Sales of used, certified cars, trucks, and SUVs has been on a long-term rise. CPO vehicles seem to make sense: avoid the sharp drop that most new cars suffer when they drive off the lot, yet have the peace of mind that comes with a thorough inspection and long term warranty, backed by the manufacturer.

Yet a couple of recent transactions have made me investigate things further. A few weeks ago, I had a client switch from the new 2011 Toyota Sienna minivan he had been planning, to a used, certified one. There was nothing wrong with that: it was an exceptionally clean 2008 Limited model with only 12,000 miles on it. But when we investigated what was covered by Toyota over the long term, we were both disappointed.

While Toyota offers a comprehensive, 3-month, 3,000 warranty, this minivan’s remaining 3/36 bumper-to-bumper coverage made it redundant. And while the 7yr/100,000 mile limited powertrain warranty that comes on Toyota CPOs is decent, it left the owner exposed to so many potential issues, like failures of the Sienna’s power sliding doors, DVD, or navigation, that he asked me if going the CPO route was indeed the best option.

So we investigated what I could do. In the end, we ended up having my company buy the Sienna from the dealer wholesale—as a non-CPO vehicle—and sold it to him with an comprehensive, 8 year/120,000 mile extended warranty (from a A-rated insurance company whose products I’ve sold for over a decade, and used on my own cars) for less than a $1000 more than if we had gone down the CPO path. I arranged financing at the same rate Toyota was offering as well.

None of this is to say that the manufacturer’s program wasn’t a good thing. Especially in the frightful chaos that is used car shopping for most people, who aren’t represented by a broker or other agent looking out for their best interest. The dealer had done a thorough, 160-point inspection—equivalent to what I have done on other used cars I sell—and it had a clean CARFAX history (not a foolproof guide, but that’s another blog). It was thought provoking, however.

The second case involves my recent purchase of a BMW for my fiancé. To make a long story short, an increase in auction prices of the 335i model we wanted of over $2000 in the past month made me decide to look at CPOs as well. But I decided against when I saw that items like the navigation system weren’t covered by the BMW program, and that it only extended two years beyond the expiration of the original, 4yr/50,000 factory warranty.

Which meant that in less than three years, I’d be fully exposed. And having owned seven other BMWs, that made me very nervous. Instead, I kept looking, and finally found the right vehicle through the Manheim auction system. And because I can get a extended parts and service contract (i.e. extended warranty) that runs out 5 years from the date I start it, I have a lot more coverage for only a bit more money.

Send article as PDF to