Get used to it: gaining value from certified pre-owned vehicles

Black Enterprise, April, 2004 by Leslie E. Royal

Donald Byrd was all set to buy a brand-new luxury SUM when he stepped onto the lot of Baranco Lincoln-Mercury car dealership in Duluth, Georgia, last May. After viewing all of the hot rods, he caught sight of a sweet, champagne-colored 2000 Lincoln Navigator with leather seats, a built-in TV, and a six-CD changer.

"I went to the dealership with every intention of buying a new truck. When I saw this truck, I said 'Forget the new one,'" says Byrd, a district supervisor for the Westchester County Journal and News in White Plains, New York. "The price was definitely the reason that I changed my mind." Byrd paid $24,000 for his Navigator. He would have paid approximately $50,000 for a 2003 and about $58,000 for a 2004.

According to the J.D. Power and Associates' 2003 Vehicle Dependability Study, 42% of used-vehicle buyers make the purchase because they feel the quality of a used vehicle is as good as a new one, if you are interested in buying a luxury car without paying retail prices, here is important information to consider.

Out of 35 models, the survey lists Lexus, Infiniti, Porsche, Acura, Cadillac, Lincoln, and jaguar as luxury vehicles that. have experienced the fewest problems within three years. Problems included excessive wearing down of brakes: air conditioning: wind noise; shocks and struts: faded, cracked, or worn materials; worn or broken moldings; cracked and peeling paint; and various fluid leaks.

"With the proliferation of long-term warranties being offered on new vehicles and the increasing popularity of manufacturer-sponsored used-vehicle certification programs, long-term quality issues are critical to manufacturers and their bottom lines," says Joe Ivers, partner and executive director of quality/customer satisfaction at J.D. Power and Associates. "Manufacturers must align themselves with consumer expectations for durability."

When you are ready to make a purchase, go to www.nada guides.com. The online search is free. There is a fee to purchase the appraisal guides. "We can give you free, online, market-relative information on vehicles you want, finance options, insurance, and basically everything you need to purchase a car," says Mark Perleberg, lead auto expert for N.A.D.A. Guides. "You can drive a 3-year-old Lexus for the same price as a new midsize car like a Toyota Camry."

Our experts say the best way to protect your investment is to purchase a certified pre-owned (CPO) vehicle. "The purchaser's perception is that new vehicles depreciate too much. The main selling point of the CPO program is peace of mind with warranties that include free maintenance, possible exchange policy, lower interest, mechanical inspections before certifying, lower mileage, and product quality that is as good as a new vehicle," says Todd Wilson, former director of Automotive Sales and Internet Research for J.D. Power and Associates.

"If you are buying a used vehicle in the present year, you can save as much as 20%. When buying a used vehicle that is 3 years old, you can save as much as 60%," says Gregory T. Baranco, president of Baranco Automotive Group in Lilburn, Georgia (No. 30 on the BE AUTO DEALER 100 list with $80.4 million in sales).

In addition, used car purchases retain must of their value. According to J.D. Power and Associates' 2003 Used Vehicle Sales and Certification Study, luxury-car buyers pay nearly $3,000 more for a certified vehicle than a noncertified one. Also, 38% of used-vehicle buyers purchase a CPO vehicle. "Without question, consumers rate the warranties that come with CPO vehicles as the most valuable feature of the programs," says Wilson, "and they're willing to pay more for the added peace of mind."