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How Unreliable Car Brands Benefit From Certified Pre-Owned Programs

2K views 11 replies 8 participants last post by  CaptainDan 
#1 ·
Here’s How Unreliable Car Brands Benefit From Certified Pre-Owned Programs
Doug DeMuro
April 26, 2016
Jalopnik

Today, I’ve decided to address certified pre-owned programs. More specifically, I’m going to tell you why certified pre-owned programs actually benefit car companies with a reputation for poor reliability.

For those of you who do not live in a country where certified pre-owned programs exist, such as the country of Europe, please allow me to explain what the hell they are. Here’s the gist: if you buy a new car, you get a warranty, and everyone is happy. But in the past, if you bought a used car, you got no warranty, and everyone was sad. So automakers came up with an idea: why not sell used cars with a warranty and come up with some catchy name beyond “used cars with a warranty”? And thus, certified pre-owned was born.

So the way it works now is, if you want a car with a warranty but you don’t want to spend big money on a new model, you buy a certified pre-owned vehicle. This way, you get a fairly recent car with a long, factory-backed warranty that’s almost as good as a new one. Meanwhile, dealers get to sell their own car a second time, with a higher profit margin than a typical used vehicle. Everyone is happy again.

CONTINUE AT LINK ABOVE
 
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#3 ·
I don't know about mainland Europe but the UK has long had "certified pre-owned programs" in the form of manufacturer-approved used car schemes of which GM's Vauxhall Network Q is one of the best - in addition original factory warranties are transferable to subsequent owners - there are also after-market warranties which non-franchised car dealers can use as well as after-market consumer warranties.

A number of manufacturers have add-on warranties which can be used to extend original factory warranties.
 
#4 ·
"The country of Europe." Thanks for the larff!

re: Ruperts Trooper's comment, so if Brexit happens then that statement about pre-owned Europrograms will be totally, 100% true?
 
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#10 · (Edited)
Twisted-up logic that surmises preference for buying a certified-used car is inversely proportional to perceived reliability of the brand. Where's the data? Would be easy to compare take rates among brands, assuming their certified plans and inventory selections are comparable. If the take rates are similar, as I suspect they are, then the certified program benefits the reliable brands more, for they can charge the cost premium that's less offset by future warranty claims. If true, this is the diametric opposite of what Jalopnik suggests. Which makes his article a heap of guesswork that lacks data, typical of pop-up publications.

I knew two people that within a short time of one another had to change the tranny in Lexus RX300s, each vehicle having fewer than 80K miles. The bill for this is over $4K. Perhaps some select certified used according to the brand's perceived cost of repair?

The premium of a certified used selection is an insurance policy against problems that are possible under any brand, not unlike a preference for new over used when the extra cost of depreciation buys monthly expense predictability.
 
#11 ·
I can't stand Jalopnik articles
 
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