August 19, 2015
By Annette McLeod
CPO? What's CPO?
CPO stands for 'Certified Pre-Owned' and it just may be the best thing that ever happened to used-car ( or -truck) buyers.
When my partner and I decided recently that it was time to launch his own business, our biggest initial investment was going to be a truck. We knew there were some good incentives on end-of-year models, so our first instinct was to buy new. The last thing he needed was a breakdown in the middle of a job.
After poking around online a bit we requested quotes from a couple of local dealers: a new full-size pickup with the 6-foot bed and crew cab he needed ranged from $47,000 to $52,000!
Yeah, right. For a start-up, those kinds of digits are the stuff of night sweats. So, we scaled back our expectations and went truck hunting in the big city, along a few streets that are a veritable Magnificent Mile for used-vehicle shoppers.
We looked at vehicles at price points from about $20,000 down to a $3,500 rust bucket, which got us thinking about image. Sure, he could start out in a rolling roadblock fastened together with duct tape and big dreams, but it wasn’t how we wanted the company to be perceived.
Although there were a couple of vehicles that seemed to suit our purpose, we were concerned that if something catastrophic happened to the truck, any complaints would be met by indifference or worse — an empty lot where the “dealership” used to be.
There we were, caught between the restriction of a limited budget and the hard place of wanting a reliable vehicle sold by an entity likely to back it up if it turned out to be a lemon. It was in that hinterland that we discovered Certified Pre-Owned (CPO) vehicles.
Certified Pre-Owned vehicles
For the uninitiated, CPO vehicles are sold by factory-authorized dealerships, whose technicians inspect and refurbish them to an acceptable standard established by the automaker. "Pre-owned," it seems, is a more marketable descriptor than "used."
CPO vehicles aren’t quite the industry’s best kept secret but, for sure, not everyone knows about them. And they should if they're shopping used.
A study released in the spring says that familiarity with the concept is at an all-time high, with three-quarters of new-car shoppers and nearly half (45%) of used-car shoppers’ saying they were familiar with the term. The study further revealed that the number of those considering a CPO vehicle for the first time had doubled over the year prior.
CPO vehicles typically offer numerous advantages over other used vehicles, including:
> Manufacturer-backed warranty coverage, which varies from the balance of a factory warranty to some luxury marques offering up to six years and 160,000 km on vehicles still under factory warranty. Most are transferable.
> CarProof Vehicle History report.
> Multi-point (usually 100 or more) inspections by certified technicians, usually with brand experience, to ensure that the vehicle meets manufacturer's standards for certified status.
> Roadside Assistance coverage
> Limited exchange period if not satisfied
> Accountability. Today’s auto retailers understand that reputation is everything, and that used-vehicle buyers often become new-vehicle buyers later on. They’re eager to retain customers and will take your CPO vehicle problems as seriously as they would new-vehicle issues.
> Someone else has taken the initial hit on depreciation, which can run as high as 40% over the first two or three years of ownership.
> Access to dealer resources such as special financing with attractive terms.
The bottom line is, you can get more car and more certainty for your buck.
The buying experience
Perhaps less practical but also appreciated is the buying experience itself. When we purchased our vehicle from a long-standing neighbourhood dealership, we got the same treatment as if we’d bought a new car, right down to a tour of their impeccably clean and smooth-running service department, a hot cup of coffee, and a salesperson who wouldn’t be caught dead in a white belt.
Like us, the biggest single reason shoppers are embracing CPO vehicles is reliability. The top two reasons to purchase any replacement car, not just CPO, are that repairs to the current car are too costly and/or the car is no longer mechanically fit. Buying a CPO vehicle can allay fears that what they buy may be equally troublesome – or at least ensure that any problems will be addressed.
Bear in mind that CPO vehicles are still used vehicles, which means they can have problems that new vehicles are less likely to have. It also means that you should still do your research. Look for fan forums where people are likely to bellyache about their used models, as well as recalls (which should have been taken care of by the dealer before the car is put on the lot), and look at resale sites and reference books to find out what the vehicle you’re considering is typically worth.
While all their “pros” do cost money, the premium isn’t exorbitant, ranging from a couple of hundred dollars on lower-end models to a couple of thousand on a luxury car.
In the end, we walked into a reputable, long-established dealership in my neighbourhood and got lucky. We found the truck that suited us with low metrage, fully inspected and factory certified, right on budget. It even had a few extras, like chrome handles, that the previous owner had installed when he originally bought the truck. We know we made the right decision every morning when it rumbles to life and the fenders don’t fall off.
Whether you’re looking for a new vehicle at a used-vehicle price, or hoping to put yourself into higher-end wheels than you could afford new, a CPO vehicle could be just what you need.
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