What’s the worst thing about buying a new car? The depreciation. CarFax reports that the average vehicle will lose up to 60% of its value in the first five years. Ouch.
Of course, some cars, like the Porsche 911, are better with deprecation than others. So, except for some very rare instances, your new car will drop in value the moment you drive away from the dealer and continue to lose value.
New vehicles have advantages, too. They can be more reliable, have the latest safety systems, and include the latest performance technology.
Savvy car buyers have discovered the advantage of manufacturer-supported certified pre owned (CPO) programs, which offer nearly new cars that have already taken a depreciation hit.
Let’s take a look at CPO programs--we’ll first review some overall concepts and then explore individual CPO programs.
What Is A Certified Pre Owned (CPO) Program?
A CPO program is an extended warranty service administered by a car manufacturer for the brand’s cars. For example, an official CPO warranty for a Lexus can only be issued by Lexus. And, Lexus cannot certify an Acura.
Manufacturers mandate what late-model used cars can qualify as a CPO vehicle. These qualifications include:
- Mileage caps
- Age limits
- Clean vehicle history
An authorized dealer then performs a required inspection to ensure the vehicle operates in a safe and normal manner. The dealer also pays a fee to the manufacturer for the extended CPO warranty.
This cost and a markup are added to the selling price of the CPO car. Yes, a CPO car will cost more than an equivalent non-CPO vehicle, but for many buyers, the extra peace of mind is worth it.
Importantly, don’t be fooled by independent used car dealers offering “certified” vehicles. This label carries no affiliation with any car manufacturer and is merely a marketing label or reference to a third-party warranty.
Where Do CPO Cars Come From?
Dealers source CPO-candidate cars from a variety of places. This can include cars coming off of leases, trade-ins, service loaners, company cars from the manufacturer, and auction purchases.
What Are Some Other CPO Considerations?
Compared to buying new, purchasing a CPO car will save you money, but there may be some drawbacks. Potential tradeoffs include:
- Age of a CPO vehicle: In most cases, the car won’t be the current model year. CPO cars tend to be two to four years old.
- It’s not new: New car lemon laws will not apply to this purchase. However, other consumer protection regulations may apply.
- Fewer choices: The supply of CPO cars can be limited, so you may not find your preferred color or equipment.
- Varied Warranty: The CPO warranty may have different coverage terms than a new car warranty from the same manufacturer. And CPO warranty coverage may differ between manufacturers. Carefully examine these coverage terms.
Manufacturer CPO Programs
Let’s look at the CPO programs offered by luxury and performance automakers. In most cases, time and mileage limitations for the warranty coverage begin when the car first entered service as a new car.
Honda’s luxury division offers a 24-month/100,000-mile warranty on its CPO vehicles. The mileage cap is based on the car’s original in-service date. The vehicles receive a 182-point check, must have less than 80,000 miles, and be less than six years old. Acura includes the first scheduled maintenance and roadside help.
This German brand promises a 300-point vehicle inspection and a 5-year warranty without mileage limitation. Audi CPO vehicles beyond the five-year time frame receive 12 months of unlimited-mileage coverage. Audi provides a year of roadside assistance.
BMW’s CPO program adds one year of unlimited-mile coverage to the car’s original 4-year/50,000-mile new car warranty and provides up to six years of roadside assistance. The company calls its CPO evaluation process a 360-degree vehicle inspection rather than specify the number of inspection steps.
Even ultra-premium brands like Bentley have gotten into the CPO arena. The Bentley program offers 12 months of unlimited-mileage coverage following the surprisingly-modest 3-year/unlimited-mile new car warranty.
GM’s top-tier line offers a 172-point CPO inspection and a 12-month/unlimited-mile extension to the 4-year/50,000-mile new car warranty. Roadside coverage is included for the length of the coverage.
Yes, even Ferrari sells CPO cars and promises a 101-point inspection and a “provenance and maintenance history verification” on vehicles up to 14 years old. Vehicles sold under the “Ferrari Approved” banner include 12-24 months of warranty coverage and two years of roadside assistance.
Upstart luxury marque Genesis takes a slightly different approach to the CPO game thanks to its substantial new car warranty. CPO-eligible Genesis vehicles, which must be 2017 or newer models with less than 60,000 miles, simply receive the balance of the 6-year/75,000-mile new car coverage (and 10-year/100,000-mile powertrain coverage). Genesis includes a 10-year/unlimited-mile roadside service plan).
Relying on a 167-point inspection, Infiniti’s CPO program offers tiered warranty coverage depending on the car’s age which can’t exceed six years or 60,000 miles. CPO cars with more than 15,000 miles and more than four years old receive a 2-year/unlimited-mile warranty.
Vehicles with the same mileage conditions but less than four years receive a 6-year/unlimited-mile warranty. CPO Infinitis with less than 15,000 (and don’t fall under another category) receive a 6-year/75,000-mile warranty. First-year maintenance and roadside help (during the warranty period) are included.
JLR promotes a 165-point inspection program that offers a 7-year/100,000-mile warranty with roadside assistance.
Even the ultra-wealthy want to save money on a hypercar. Koenigsegg doesn’t offer a lot of details on its CPO program other than promising a two-year warranty.
Lexus provides 6-years/unlimited-mile coverage for its CPO vehicles which are required to have less than 80,000 miles and be six years or newer.
The company uses a 161-point evaluation and includes standard maintenance for the first two years or 20,000 miles.
Starting with a 200-point inspection, Lincoln provides CPO warranty coverage for six years/125,000 miles. Roadside service is also included.
A 120-point inspection begins Maserati’s CPO program that is limited to 2016 or newer cars. The warranty extends to six years without a mileage restriction and includes roadside services.
The McLaren Certified program includes a provenance check and 12 months of warranty coverage and roadside assistance.
Mercedes’ 165-point CPO plan limits its program to vehicles that are six model years old or newer and a maximum of 75,000 miles. The CPO warranty adds 12 months of unlimited-mileage coverage on top of any existing new car warranty. CPO buyers receive roadside assistance.
Porsches that are 14 model years or newer and with less than 125,000 miles are eligible for the company’s CPO program. CPO warranty coverage lasts for two years without mileage restrictions and begins at the time of purchase or after any new car warranty expires.
Keep your nearly new Rolls posh with the company’s “Provenance Pre-Owned” program that provides up to two years of warranty coverage, maintenance, and roadside help.
Volvo’s 170-point program provides five years of unlimited-mileage coverage for its CPO vehicles that must have no fewer than 80,000 miles. The company includes roadside help and a one-year subscription to its Volvo On Call telematics service.