ARTICLE_DETAIL

Why Certified Used Cars Cost More

4/10/2013
In recent years, used-car certification programs have proliferated, and now all major auto manufacturers offer Certified Pre-Owned (CPO) vehicles through their networks of dealerships. Additionally, national used-car superstore retailers offer their own version of used-car certification, and third-party used-car warranty companies provide certification programs that are not affiliated with those offered by car manufacturers. This article pertains only to those CPO programs offered by the original equipment manufacturer (OEM).

Typically, any used car sold through an OEM CPO program will cost more than a used car that is not. There are several reasons why such vehicles command a premium in the used-car marketplace. This article explains why certified used cars cost more than used cars that are not certified.

Reason 1: Vehicle Condition
Certified used cars must meet specific condition, mileage, and age restrictions to be eligible for an OEM CPO program. Used vehicles that do not meet these restrictions cannot be sold as a Certified Used Car through an OEM CPO program. Generally, only those used vehicles that are in excellent condition, which have been driven fewer miles, and which are only a few years old will be eligible for an OEM CPO program.

Reason 2: Vehicle Inspection
If a used vehicle meets condition, mileage, and age requirements, a vehicle history check is performed to make sure the vehicle's title is clean. If the vehicle history report is clean, the vehicle is thoroughly inspected by the dealership, and any worn parts are replaced with new parts. Then the vehicle is reconditioned inside and out with the goal of making it as close to new condition as possible. The vehicle history report and the report detailing the certified used-car inspection and reconditioning process are supplied with the vehicle at the time of sale.

Reason 3: Extended Warranty Protection
Many OEM CPO programs extend the length of the original warranty coverage. The extension of coverage may include the powertrain limited warranty, which covers the engine and transmission, or the original bumper-to-bumper limited warranty, which covers those components of the vehicle, other than the powertrain, that are not subject to wear and tear. Alternatively, some OEM CPO programs offer a separate warranty covering the vehicle against defects for a specific range of time and/or mileage.

Reason 4: Roadside Assistance and Other Perks
In addition to extended warranty coverage, OEM CPO programs often include 24-hour roadside assistance, and sometimes provide additional perks such as trial subscriptions to satellite radio or telematics and Internet services, free scheduled maintenance, or courtesy transportation in the event the vehicle requires repair for a covered item. Additionally, some OEM CPO programs provide a money-back guarantee, allowing a vehicle buyer to return the vehicle within specific time and mileage limits and to choose a different vehicle from the dealer's selection of CPO vehicles.

Summing Up
Certified used cars are usually more expensive to buy for several reasons. Certified used cars sold through new car dealerships under OEM CPO programs are newer models with lower miles, are thoroughly inspected with vetted title histories, are reconditioned to as close to new condition as possible, are equipped with extended warranties, and offer additional services that are unavailable for used vehicles that are not sold through an OEM 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 used car buyers who are comparing OEM CPO vehicles to other models available in the marketplace.

Additional Research: