Looking for an upwardly mobile set of wheels that won't drain your bank account? A certified pre-owned vehicle might be the answer. CPO programs make aspirational autos attainable while still offering you a ride that's near-new both cosmetically and mechanically — plus one that comes with warranty-backed peace of mind.
Luxury automakers Mercedes-Benz and Porsche launched pioneering CPO programs around 1990, with fellow premium brands from Lexus and Acura to BMW and Jaguar soon following suit. Today even supercar makers such as Bentley, Ferrari, Lamborghini and Maserati offer CPO models.
"The main reason to consider a CPO vehicle over a new vehicle is price," said Eric Anderson, ownership database supervisor for automotive research firm IntelliChoice. "The largest area of ownership cost on a luxury vehicle is depreciation. By purchasing a 2- to 4-year-old CPO luxury car, you can avoid the first few years of depreciation."
So while automakers add anywhere from to 2% to 8% to the original used car price for their certified vehicles, a 2- or 3-year-old CPO car will usually be priced 20% to 40% below its original MSRP. That can amount to tens of thousands of dollars off for luxury models.
For example, a brand-new BMW 740i sedan has a starting MSRP of $74,000. But a 2012 CPO model with 33,000 miles, found recently through the company's CPO website, was priced below $52,000 — 30% less than the MSRP. All certified BMWs have less than 60,000 miles and have warranties good for six years or 100,000 miles (from the original in-service date, or the first time the car was sold).
Elsewhere, a stately 2014 Audi A8 L can run you well north of $100,000, but a 6-cylinder 2013 CPO model with 24,420 miles, found recently through Audi's CPO site, will cost you just $64,893 — and that's after the German luxury marque's 300-plus-point inspection.
"Most luxury CPO programs offer more benefits compared to a non-luxury CPO program, which means the added sticker price for a luxury CPO vehicle is higher than a non-luxury CPO vehicle," Anderson said.
Based on IntelliChoice's annual cost of ownership analysis for 2- to 4-year-old vehicles, Anderson was particularly impressed with the Lincoln MKS, MKX and MKZ; the Lexus GX; and the Volvo XC70. "Volvo, Lincoln and Lexus all have strong CPO programs, and Volvo has actually won the Best Premium Brand CPO award for seven years in a row," he said.
Drivers considering any CPO vehicle, luxury or otherwise, should request a copy of its inspection checklist (paying special attention to "wear items" such as tires and brakes), ask about special financing incentives and scrutinize its warranty.
"While most luxury programs offer a two-year/50,000-mile warranty extension, some programs require a deductible and others have different start times, such as from date of purchase," Anderson explained.
With the high parts and labor costs for premium vehicles, the extended warranty on a luxury CPO can be especially attractive. However, this is also part of the reason why the markup on luxury CPO models is higher than that on non-luxury CPOs. And with luxury and non-luxury vehicles often sharing powertrains, drivetrains and platforms, the higher-end cars aren't necessarily any more durable.
"I do not think of 'luxury' as better-made but instead as a more feature-rich vehicle," Anderson said. "The difference comes in the styling, standard features on the vehicle and some of the fit and finish of the vehicle."
If you're tempted by a CPO supercar, consider that, while this could indeed save you thousands compared to the purchase of a new model, there is no "cheap" way to own and drive these high-performance head-turners.
"I am not sure buying a Lamborghini, Bentley, Maserati or Ferrari ever makes sound fiscal sense whether it is new, used or CPO," Anderson said. "From a purely financial perspective, unless the vehicles are appreciating in value, then the cost to own and operate them will be extremely high."