Here’s a buying opportunity for smart used-car shoppers
Americans bought more than 225,000 Certified Pre-Owned (CPO) cars in September. That’s a 2% increase from August and a 1% increase compared to September of last year.
Selling too fast for certification
But the slight increase masks a startling phenomenon. CPO sales could have been much higher, except that dealers may be selling used cars too fast to pass them through the certification process. That creates a unique buying opportunity for smart shoppers (more on that in a moment).
Kevin Chartier, vice president at Manheim Consulting, explains, “In today’s market, everything is selling so quickly and at such high prices, that I think that in many cases the dealers are selling cars before they get a chance to pull them into their shops to spend the time to recondition them up to full CPO standards.”
(Manheim Consulting and Kelley Blue Book share the same parent company, Cox Automotive.)
Also see: 18 of the best new and used cars for seniors
A longer inspection process
A Certified Pre-Owned car is a used car that has passed through an inspection process. Dealers check CPO cars more thoroughly than they do the other used cars on their lots. CPO cars are typically sold with a warranty.
That additional peace of mind makes CPO cars a sort of middle ground between new and used cars – protected against defects like a new car, but with the lower price of a used model.
Cars of all kinds in short supply
In 2021, however, a shortage of needed parts has slowed the production of new cars all over the world. The resulting shortages have pushed prices to record highs – the average new car sale price has now set five consecutive monthly records. It will likely set a sixth when September’s final numbers are available.
Also read: Why automakers are closing this loophole in your car lease
Those high prices have pushed some buyers who would otherwise be shopping for new cars into the used car market. The average used car sale price has gone up nearly a quarter in just one year. At the end of August, it approached $26,000.
High prices are making some new car shoppers sit out the market entirely. They may soon do the same to used car shoppers.
Considering an offer? Ask them to certify it
If you are in the market for a used car, it’s worth noting that many of the newer used cars you find on dealer lots would probably be sold as CPO cars under normal circumstances. If dealers are rushing used cars to the sales lot as fast as they can, skipping the CPO process, that means many of the best used cars aren’t certified at the moment. It’s not because they wouldn’t qualify for it. It’s because the dealership is in a hurry.
See: Used car buyers: How to spot flood damage
Before you put your money down, consider asking the dealer to certify the car. If the dealership is confident that you’re ready to buy the car, they may be willing to put in the extra effort to inspect it. You’re always better off with a warranty.
This story originally ran on KBB.com.