To date, BMW Canada has sold 11,000-plus Certified Pre-owned (CPO) cars and by year’s end will have retailed some 15,000 used cars. This is big business.
BMW Canada will move about 30,000 new BMWs and Minis and motorcycles in 2011. Thus, the CPO route represents a profitable used-car sales enterprise equal to about half of the company’s new vehicle sales.
The story is similar at Mercedes-Benz and other luxury brands. But even mainstream brands are moving ahead aggressively with CPO programs.
The two big ideas behind CPO programs is to retain customers who cannot afford to buy new and to do what’s possible to manage resale values by keeping some measure of control over the used-car marketplace.
CPO cars allow companies and their dealers to keep their used vehicles in the selling funnel and away from auctions, where the marketplace sets prices with cutthroat precision. With more control over supply and pricing, car companies and dealers benefit from higher residual values and strong brand strength, which in turn can benefit new vehicle sales by lowering monthly payments, among other factors.
If you are going the CPO route, you’re best served by knowing:
1. How much does the dealer pays the factory for that CPO designation and packaging?
2. What sort of vehicle inspection and warranty is offered and if it’s done by a third part or not. Is it a 150-point inspection or a 300-point one and what does it include?
3. The warranty? Two years, three years? How many kilometres? Is there a warranty deductible?
4. What sort of dealer exchange or return provision is offered? If you don’t like the car within 72 hours, you can return it no string attached.
5. Is the warranty transferrable? You’ll have an easier time selling the car to someone else if it is.