Though it’s easy to pick up a used Mercedes-Benz, Jaguar or even a Porsche for a few grand on Craigslist, such a car will likely be shabby, unreliable and a maintenance money-pit. A prestigious name on the hood doesn’t count for much if your car spends most of its time in the shop or leaking oil in your driveway.
Allow us to suggest a more astute route into an affordable luxury car — one that will actually live up to its nameplate: purchasing a certified pre-owned model from a dealership. These late-model, low-mileage vehicles have been rigorously inspected and refurbished. Many are in impeccable cosmetic and mechanical condition, and all come with comprehensive warranties. A CPO will cost you more than the used ride you found on the Internet, but can save you a bundle in the long run.
In the current sluggish economy, many luxury-loving drivers are turning to CPOs to keep them cruising in style.
“Over the last 10 years, luxury CPO sales have increased around 50%,” said Eric Anderson, senior analyst for IntelliChoice. “Looking back to 2006, CPO sales were equal to around 20% of new car sales for the luxury brands. [In] 2009, CPO sales equaled 36% of new car sales.”
Luxury marques Mercedes-Benz and Lexus pioneered the CPO concept in the late 1990s. Today, high-end brands including Porsche, Jaguar, Land Rover, Maserati — even Rolls-Royce and Bentley — offer certified pre-owned vehicles.
You can expect a luxury CPO vehicle to cost $1,500 to $3,000 more than the same noncertified model in similar condition, according to Anderson. Savings vary greatly depending on the age and mileage of the vehicle as well as the demand, but it’s still a bargain compared to an equivalent brand-new car.
“Most CPO vehicles are around 3 years old,” Anderson said. “So I would expect you should save thousands of dollars by purchasing a 3-year-old CPO vehicle over a new car.”
Superior build-quality and durable components are central to any car with a “luxury” tag. But many drivers feel that pricey rides hold up better as used vehicles, period — especially when they’re manufacturer-certified CPOs, which are refurbished using only original manufacturer parts. Considering that luxury vehicles cost more to maintain, the comprehensive warranties common to CPOs are even more of a selling-point on luxury models. Most luxury brands offer longer comprehensive warranties than “regular” brands, Anderson noted, but their powertrain coverage can be shorter.
“I think [CPO warranties and inspections are] even more important when considering a luxury vehicle,” Anderson said. “Porsche received the 2012 IntelliChoice CPO Award for best warranty, followed closely by Land Rover, Jaguar and Volvo.”
Luxury CPOs are also more likely to be former lease vehicles, which makes it more likely they were serviced by dealers according to rigorous leasing requirements. Indeed, a significant driving force behind the creation of early CPO programs was to create an outlet for the many off-lease vehicles arriving back at luxury dealerships.
Luxury lease sales represented 42% of total luxury retail sales in 2011, but leases accounted for only 16% of mainstream retail sales during the same time period, according to Joe Derkos, director of J.D. Power and Associates’ Power Information Network.
Lately, dealers are getting fewer lease returns — a lag-effect from the reduced number of lease contracts during the 2008-09 economic downturn. So they’re bolstering their CPO inventory with traded-in vehicles. A Carfax report, which CPO dealers should be happy to provide, will detail a car’s lease or sale history.
“Not only are dealers taking in more trades, but they are increasingly likely to keep these vehicles for resale through their own used sales operations as opposed to selling trade-in units at auction,” Derkos said.
A final plus-point of buying a certified pre-owned luxury car is a little less tangible: Though the best dollar-for-dollar bargains in any used car category are likely to be private-party sales, it can be tough to find a high-end car in CPO-like condition. It takes huge time commitment, and there’s also the matter of paying a reputable mechanic to inspect any cars that meet your criteria — even the ones that you don’t end up buying. This could add hundreds of dollars to your eventual purchase price — plus you’ll have to pay cash and won’t get the benefits of a CPO warranty.
Ultimately, for many luxury car buyers, it might be the hard-to-quantify “shopping experience” that swings the balance in favor of CPOs.
“CPO programs give buyers an experience very much like that enjoyed by new-car buyers,” Derkos said. “Their transactions often take place in the same showroom with the same sales staff as new-vehicle customers experience. They receive a fully inspected and appropriately reconditioned vehicle with bumper-to-bumper warranty coverage, often available with special financing rates.”