An improving economy and lower gas prices are driving strong demand for new and used cars. The U.S. auto industry is now poised to report its sixth consecutive year of growth, which would set a new record. Although sales of new cars and trucks are typically the most profitable, a relatively new market segment is quickly gaining ground.
A New Used Car?
According to a recent report from Edmunds.com, sales of certified used cars jumped to 2.3 million in 2014. That’s about 20 percent of the entire pre-owned market, which may signal a significant change in the way Americans shop for secondhand vehicles. Here are five reasons for this change.
For a vehicle to be accepted into a certified pre-owned program (CPO), it must have low mileage, no history of major bodywork, and be only a few years old. As a result, many (perhaps even most) CPO vehicles were leased models that were returned to the dealership in excellent shape. The dealership can then have them thoroughly inspected and, if accepted by a CPO program, sold as certified automobiles.
2. Lower Prices
Even though certified used cars are more expensive than comparable secondhand models, they’re far more affordable than brand-new ones. With depreciation rates of roughly 50 percent for a five-year-old auto, it’s no wonder that many shoppers turn to CPO vehicles to save a considerable amount of money.
3. Nearly New
When you visit the average used car lot, you may notice that most of the vehicles are past their prime driving years. An average age somewhere between 6 and 15 years is not at all uncommon. By comparison, most certified autos are relatively recent models, often between three and five years old. As you might expect, the fact that they are generally much younger means that they’re also in much better mechanical and aesthetic shape.
4. Warranty Coverage
When an automobile is accepted into a CPO program, its manufacturer issues an extended warranty. Just like the regular factory warranty that comes with all new cars, these written guarantees provide protection against replacement or repair within a specified period of time. Depending on the program, the average warranty should pay for minor automotive procedures from the dealership, such as oil changes and tire rotations.
Buying a pre-owned auto has always been a big gamble because there are absolutely no guarantees that it will work as intended. A certified vehicle, on the other hand, removes most of the mystery, thanks to a series of guarantees that ensure its quality and safety. In addition to the basic warranty, buyers can also take heart in the fact that these used cars and trucks are thoroughly inspected by automotive experts before they are accepted into a CPO program.
With many more benefits than costs, it is no wonder sales of certified pre-owned autos are rising at an unprecedented pace.