We’re here to discuss used cars.
Good used cars.
Used cars that new-car dealers have poked, prodded and puttered with until they qualify as what the industry calls CPO
—Certified Pre-Owned vehicles.

As most of you know, buying a car is no more complicated than cosmetic dentistry.
Entire books have been written on the subject, and on subtopics such as leasing, financing and negotiating.

That’s just for new-car purchases.

If you’re unfamiliar with CPO vehicles, a super-heated segment of the market, we’ll bring you up to speed.
And if you already know about it, we think we’ve picked up some inside information you may not have in your memory bank.

Even you may know less than you should about buying a used car, and why used-vehicle certification programs might make
sense for you or your family’s needs. That’s why we’ve turned our consumerist microscope on the world of CPO vehicles,
and are here to tell you everything we’ve learned about them.

Once upon a time dealers would print up big stickers and slap them on the window of every clapped-out hulk on their used-car lot.
The emblem would proclaim a used car to be Certified. Or a Blue Ribbon Choice. Or a Dealer’s Choice.
In most cases, these certified cars would be guaranteed until you got them home or the crankshaft separated, whichever came first.
Meaningless is too kind an adjective for that level of certification.

Happily, this has changed for the better.

Genuine, factory-backed used-car certification has re-engineered the whole atmosphere surrounding a car, truck or SUV that
someone else got to before you did. Now CPO programs offered by most manufacturers are buyer-friendly, reliable and comforting.
The industry-wide success of CPO programs has lessened the stark terror that confronts anyone about to buy a used car.  

Read what we have to say in the pages that follow, and you’ll be a better-educated, more comfortable buyer.
You will learn how you can drive more for less—confidently. Thank you notes may be sent to the usual address.

What exactly is a certified pre-owned vehicle?

There’s more to real certification than just a sticker.

First, obviously, the vehicle must be used—pre-owned. It can be a trade-in, a demonstrator, an off-lease vehicle
or one the dealer purchased at an auction. The CPO designation is awarded by a franchised dealer who must
adhere to strict rules established by the manufacturer the dealer represents.

To become certified, a vehicle must undergo a thorough inspection. In most cases the inspection checklist will contain
at least 100 to 150 separate items. The Audi CPO program has a 300-point checklist.
Any problems the inspection turns up are corrected.

The mileage and the absence of collision damage are verified. 

Once the vehicle has been thoroughly inspected, cleaned and detailed, it goes on the lot as a Certified Pre-Owned vehicle.
Jaguar calls its CPOs Select Edition cars.
GM’s Buick, Chevrolet, GMC, Oldsmobile and Pontiac brands are called GM Certified Used vehicles.
But the generic term CPO is used by everyone.

Most manufacturers who compete in the U.S. market have a CPO program.

Exceptions are Aston Martin, Ferrari, Lamborghini, Mini, Maserati and Panoz.
MINI has a program in the works, and it should be online this year.
Another marque still among the missing is Mitsubishi.

Note a dealership may offer a “certified” car from an automaker it does not represent on its new-car lot.
This means the dealer—not the manufacturer—has set the rules for certification.

A dealer’s requirements may not be as stringent as a manufacturer’s, and the warranty may be of lesser quality.

This is not always the case, but you should be aware of the distinction. In increasingly rare cases some luxury dealers elect not to
participate in the manufacturer’s program. In our opinion, these self-certifiers are best avoided.

In every case, always ask specifically whether the manufacturer or the dealer stands behind the warranty.
And read the actual warranty agreement, because all dealers don’t play by the rules.
Generally speaking, the entire industry has done an impressive job cleaning up its certification process
—but there may be some land mines.

Not surprisingly, because it encompasses Buick, Chevrolet, Pontiac and GMC used vehicles,
GM Certified leads the CPO pack with first-quarter sales of 150,000.

CPOs, like tattoos, are here to stay.

The CPO advantage

There are solid reasons to seek out a CPO vehicle, some of which you may not have thought of.

Buying and owning a Certified Pre-Owned vehicle has both tangible and intangible advantages.

Chief among the tangibles is the warranty. For all intents and purposes, you get a new-vehicle warranty at a
used-vehicle price.
We’ll examine some variations on the warranty theme a bit further along.

Because of the stringent requirements for certification, you wind up with a car that’s as close to good-as-new as possible.
If nothing else, just going through the checklist allows problems that might otherwise escape notice to be identified and corrected.

The checklist and the warranty mean your car will confer a feeling of confidence that might not characterize the ownership
experience you would have with a vehicle bought from a stranger. Or even from your Uncle Otis, for that matter.

