Certified Pre-Owned Vehicles (CPO)

CPO refers to an automaker Certified Pre-Owned program for used vehicles. CPO skews more toward the luxury brands. The higher prices of luxury vehicles offers an opportunity for larger interest savings at the low financing rates provided by CPO programs compared to less expensive vehicles. With a luxury vehicle, the potential for expensive repairs and more frequent breakdowns make the comprehensive CPO warranty from the carmaker a more significant benefit than for most other vehicle classes.

Currently a mass-market vehicle covered  by a CPO program commands about $1,500 to $2,000 more, and up to $5,000 on a premium class vehicle, compared to a comparable non-CPO vehicle. You'll receive a more complete warranty, lower-interest-rate financing and possibly a lower mileage vehicle. Canadian Black Book is currently developing a SEPARATE valuation guide for CPO vehicles that will reflect their higher market values compared to other used vehicles.

Common features of Certified Pre-Owned vehicle programs are:

  • a pre-purchase inspection by the dealer according the automaker's standards. This inspection is supposed to include collision repairs/prior body damage, tires and brakes, and fluid leaks, with a written report provided to the purchaser. There is almost ZERO oversight of the inspection process by carmakers, so you can't count on the dealer to properly recondition the car nor weed out collision-damaged vehicles. 
  • a CarProof report on prior collisions (the report may not pick up all prior collisions, but it is much better than no disclosure)
  • an excellent warranty, usually for 2 yrs/40,000 km with coverage similar to a new vehicle, and repairs at any dealer selling the brand. That's better than almost all used vehicle warranties from aftermarket companies.
  • Low-interest rate auto financing (a significant benefit for the luxury car brands, compared to market rates -- most plans now offer it)
  • roadside assistance (usually)
  • exchange program (up to 30 days if the customer is not satisfied)
  • some high-end brands now offer low interest rate leases on used cars

For a luxury vehicle, CPO can be a plus, but you can wind up paying a lot  for it. New car dealers selling used BMW and Mercedes with CPO will often ask $5,000 more than an independent dealer. Most consumers are not prepared to pay that much more, but with the better warranty and interest-rate savings the real cost difference can be much lower. Most buyers of mainstream compact and midsize vehicles are too price-sensitive to choose a CPO vehicle.

In Quebec, AMVOQ the used car dealer association, introduced an innovative CPO plan for used vehicles sold by its members, who are used car dealers in Quebec. Like the automaker plans, financing is available at attractive rates, and vehicles are inspected by the dealer prior to the sale. AMVOQ says a percentage of vehicles are subject to 3rd-party inspections to maintain the integrity of the program. AMVOQ's CPO program is guaranteed by a third-party warranty company.

For APA members, the Association's used car buying service available in Greater Toronto and Montreal likely offers the best value.

Limitations

CPO vehicles are more expensive. New car dealer advertised prices sometimes make CPO appear expensive; most dealers will negotiate if you bring in an ad for a cheaper non CPO vehicle from another dealer.

The APA has seen examples of poorly inspected vehicles with defects present that are reported to have passed a CPO certification. Many automakers exercise poor oversight of their dealers -- this is particularly common in Quebec for previous collision damage not picked up in CarProof's vehicle history reports.

Should I be concerned if a vehicles offered by a new car dealer is not CPO?

The maximum age for eligibility of CPO vehicles is 4 to 6 years, depending on the program. A dealer cannot get coverage for older vehicles.

Some vehicles sold by dealers do not qualify because there is an issue with their history. Some dealers prefer not to pay the marketing fee per vehicle to register cars in the programs. Some non-luxury brands like Honda and Toyota already have strong demand for their vehicles so they haven't needed to support their CPO program strongly.

What if I am not happy with my purchase?

A 7-day or 30-day EXCHANGE privilege is part of most automaker CPO programs. This is different from the APA Used Car Program which offers a 30 day RETURN privilege and refund less than an allowance for use of the vehicle. The exchange privilege means that you must take another vehicle from the same dealer's inventory -- for some consumers this is not appealing.

In APA's experience the return or exchange privilege is a nice safeguard that is rarely used because it's inconvenient for the consumer. When a CPO vehicle turns out to be a lemon, the automaker generally does not get involved. In theory, they could be liable for representations made about a vehicle, if they made representations about safeguards offered with their CPO program, and you purchase a vehicle with defects that should have disqualified it.