Some certified pre-owned cars are not that expensive after all
Earlier this year, Edmunds.com reported certified pre-owned (CPO) vehicles reached an all-time high of 2.3 million sales in 2014. This makes up 20.8 percent of used car sales at franchise dealerships.
CPO vehicles can be appealing to consumers because they are inspected very thoroughly by the car manufacturer and come with a manufacturer-backed program. Manufacturers must meet strict criteria for what qualifies as a certified pre-owned vehicle.
Because there is additional work involved with inspecting these vehicles and offering a manufacturer-backed warranty, they can sometimes be more expensive than non-certified used cars. However, a recent study from iSeeCars revealed CPO vehicles are only slightly more expensive than their counterparts.
“The perception is because there is additional work involved, CPOs are more expensive,’’ said iSeeCars CEO Phong Ly in a phone interview. “Our curiosity was piqued, so we asked ‘how much more?’’’
iSeeCars analyzed 3.5 million used car sales and found dealers charge an average of $722 more for manufacturer certified pre-owned cars than a non-certified pre-owned car. This is only 2.9 percent more than average.
The vehicles surveyed were 2010 to 2015 model year cars sold between November 2014 and April 2015 with mileage limits that match CPO program criteria.
The study found most car brands have a CPO premium that falls below $1,000. Most brands are non-luxury models. The report also found nine brands with premiums that fall below $500.
“Looking at the manufacturers with what are typically considered the best CPO programs, our analysis found some real bargains that can make buying a certified pre-owned car very compelling,’’ said Ly.
But Ly also cautioned consumers should be aware of what they are getting for their money. For example, while there are four car brands from Chrysler-Fiat with CPO premiums under $500, Ly points out the company’s program isn’t as generous as the competition.
According to iSeeCars’ findings, the Fiat-Chrysler CPO program offers consumers a 3-month/3,000 mile comprehensive warranty and charges consumers a $100 deductible for repairs. Meanwhile, GM (which has two car brands with CPO premiums under $500) offers a two-year/24,000 mile maintenance plan with no deductible for a car repair.
“Not all manufacturer programs are equal,’’ said Ly. “In the case of the Fiat-Chrysler program, comparatively speaking it’s not as great as other programs.’’
Check out some of the car brands with CPO programs under $500.
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