Certified pre-owned cars (CPO) present an attractive alternative to buying a higher-priced new car. For less money, a CPO buyer can afford a car that feels almost new, even if the odometer is showing some miles.
Additionally, shopping for a CPO car is easier than shopping for a used car. This is because the certification process removes one of the major drawbacks to buying a used car: uncertainty about the mechanical condition of the vehicle. A factory-trained mechanic inspects a potential CPO car to ensure it measures up to the requirements of that manufacturer's program. The dealership that's performing the certification replaces or repairs anything that's worn beyond the limits of that manufacturer's program.
"When it's a certified car, the manufacturer has gone out of its way" to ensure that the vehicle meets high standards, said Steve Skinner, internet manager for Capistrano Volkswagen in San Juan Capistrano, California. "We are definitely giving the customer a chance to get a quality car at a lower price."
The Birth of CPO Programs
Certified used car programs began appearing in the early 1990s as customers returned an increasing number of leased vehicles. These cars were in good mechanical condition, usually with fewer than 40,000 miles on the odometer. Typically, dealerships put the best of these returned vehicles on sale and sent the rest to auction, where used car dealers bought them and then sold them to the public.
Dealers and carmakers realized they might be missing an opportunity to highlight and sell perfectly good vehicles that were building up on lots. How could they draw additional attention to these "cream puffs"? Lexus launched its program in November 1993 and was the first carmaker to use the term "certified pre-owned." Mercedes-Benz was first to offer a factory-backed warranty for pre-owned cars, said Kurt Cornell, general manager of pre-owned and fleet operations for Mercedes-Benz. Soon, other manufacturers started their own certified pre-owned programs. Now, nearly all brands offer them.
Everything You Need to Find the Perfect Certified Pre-Owned Car
CPO vehicles are perfect for value-conscious shoppers who want a thoroughly inspected "near-new" car with a solid warranty. Learn more about CPO vehicles.
Which Cars Qualify?
When someone returns a leased vehicle or trades in a car during a new-car purchase, the dealership evaluates the vehicle's condition and considers it for the brand's CPO program. Taking VW's CPO program as an example, the car has certain requirements to meet: It must be five model years old or newer, with less than 75,000 miles, and it has to have been operated by the previous owner for at least 12 months.
If the car falls within those guidelines, a factory-trained Volkswagen mechanic performs a 112-point inspection. If the mechanic finds any problems, they are repaired, with the goal of bringing the vehicle as close to "as new" condition as possible. A Volkswagen dealership then sells the car with a limited two-year/24,000-mile warranty that covers, among other things, the powertrain, electrical system and air-conditioning. Finally, VW provides two years of 24-hour roadside assistance for added peace of mind.
Many other manufacturers have similar CPO programs with multipoint inspections and comparable warranties. Honda's CPO program includes a 182-point inspection and a limited seven-year/100,000-mile warranty on the powertrain and a one-year/12,000-mile warranty on non-powertrain components, plus any unused new-car warranty coverage. To find out more about what your favorite automaker offers, check its website. It is usually linked, by ZIP code, to local dealers. On the dealer website, you can specifically search the certified used car inventory.
Not All "Certified" Cars Are CPO Cars
Keep in mind that the term "certified" can mean different things on different car lots. Be sure you know who is certifying the car. Is it the manufacturer, or just the dealership? Familiarize yourself with what the manufacturer's CPO inspection covers during the certification process and what the warranty covers. If the certification is not from the manufacturer, which is what you'll find at independent used car lots, "certified" has less value. Many of these car sellers don't have their own repair facilities.
Obviously, if a manufacturer such as Ford Motor Company stands behind a guarantee, it is more valuable. For one thing, any Ford service department will honor the CPO car's warranty. That's an important factor if the person buying the certified used car is traveling or moves to another state.
CPO programs are ideal for shoppers who want to save money over the price of a new car, but who also want to drive a near-new car with a solid warranty. While CPO cars offer many benefits, they are more expensive than the non-CPO used cars that you can buy from dealers and private parties.
To see how much more CPO cars typically cost, visit the Edmunds Used Car Appraiser. After you select the year, make and model, you will see the trade-in, private-party, dealer retail and CPO prices. A certified 2013 Honda Accord EX, for example, costs about $1,000 more than a non-CPO car sold at dealer retail price.
To find out the specific benefits of each program, see our Certified Used Vehicle Programs comparison tool.