Because you are buying a used vehicle, you’ll spend far less money than on a new model.

This means you can perhaps buy that Lexus or Cadillac or Mercedes you’ve always wanted, and so what if it’s a couple
of years old.
Unless you’re pathologically driven to own the newest thing available, you’ll get just as much driving satisfaction out of a
two- or three-year-old model as you’d get from a brand-new one.

And you finesse the massive depreciation you would suffer on a new vehicle.

Another advantage, if you pick a luxury CPO, is you become part of a good dealership’s extended family.
Owners, by and large, benefit from a higher standard of customer service at luxury dealerships than they do at mainstream stores.

We feel bound to mention two disadvantages of CPO ownership. One is choice. You may not be able to find the exact combination of model, style and options you consider ideal, but CPOs have become so popular with dealers that this isn’t the drawback it once was. The other disadvantage is cost. In most every instance, you’ll pay over suggested book value for your certified vehicle.

Of course, all of this means becoming a CPO owner depends upon your willingness to spend a few thousand dollars more for
CPO security over a chancy—but less expensive—noncertified used vehicle. Favorable dealer or manufacturer financing rates on CPOs, however, can sometimes offset the extra cost. And don’t forget: When you finance a CPO vehicle through the dealer, there is nothing that
says you have to buy it—leasing one of these beauties is a real option many consumers don’t think about.

But always remember, you’re not spending what it would cost for a new vehicle.

A real-world search for a CPO car

As it happens, I’m in the market for a new car. One car on my short list was the Nissan Maxima. A new one, nicely equipped,
as the ads say, should cost somewhere between $31,000 and $34,000, not allowing for any rebates or a trade-in.

I consulted the Red Book two- or three-year-old Maxima. The average of the two book values for a 2004 model is
C$31,000, and a 2003 model averages C$22,000.

Next I began searching for some Nissan-certified Maximas. That’s where the trouble started.
The Nissan website gave a thorough rundown of the company’s CPO program but suggested I contact my local
dealer to find the Certified Pre-Owned Nissan that best suits my needs.

To my irritation, my local Nissan dealer’s website made no mention whatsoever of a Certified Pre-Owned program,
let alone any CPO Maximas. What’s more, the dealership’s pre-owned inventory page did not supply asking prices.
I ruled out shopping locally.

I then called up websites for four Nissan dealers nearby. Not one of them mentioned CPO vehicles on its website.
Being the hard-bitten, tenacious shopper I am, I wrote off the Maxima for the moment and moved upscale slightly,
to a Lexus ES 300.

Lexus, insofar as the Internet is concerned, is an aggressive proponent of CPO vehicles. Lexus-sponsored searches
and comparison charts show up on virtually all the car-shopping websites. 

I went to the Lexus site, clicked on the Certified Pre-Owned box, and typed in the model I was looking for and how
far I was willing to drive (200 miles). In less time than it takes to write this, I had a list of 10 factory-certified ES 300s.
Eight were 2002 models, and the remaining pair bracketed this group.
Prices ranged from C$22,500 for the 2001 to C$29,995 for the 2003. The 2002s ranged from C$26,700 to
C$29,600.

Lexus dealer of choice had a 2002 with 50,000 Km on it and wanted C$27,995 for the car. This was the lowest
mileage in the bunch, and the car was white, an excellent color choice in the heat.
So we’ll use it as our CPO guinea pig.

Parenthetically, my local classifieds listed two 2002 ES 300s, one a private sale at C$20,000, the other a
non-Lexus dealer’s offering at C$22,500.

Now you have to ask yourself, would you take a chance on a private sale or buy from a used-car lot to save
the difference between their prices and the C$27,995 Certified Pre-Owned ES 300? We’re talking about $7,000
in one case and $5,500 in the other, considerable sums. But we’re also talking about virtually no guarantee.
Unless I knew the owner, or I could have the car inspected by a trusted independent, I wouldn’t buy a used car
from an individual.
I’m even wary of buying one from someone I do know, for fear of ruining a friendship.

Finally, never forget that the $27,995 is negotiable. Never.

Assuming you could get the CPO Lexus for $27,000, the premium over book retail drops to $1,500.
This, as it turns out, is approximately the national average between certified and noncertified cars.
An extended warranty could cost you that much, so I judged the extra cost to be reasonable.

You might or might not agree.

Tips on Searching for a CPO Vehicle

Not all manufacturers’ websites have search functions. You may need to visit dealership websites or actual
brick-and-mortar dealerships.
Be patient. The car you want is probably out there, but you may have to travel to get it.