Shoppers who might prefer a new car or truck, but can't quite afford one, are prime Certified Pre-Owned (CPO) candidates. So are folks who, in tight economic times, don't want to stretch the budget that far.
With CPO inspection and warranty coverage, you get a vehicle that's likely to be among the better choices out there. Sure, it's priced higher than an ordinary used car of the same type, but substantially lower than a new one.
When Kelley Blue Book (KBB) surveyed auto shoppers in 2009, some 70 percent of respondents said they would consider a used car, whether certified or not. One-third would consider a used vehicle only if it was certified.
More than three out of five new-car shoppers would consider a used model, but again, only if it has undergone certification. On the other hand, only 28 percent of those seeking used vehicles contemplated moving up to a certified example.
About 30 percent of participants in KBB's 2009 survey considered the extended warranty that accompanies a Certified Pre-Owned vehicle to be the most important factor in their online research. In second place: a vehicle history report. Nearly 70 percent of those surveyed would consider a certified used car based on the inspection/certification process, while 57 percent put the extended warranty as a strong factor.
A survey by CNW Marketing found that the top buying reasons were the inspection (30 percent) and warranty (27.2 percent), with price trailing far behind.
Just about everybody seeks a sense of security when buying a used car. That's the point of inspection and warranty coverage. Overall, 55 percent of KBB-surveyed shoppers cited peace of mind as a top priority.
Younger folks may be even more impressed by certified used cars as a value proposition. A Deloitte survey in 2009 found that the 75 million members of Millenials, born between 1979 and 1991, are three times as likely to buy a used car rather than a new one. Part of that choice is based on the ability to get financing, but 63 percent of respondents said they consider used vehicles to be greater values.
CNW Marketing has found that Certified Pre-Owned buyers are more satisfied than buyers of used cars in general. Satisfaction also is established by the number of owners who return to the CPO fold a second time. In KBB's survey, 40 percent of potential certified shoppers either owned a certified used vehicle, or had one previously. Half of those folks said certification was important.
Automakers see considerable evidence of buyer satisfaction, by the reactions of those who drove home a certified used car. Among Toyota's CPO customers, for instance, 43 percent had never owned a Toyota before. Even more important to the company, 76 percent have said they'll buy a new Toyota next time.
Certified Pre-Owned vehicles account for only a modest portion of the used cars sold each year, but they're strongly affected by the supply of late-models, eligible for factory certification. Many certified used cars are off-lease models, returned to the lessor after the term was up. Due largely to the credit crisis of the past two years, leasing activity has fallen significantly.