Are Certified Pre-owned Vehicles Worth it?

Breaking down the growing popularity behind CPO vehicle sales in recent years and what it means for a used car buyer.

Are Certified Pre-owned Vehicles Worth it?

As a buyer you have a lot of choices in terms of where to buy your new vehicle. You can buy a new vehicle, a typical used vehicle from a dealer, or on the private party, and there’s a third option that has gained some popularity recently - a certified pre-owned vehicle from a dealer.

What is a Certified Pre-Owned Vehicle?

Automakers have had CPO programs for almost 20 years and for a premium buyers can purchase one of these vehicles. The vehicles all have low mileage (typically between 50,000 and 80,000 miles), are within a few years old and come with additional features like roadside assistance, free scheduled maintenance and lower finance rates, additionally they’ve gone through the following:

  • Comprehensive 100-160 point inspection
  • Reconditioning (new tires, brake pads, etc.)
  • Extended bumper-to-bumper warranty & roadside assistance
Who buys CPO vehicles?

The National Automobile Dealers Association recently did a survey and only 9% of the 3,100 visitors surveyed had purchased a CPO vehicle, they found that 39% of male respondents were moderately or extremely familiar with CPO vehicle programs and females were less aware, 60% expressed little or no familiarity with the CPO option.

Among young responders (those 18-34 years old), 29% said they were “likely” or “extremely likely” to consider purchasing a CPO vehicle in the future. In addition 39% of respondents said they were willing to pay up to $1,000 more for a CPO vehicle vs. a non-certified one and 31% said they weren’t willing to pay a premium.

Growing CPO Popularity

In 2015, CPO reached an all-time high of 2.55 million unit sales. The growing inventory is due to an increased supply of vehicles coming off-lease. CPO sales only make up about 6% of the used car market.

Toyota sold the most CPO vehicles this year. Chrysler, Dodge, Jeep, and Ram have grown the most at 23% year to date according to NADA. Premium brands have always dominated CPO vehicle sales, led by Mercedes-Benz and BMW. Lexus trails and Cadillac and Infiniti are gaining ground. Kia has seen the most growth and CPO sales has increased by 200% from 2012-2015.

How Much More Are You Paying for a Certified Pre-Own?

When you purchase a CPO vehicle, you’re purchasing a used car that has gone through an additional layer of inspection and reconditioning. This always comes with a price. The average premium for 68% of CPO vehicles is $800-$1,800.

Is a CPO car a good deal?

There’s a fear in the used car market that you could be buying a vehicle with issues. It’s hard to know with absolute certainty that the vehicle you’re purchasing won’t have an issue. If you buy a used car from a dealership - there are limited guarantees once you drive the vehicle off the lot. Just because you buy a used car from a dealership doesn’t mean it was inspected.

Certified Pre-Own vs. Private Party

If you buy a vehicle in the private-party, you can do your best to ensure that you’re buying a mechanically sound vehicle by getting it inspected, view the vehicle history report and by requesting service records. It’s the only way to get a more comprehensive picture of how the vehicle was maintained. In the private party you’ll know and meet the old owner. Buying a car that has had one-owner and who can provide records will give you a leg up. Getting the vehicle inspected by a certified mechanic, which will run you about $100 and will also give you peace of mind (a much cheaper option than the CPO premium). Buying a good, mechanically sound car in the private party is all around the best financial decision (you’ll pay less than a vehicle sitting on the dealer lot).

Buying a certified pre-owned car can provide answers for some wear and tear type questions in how the vehicle was maintained. The premium you’re paying is for peace of mind and products, like the inspection, reconditioning, warranty and better used car financing rates. A certified pre-owned car can be a great value for buyers who want the convenience and peace of mind, but it’s never a guarantee that you won’t have an issue.

There are no guarantees in the used car market. Buyers should take their time and be confident in their decision. Ask all the right questions and do your research - there’s an option for everyone. Here at Instamotor we do our best to bring transparency to the purchasing decision. As a buyer information is king and we provide a free vehicle history report, as much information about the vehicle as possible so you can make an informed decision and get the best price.

Buying Tips
Valentin GuiValentin Gui

Founder and a car nut. Born and raised from Detroit, Michigan. Val managed 12 dealerships prior to founding Instamotor.