Are CPO (Certified Pre-Owned) worth the extra money?

CPO

If you’re in the market for a used car and have been checking out your options online, chances are you’ve stumbled upon the term CPO which stands for Certified Pre-Owned. There are other terms and acronyms for the same thing, like “CUV” (Certified Used Vehicle) that Honda uses to distinguish its CPO program.

What is a CPO vehicle?

Not to be confused with a regular “certified” used vehicle that will conform only to the local motor vehicle department’s / ministry of transportation’s  minimum road-worthiness requirements, a CPO vehicle is inspected, re-conditioned and certified to manufacturer-established standards that are more rigorous than those of the government. Only certain used vehicles are eligible to be part of a CPO program based on their age, mileage and history. If eligible, the vehicle will go through a re-conditioning process (like refurbishing) and likely comes with an extended manufacturer warranty. So compared to a regular “certified” used vehicle that will meet only the local government’s minimum road-worthiness requirements by having attributes like a minimum tire tread depth and adequate brakes, a CPO vehicle has to be more rigorously up to speed in order to be deemed a CPO vehicle.

What are the benefits of a CPO vehicle?

The biggest advantage to a CPO vehicle for most consumers is peace of mind. Knowing that the used vehicle you’re buying has met certain quality criteria and has been re-conditioned is very reassuring – but it comes with a cost. The re-conditioning is not a free value-added service, and as such is built into the price. As with any pre-owned vehicle, each and every vehicle is unique so comparing CPO vehicles requires appropriate diligence.  And knowing the differences between each manufacturer’s CPO program is very important as the quality, terms and conditions differ greatly.

Where can I buy a CPO vehicle?

CPO vehicles are only found and sold by the vehicle’s corresponding manufacturer dealership. You cannot buy a CPO BMW, for example, at a “John Smith’s Auto Sales” type of independent dealership. You’d have to buy a CPO BMW from a Bimmer dealer, CPO Audi from an Audi dealer etc. etc. If you find a “CPO” vehicle at a small independent dealer, chances are they’ve created their own CPO program that might not carry the same weight and value as a manufacturer-backed CPO vehicle and any extended warranty would be provisioned by a third-party. So be aware that not all CPO programs and vehicles are created equal.

The merits of buying a CPO may be becoming obvious, but the big question that will undoubtedly arise is:

Is a CPO vehicle worth the extra money?

CPO vehicles are more expensive as they have been screened (typically they can’t have been used as rentals, can’t have had a big accident, can’t be over a certain age or km amount), have been re-conditioned (which may involve very little, or perhaps extensive parts and labour) and come with that sweet extended manufacturer warranty that makes buying a used vehicle so much more inviting. For non-luxury brands, CPO vehicles can carry a premium of very little: around $500-1,000 more than a non-CPO options. Luxury brands, however, typically command an additional $1,500-$3,000 for their CPO vehicles. Much of this cost is due to the dealer’s cost to participate in the CPO program as they have to pay the manufacturer (who provides the extended warranty) to register a used car as CPO. Non-premium dealers will pay roughly $400-700 to participate before costs of re-conditioning, and luxury dealers will pay closer to $1,500-2,000 to participate before re-conditioning expenses.

With this premium in mind, it is only worth the extra money if:

a) you have the budget for a CPO vehicle and won’t be over-extending yourself

b) the premium for a CPO is not exorbitant compared to non-CPO vehicles

c) buying a CPO still proves to be cost-effective compared to buying new. Sometimes the incentives on new vehicles can put the total pricing within shooting distance of a CPO (e.g. if financing a new car at 0% vs. a CPO at 5%).

As always, doing your homework will ensure you’re making the right decision when determining whether CPO is worth the extra money and the right decision for you. For many, the added peace of mind of the extended warranty can be worth the premium, but if you’re a value shopper and the lowest up-front price is the bottom line, then CPO is probably not for you. AutoTrader.ca has a tool to let you compare certified programs.

If you’d like any assistance finding a pre-owned vehicle, Car Compass is here to help.

Yours truly,

Angus McComb

http://www.CarCompass.ca

416-477-9328