There are drawbacks to CPO cars, as well. Manufacturers don’t perform those detailed inspections and tack on a warranty out of the goodness of their hearts.
May 30, 2006 (Press Release) --
There are drawbacks to CPO cars, as well. Manufacturers don’t perform those detailed inspections and tack on a warranty out of the goodness of their hearts. They charge a premium for their CPO stamp of approval.
Some are better deals than others. Certification in the sports car category, for example, only cost a 2.9 percent premium over book value in 2005, according to CNW Marketing Research. But in the luxury department, certification usually doesn’t come cheap. Manufacturers charged an average premium of 7.8 — or nearly $3,400 — for luxury car certification in 2005 and just slightly less — 7.7 percent — for near-luxury. But, notes industry expert Art Spinella, premiums are “always negotiable” and vary by geography. “It’s easy for a manufacturer to get a premium on a certified car in Las Vegas, but it may be more difficult in Florida,” Spinella says. “It all depends on what the local economy can tolerate.”
But many finance companies — even some that are captive arms of the manufacturers — may not be willing to finance any premium. “If you want to buy a car and the Kelley Blue Book value is $20,000, but the dealer is asking $22,000 because it’s certified, they may not approve it,” says Spinella. “That’s starting to change, but they’re making the move slowly.” Also, the certification you pay the premium for does not increase the eventual resale value of the car when you decide to sell it or trade it in down the line.
For all the talk of 100-plus-point inspection processes, warranties and vehicle history reports, there is no data to suggest that certified used cars are any more reliable than their non-certified brethren. Although Consumer Reports found that 90 percent of certified pre-owned buyers said they were very or completely satisfied with their purchases, there have been reports of consumers suing auto manufacturers because the CPO car they bought turned out to be a lemon. Spinella says such lawsuits and the problems they stem from are probably less common in the CPO space, given the certification process and vehicle history checks. But in the end, a certified pre-owned car is a used car, just like any other, and is subject to used-car problems.
The CPO market can also be a little tricky to navigate for first-time buyers. Manufacturers aren’t the only ones offering “certified” used cars, but their programs are preferred. Manufacturer-backed programs feature newer cars with fewer problems, according to Consumer Reports. But there are a whole host of sellers that have jumped on the “certification” bandwagon, from used-car superstores like CarMax and AutoNation to independent dealers. The reliability of non-manufacturer certified programs varies. “Some, like the certification program at CarMax, are pretty trustworthy,” Spinella say. “Others, unfortunately, are not.” Only the manufacturer-backed programs will allow you to get warranteed repairs at any licensed dealer in the country. If you buy a certified used car with a limited warranty from Earl’s Used Car Emporium down the street, you might be out of luck if you encounter car trouble out of town.
Source: http://search.msn.com
Posted by Stephanie Overby
Some are better deals than others. Certification in the sports car category, for example, only cost a 2.9 percent premium over book value in 2005, according to CNW Marketing Research. But in the luxury department, certification usually doesn’t come cheap. Manufacturers charged an average premium of 7.8 — or nearly $3,400 — for luxury car certification in 2005 and just slightly less — 7.7 percent — for near-luxury. But, notes industry expert Art Spinella, premiums are “always negotiable” and vary by geography. “It’s easy for a manufacturer to get a premium on a certified car in Las Vegas, but it may be more difficult in Florida,” Spinella says. “It all depends on what the local economy can tolerate.”
But many finance companies — even some that are captive arms of the manufacturers — may not be willing to finance any premium. “If you want to buy a car and the Kelley Blue Book value is $20,000, but the dealer is asking $22,000 because it’s certified, they may not approve it,” says Spinella. “That’s starting to change, but they’re making the move slowly.” Also, the certification you pay the premium for does not increase the eventual resale value of the car when you decide to sell it or trade it in down the line.
For all the talk of 100-plus-point inspection processes, warranties and vehicle history reports, there is no data to suggest that certified used cars are any more reliable than their non-certified brethren. Although Consumer Reports found that 90 percent of certified pre-owned buyers said they were very or completely satisfied with their purchases, there have been reports of consumers suing auto manufacturers because the CPO car they bought turned out to be a lemon. Spinella says such lawsuits and the problems they stem from are probably less common in the CPO space, given the certification process and vehicle history checks. But in the end, a certified pre-owned car is a used car, just like any other, and is subject to used-car problems.
The CPO market can also be a little tricky to navigate for first-time buyers. Manufacturers aren’t the only ones offering “certified” used cars, but their programs are preferred. Manufacturer-backed programs feature newer cars with fewer problems, according to Consumer Reports. But there are a whole host of sellers that have jumped on the “certification” bandwagon, from used-car superstores like CarMax and AutoNation to independent dealers. The reliability of non-manufacturer certified programs varies. “Some, like the certification program at CarMax, are pretty trustworthy,” Spinella say. “Others, unfortunately, are not.” Only the manufacturer-backed programs will allow you to get warranteed repairs at any licensed dealer in the country. If you buy a certified used car with a limited warranty from Earl’s Used Car Emporium down the street, you might be out of luck if you encounter car trouble out of town.
Source: http://search.msn.com
Posted by Stephanie Overby
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