are replaced with new ones. The used vehicle is then reconditioned inside and out to restore its condition to as close to new as possible. The vehicle history report and a report detailing the inspection and reconditioning process are supplied with the CPO vehicle at the time of sale.
Reason 3: Extended warranty protection
Many CPO vehicle programs extend the length of the original warranty coverage. The extended warranty may include the powertrain limited warranty (which covers the engine and transmission) or the original bumper-to-bumper limited warranty (which covers the vehicle components, other than the powertrain, that are not subject to wear and tear). Alternatively, some CPO vehicle programs offer a separate warranty covering the vehicle against defects for a certain amount of time or mileage.
Reason 4: CPO program perks
In addition to an extended warranty on the automobile, CPO vehicle programs often include 24-hour roadside assistance, as well as additional perks such as trial subscriptions to satellite radio, telematics or Internet services, free scheduled maintenance, or courtesy transportation in the event the vehicle requires repairs that are covered by the warranty. Some CPO vehicle programs also offer a full money-back guarantee, which allows the buyer to return the vehicle (subject to time and mileage limits) and to choose a different vehicle from the dealer’s selection of used cars.
Conclusion: Why pay more for a certified used vehicle?
Above, we examined why CPO vehicles are generally more expensive to buy. It’s clear that certified used vehicles sold under an OEM CPO program through a dealership are newer models with lower mileage, are thoroughly inspected with vetted title histories, are reconditioned to restore their condition to as close to new as possible, and are offered with extended warranties and additional services not available for used vehicles not sold through a CPO program. Whether or not paying extra for these services is worthwhile to the consumer is a decision that can only be made by informed buyers after carefully comparing OEM CPO vehicles to other used vehicles on the market.