Ask an expert: What is a certified pre-owned (CPO) vehicle?

A: Certified pre-owned vehicles are essentially used cars that come with a promise: They have been tested and approved to meet certain standards. These vehicles receive in-depth inspections, repairs, service and detailing upon arrival at the dealership and carry a warranty longer than most regular used cars. 

The most valuable certification is offered by vehicle manufacturers, with each automaker certifying only its own brand of car or truck. In the past, CPO offerings have appealed mainly to luxury car buyers looking for a high quality new vehicle at a low price. However, with improved manufacturer warranties, consumer cash incentives and low-rate financing options, demand for certified vehicles has increased across many sectors of the market. On average, new vehicles depreciate by 44 percent in the first five years of ownership — nearly 20 percent in the first year alone — making certified pre-owned models an attractive option for shoppers who want the perks of buying new but don’t mind owning an older car.

Typically, certified pre-owned vehicles are no more than five years old, have had no major bodywork and have traveled less than 100,000 miles, although this may vary with each manufacturer. An extended road-side assistance package, including towing, battery jump-start and lock-out service is offered by some manufacturers.

For all these benefits, buyers of CPO vehicles can expect to pay a premium above normal used car prices. On average, a certified pre-owned vehicle costs between two and eight percent more than its average market price. This markup value can range from $500 to $1,700 for non-luxury vehicles. The bigger price tag represents the decreased risk involved with an inspected, reconditioned vehicle and the added value of a manufacturer’s warranty, which would have to be purchased separately for a used car.

This added feeling of security has caused a major boost in CPO popularity. According to the 2014 publication of the NADA Used Car Guide, CPO sales took off in 2012 and have continued to increase over the past few years, reaching a record high of 2.1 million units in 2013.

But buyers should read the certified vehicle warranty carefully. Some are figured from the date the vehicle was sold new, while others begin on the date the used car is bought.

Overall, a CPO vehicle can be a smart choice for buyers who want new car benefits for a less-than-new car price. To see how CPO cars compare to used vehicles, browse certified pre-owned vehicle inventory from local dealers.

Rick Finch
SVP and General Manager, Autos
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