Certified Pre-Owned Assures Used Car Values

by Don Elliott on June 6, 2012

In a year when new car sales are on the upswing, some car buyers opted for a better deal on nearly new Certified Pre-Owned (CPO) vehicles. Car manufacturers are going out of their way to make sure that their customers, both new and used, can buy with confidence, whichever they choose.

General Motors recently announced a rebranding of their CPO program and the introduction of Owner Care, a special maintenance program that “includes free oil changes, tire rotations and multi-point inspections for two years or 30,000 miles.”

The GM rebrand changes the GM Certified Used Vehicle program to Chevrolet/Buick/GMC Certified Pre-Owned Vehicles. GM has been a leader in promoting the benefits of CPO consideration, selling a remarkable 29,604 units in March, about one-sixth of the record 174,471 CPO units sold that month. Larry Pryg, national manager of certified pre-owned operations, reports in “Automotive Remarketing” magazine, “We were the first to hit 3 million (certified pre-owned sales). We’ll be the first to hit 4 million (expected in Q3). That’s pretty exciting for us.”

And it should be exciting for car shoppers as well. According to an AutoTrader.com survey, the economy has driven 60 percent of new-car shoppers to consider a certified pre-owned vehicle. Price is certainly the primary consideration. But CPO shoppers stated overwhelmingly that the warranty benefits highlighted the used car value.

Renee Godfrey, CPO manager at Ford Motor Company, pointed out that their “vehicles have been inspected and are backed by Ford Motor Company with a 12-month/12,000 mile comprehensive warranty and 7-year/100,000 powertrain warranty.

Again, from the AutoTrader.com survey, consumers indicated that they would pay, on average, $1,380 more for a certified vehicle versus a used car that is not certified.

AutoTrader.com tracked the views for certified pre-owned vehicle searches on its website. Their top 10 CPO vehicles searches were:
1. BMW 3 Series
2. Honda Accord
3. Chevrolet Silverado 1500
4. Honda Civic
5. Ford F-150
6. Volkswagen Jetta
7. Toyota Tacoma
8. Audi A4
9. Toyota Camry
10. Toyota Tundra

The car manufacturers are working closely with wholesale auto auction dealers to help identify vehicles that can be certified back at their dealerships. Competition for certifiable inventory has kept used car prices at all time highs for more than a year. Consumers are willing to pay more, dealers have to pay more to get the inventory, and car auctions are competing for consignment.

Fortunately, prices can only go so high before it is cheaper to buy a new car. Car shoppers should pay close attention to the transaction costs when they go to a car auction, particularly for the most popular CPO vehicles, to decide which is a better deal—new or certified pre-owned.

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