Originally Posted by lesz

But that CPO warranty is also one of the especially high mark-up items on which dealers make extraordinary profits. CPO designation fits into the same general category as extended warranties and dealer installed options with regard to the level of profit for the dealership. Just like a dealer only pays a small percentage of what it charges the customer for an extended warranty, when a vehicle is designated as a CPO vehicle, it only costs the dealer a small fraction of the $2500 or so that the customer will be paying for that CPO designation.

The reason why both Lexus and the dealership want to designate as many used vehicles as possible as CPO vehicles is because they both know that it is very unlikely that any of those vehicles are going, during the warranty period, to have need for any covered repairs that comes even close to the CPO mark-up.

While it is certainly possible that a car buyer could incur a major repair and have to pay out of pocket more than $2500, the chances of that happening are especially small, and if, say, you were to buy 3 non-CPO vehicles over the next 10 years, the odds are overwhelming that you would be thousands of dollars ahead of where you would be had you bought 3 CPO vehicles during that same time because the $7500 that you would have saved by skipping CPO status would, with very, very rare exceptions, by far exceed any repairs that you would likely have to pay out of your own pocket.

"Peace of mind" is a catch phrase that those who sell extended warranties and protection plans on $300 TV sets want us all to latch onto because those who are willing to buy that peace of mind are the ones who are generating the biggest amount of revenue for those selling the extended warranties and protection plans.

Also note that, while the 4 years and 100,000 total mile coverage for Lexus CPO vehicles sounds impressive, it really isn't nearly as much as it, at first, seems to be. The new vehicle bumper-to-bumper coverage, which transfers to a new owner, is for 50,000 miles and 4 years. So, the CPO warranty is going to cover you only for 50,000 additional miles and , say, 2 additional years if you buy, for example, a 2 year old CPO vehicle. Plus, the new vehicle power train warranty covers the vehicle for 6 years and 70,000 miles. Any repairs exceeding the approximately $2500 CPO price premium are likely to have already been covered by the power train warranty, and, by the time that power train warranty expires, it is likely that the 4 year CPO warranty will also have expired or be close to expiring. Further, if you are talking about an ES 300h, the hybrid system is covered in the new car warranty for 8 years or 100,000 miles. Thus, the additional "peace of mind" that comes from the CPO warranty isn't nearly as great as it might, at first, seem to be.

Originally Posted by waikiulee

Really appreciate your insight on this. Had been shopping for CPO exclusively, but couldn't find an ES 300h in Deep Sea Mica in Parchment. Found a 2013 at CarMax w/ 29k for $31k. (not the best deal, but I wanted something other than black, grey, white or silver).

Originally Posted by Riles

Yikes. As much as I dislike paying a premium for CPO, at least you get something in return for that premium (although not nearly worth what you pay, but at least something). CarMax marks its cars up to CPO prices but doesn't even give the CPO benefits.

Kind of went the other direction on that one!

Originally Posted by cstone3636

Where are you getting that warranty for $1400? That's a pretty good deal.