One of the trickiest parts about looking at the auto industry, especially if you’re starting to think about your next vehicle, is figuring out all of the details regarding different models, terms, and specs. While the specifics of any given vehicle are complicated enough, simply working your way through the consideration of a Certified Pre-Owned (CPO) vehicle compared to one that’s brand-new can be exhausting. No matter what your interest in the auto industry might be before you shop for your next car online or head to your local Certified Pre-Owned GMC dealer, you should take a moment to consider what’s best for you.
That’s essentially the golden rule here: go with whatever is best for you. There’s no perfect-fit answer that’s going to be right for everyone–that’s pretty much the golden rule of anything when it comes to cars. You won’t find a single model that is perfect for everyone, a way to pay for a car that meets everyone’s needs, or a type of vehicle that is ideal for every driver; that’s why there are so many options out there. As you’re looking at how the auto industry works, take a moment to think about the differences between CPO and new models and figure out which one is really best for you.
The GMC Example
Before we go any further, you may have noticed that I’ve already mentioned “GMC” once so far, and as we look at details, I’m going to continue to focus on GMC models and the programs they offer. Why? Simply because it’s one good option that illustrates what every other company does with their CPO models and new cars. I’m going to use the specific example of GMC in order to explain the general ideas that I’m looking at today.
So why not Ford, Jeep, or BMW? No particular reason – in general, you’ll find that what we look at here could just as easily be applied to those other companies. The important thing to remember is that some terms and conditions might vary from one brand to another; you might get a more thorough inspection on a CPO model from Brand X vs Brand Y or find longer warranty coverage. That’s all well and good, but ultimately the industry pretty much moves together, so the basics here are likely applicable to your favorite manufacturer.
Warranty Coverage
Now then, one of the biggest selling points that manufacturers use when promoting their CPO vehicles is the warranty coverage they include. This is a great place to start because it is one of those things that really sets CPO models apart from other used cars out there. If you buy a car from your neighbor down the street, he’s not going to offer you warranty coverage on it; but both new and CPO vehicles come with warranty protection. The big question, however, is how do they stack up?
Using GMC as our example, every CPO GMC is backed by GM’s Certified Pre-Owned benefits (these apply to Chevy, GMC, and Buick models just for the record). GM CPO benefits include:
- 6-year/100,000-mile Powertrain Limited Warranty
- 1-year/12,000-mile Bumper-to-Bumper Limited Warranty
Again, that’s not something you’ll find on your average used car, and this is one of the main reasons people will choose a CPO vehicle. If you buy a brand-new model from GMC, however, this is the warranty coverage you’ll get:
- 5-year/60,000-mile Powertrain Limited Warranty
- 5-year/100,000-mile Powertrain Limited Warranty (diesel engines)
- 3-year/36,000-mile Bumper-to-Bumper Limited Warranty
But wait, the CPO model has a longer powertrain warranty than one sold as new? Yes, that’s right – but there’s a very important catch here: the powertrain warranty on the CPO vehicle is based on when it was originally sold, not when someone buys it as a CPO vehicle. GM’s CPO program requires that all vehicles must be less than 6 model years old and have fewer than 75,000 miles on them. This means you could potentially find a CPO GMC vehicle that is 5 years old and has 65,000 miles on it, which goes beyond the original powertrain warranty.
With the CPO warranty coverage, that model would get an additional year and up to 35,000 more miles of protection on it. Combine that with the stark difference in the bumper-to-bumper warranty coverage, and you can see that the new warranties are more impressive than those on the CPO vehicles. I should also point out, just for the sake of clarity, that warranty protection like this is always “whichever comes first,” either the age or mileage, not both.
Roadside Assistance
GMC offers complimentary roadside assistance on both their new and CPO vehicles and in both cases, they’re directly tied to the powertrain warranty. This means that new models will get the full 5-year/60,000-mile coverage with roadside assistance, while CPO vehicles come with assistance for whatever the remaining duration on its warranty might be (see above for that difference). In both cases, it’s a great thing to have, certainly better than nothing, but you can see that you’ll get longer coverage with a new vehicle.
Price
This is one of the two areas where CPO models really come out on top; all things being equal, a GMC-certified model is going to cost less than a comparable vehicle sold brand-new. You should remember, however, that CPO vehicles will cost more than the same model that hasn’t been certified since those other used cars don’t include warranty coverage and other benefits. This is why CPO models are often seen as a “middle way” between the high price of a new car and the lower price tag of one sold as used or pre-owned. I should also mention that I did say “all things being equal,” so don’t expect this to be universally true during a time of record-high used-car prices. For example, during a supply-chain crisis combined with a microchip shortage during an ongoing catastrophic pandemic–such a situation could result in used prices skyrocketing to the same level as new models.
Depreciation
This is the other major way that CPO models come out on top in a lot of cases since, like other used cars, they have already gone through a lot of initial depreciation. The old adage about a car losing 10% of its value the moment it’s driven off the car lot isn’t just fiction. Cars lose a massive amount of their value the first year they’re driven, and for the next few years, they continue to go down (potential crises notwithstanding). Choosing a used vehicle lets you skip much of that early depreciation, and your car will retain more of its value. CPO models might be priced a bit higher than other used cars, but you’re still typically making a better investment with one than with a new car.
Peace of Mind
Now for something both CPO models and new cars have over used vehicles: peace of mind for you as the driver. In addition to the warranty coverage I already talked about, new and CPO vehicles are more of a known quantity. Every CPO model from GMC has to go through a 172-point inspection while new cars are fresh from the factory and in the best condition possible. You never know what a used vehicle has been through with a previous owner; there’s always a mental question mark that you don’t have to worry about with a new car, and the question mark is smaller with a CPO vehicle.
The Big Picture
If you’re wondering if it’s better to buy a CPO vehicle or a new model, it really comes down to what you need and what you prefer. You can see that they both have their advantages and their drawbacks, not to mention how your budget will ultimately play a huge role in figuring out what’s best for you. If you want to see your vehicle as a wise financial investment, then a new car is almost always the wrong answer, though the reliability and warranty coverage of a new vehicle simply can’t be beat. At the end of the day, it all comes down to what works best for you and then choosing the vehicle that meets all of your needs.
