Black Book offers cost-benefit analysis of CPO vehicles


Some franchised dealerships don’t have a robust new-vehicle inventory since the coronavirus pandemic disrupted the volume pipeline from automaker factories around the globe.

Black Book explained how retailing certified pre-owned vehicles could be leveraged by franchised stores to get into better position for new models among other potential benefits.

“For some dealers, there is additional incentive to CPO a certain percentage of their used inventory as it bumps up their status with the manufacturer,” Black Book said in its latest COVID-19 Market Insights report distributed earlier this week.

“For example, BMW takes into consideration a dealer’s CPO sales volume when deciding on the dealership’s new-car allocation,” analysts continued.

Black Book acknowledged there certainly are costs involved when certifying a vehicle, which can range by manufacturer. And depending on the specific unit, that cost can make store managers carefully consider how to proceed.

“Typically for mainstream OEMs, the cost to the dealer is $500 or less per vehicle, but luxury vehicles can reach into the thousands of dollars and vary by model,” Black Book said in the report. “In most cases, the full cost to CPO a vehicle is the responsibility of the dealer, including any reconditioning that is necessary for it to receive certification.

“Retail prices of CPO vehicles are generally about 3.5% higher than a similar non-CPO vehicle (adjusted for mileage). But just like the cost to CPO a vehicle, the difference varies among the segments and, for example, can climb to about 7% for near luxury sedans,” Black Book went on to say.

Black Book also reiterated the other benefits of CPO models, which oftentimes come with an additional warranty. Sometimes the OEM’s captive finance company has special financing rates and terms for certified vehicles, too.

And CPO vehicles also can give consumers some flexibility at the time of delivery. Black Book specifically mentioned what General Motors does.

“There are additional benefits to consumers that purchase through some OEMs, such as GM that offers an exchange program on their Chevrolet and GMC CPO units. If the customer changes their mind within three days or 150 miles, the purchaser can exchange it for any Buick, Chevrolet, or GMC CPO vehicle,” Black Book said.

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