If you’re looking for a new mode of transportation, it might be time again to consider a certified preowned (CPO) vehicle.
One reason is an increased selection. Automakers have expanded their definition of what qualifies as a CPO vehicle, which means that automakers are approving increasingly older vehicles. Also, the maximum mileage that’s allowed for a vehicle to qualify as a CPO vehicle has been increased. Further, U.S. automobile sales, which fell by close to 3 million units in 2008 and nearly another 3 million in 2009, have improved (although sales still are low by prerecession standards). As new-vehicle sales increase, more trade-ins enter the CPO-vehicle market.
The decreased number of new vehicles that were sold 3 or 4 years ago inevitably led to the shrinking number of CPO vehicles that were available, and that drove up the price of all CPO vehicles. However, as of press time, used-vehicle prices are down, according to auction company ADESA. The average wholesale auction price for used vehicles, including vehicles that qualify for CPO-vehicle programs, dropped to $9,518 in August 2012, which is down about 4 percent from a year earlier, says Tom Kontos of ADESA. Prices peaked at about $10,600 in April 2012.
The number of vehicles that are coming off leases—a prime source of CPO vehicles—also is expected to rise in 2013, industry observers say. As a result of the increased supply, prices of CPO vehicles should be more competitive in 2013 than they’ve been in years, analysts tell us. In other words, Kontos says, knowing that a dealer now pays less for his CPO vehicles than he did a year ago and that you likely will find something similar at the next dealership down the road should be solid bargaining chips for you.
(At press time, experts told us that used-vehicle prices, including those of CPO vehicles, will rise by as much as 1.5 percent as a result of Superstorm Sandy. However, you can expect that effect to fade by spring 2013.)
Further, some automakers have improved their warranties and added other incentives to entice you to buy their CPO vehicles. Consequently, you’ll find that today’s CPO-vehicle programs cover more components, for more months and for more miles, than ever before.
Automakers also have increased the number of inspection points that CPO vehicles undergo as part of their certification process. Although that development partly reflects changes in technology in today’s CPO vehicles, observers tell us that the higher numbers are less about checking quality and more about marketing.
BUYER’S MARKET. It isn’t just a few automakers that are embracing older, higher mileage vehicles. Within the past 7 years, 15 out of 37 brands that have CPO-vehicle programs expanded their qualifications to include older vehicles that have more miles.
Today, automakers’ CPO-vehicle programs commonly embrace vehicles that are up to 6 years old—more of those programs exist than do programs that are capped at 5-year-old models. (Seven years ago, vehicles that earned CPO status typically were no more than 4 years old.) Toyota CPO vehicles, along with those of companion brands Lexus and Scion, can be as much as 7 years old.
Similarly, automakers have pushed up the mileage on CPO-qualifying vehicles. At least 22 brands allow vehicles that have up to 75,000 miles. That’s about double the number of brands that allowed that many miles 7 years ago.
That isn’t just to get more vehicles into their CPO-vehicle programs, experts tell Consumers Digest. Instead it’s also because today’s vehicles are built better and last longer than do vehicles of even a few years ago. An across-the-board improvement in quality and reliability has emerged over the past few generations of new vehicles, particularly among domestic brands, says Ed Kim of AutoPacific, which is a market-research and consulting firm. That improvement in new cars, minivans, SUVs and pickups translates directly into more-reliable used vehicles, he says—the kind that qualify for the CPO-vehicle market.