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Does Lexus treat CPO buyers better than new car buyers?
A few days ago I had a chat with a colleague who is a fellow Lexus owner. He was excited about my new car purchase but mentioned that he only buys Lexus CPO vehicles. His primary reason is to avoid the depreciation hit; the secondary reason is the benefits vis-a-vis a new car buyer.
A quick scan of the L/Certified website reveals that CPO buyers can get a very good deal:
2 years tacked on to the new car warranty w/ unlimited mileage, up to 6 years (new car buyers get 4y/50k)
2 years of complimentary maintenance (new car buyers get the first two services free)
I understand why Lexus does this -- it wants to instill confidence in the CPO program and to maintain bragging rights as the industry's best CPO program. But with that said, I would think that new car buyers should be (at least) comparably rewarded for their investment. For example, Lexus could give new car buyers and CPO buyers 2 years of complimentary maintenance.
My 2016 ES is a CPO and it's great the warranty is great after my factory warranty is up i get an extra 2 year unlimited.
I get 6 free oil changes no mater the service I have my last one coming up which is the 30k service and I'm gonna save so much money.
Considering the prices that Lexus dealers command for CPO vehicles, especially ones that are only 1 or 2 model years old, they ought to be offering some perks beyond those available with a new car purchase.
I suspect that the dealers realize that there are many buyers who don't have any idea about how deep the discounting is on new cars, and the prices that they asking for 1 and 2 year old CPO vehicles are often very close to and, in some cases, even higher than the prices for which a brand new vehicle could be bought. When I bought my new 2017 ES last fall, I also shopped for prices on left over new 2016 ESs. The offers that I was getting for those new 2016 ESs were actually as much as $3000 lower than the prices that the same dealers were asking for 2016 CPO ESs, and those dealers were unwilling to budge much from those inflated asking prices. I'm currently thinking about buying a new RX or NX. As I've been shopping, just like with the ES that I bought, I've seen that the prices that the dealers are advertising (and holding to) for 2016 CPO RX and NX vehicles are in the same range as the prices for which I could buy a brand new 2017 RX or NX. The reason for this is that the dealers are adding a premium in the range of $2500 for the CPO warranty, and that CPO premium is what brings the price of those almost new CPO vehicles close to the prices for which one could buy a new car. With CPO vehicles that are 3-5 years old and that have already had significant depreciation in their values, the extra cost of the CPO warranty is diluted by several years of depreciation, but, on those 1 or 2 year old CPO vehicles, the cost of the CPO warranty makes the decision to buy a CPO vehicle and not a new car a questionable one.
Also, it should be noted that many think of CPO vehicles as being (almost) "as good as new". While that may sometimes be the case, it is not necessarily so. On every one of the Lexus model forums here, there are occasionally threads started by people who buy CPO vehicles and who later find that they have bought cars that were plagued with problems. Just recently, there have been a couple of threads on the ES board started by someone who bought a CPO ES and who, after the purchase, discovered that the car had, at some point, sustained collision damage, and he is now in a nightmare situation of trying to get the dealer to take care of less than satisfactory repairs and issues related to that accident.
Lexus (and other manufacturers) try to give the impression that the CPO inspection insures that the car is as good as new. Again, that is not necessarily the case. Most of the 161 items that are checked are things that any one of us could check for ourselves in less than an hour. They include things like checking to make sure that the car starts, that all of the lights work, that the power windows work, etc. When things like the tires are checked as part of the inspection, their condition is deemed to be satisfactory even if they have as little as 1/3 of their initial tread life left, and the same thing is true with the brakes. So, it would not be unusual for someone to buy a CPO vehicle and have to spend an additional $2000 for tires and brakes within a year of the time that he/she purchases the car.
I'm sure that there are instances where the purchase of a CPO vehicle is a "good buy", and that is more likely to be true with a 3-5 year old CPO vehicle. In other instances, especially with the 1 or 2 year old CPO vehicles, it is questionable whether buying the vehicle is a better choice than buying new, and that is the case even with the extra perks that come with a CPO vehicle.
You're exactly right about the deep discounting on new cars vis-a-vis CPOs. When I was buying my '17 I just glimpsed at the low mileage CPOs to be nosy. The asking price for the CPOs was not much cheaper than what I paid for my new vehicle.
You're also right on about the mistaken impression that CPOs are trouble free. I bought an '11 LS460 a few years ago. Within an hour of leaving the dealership I realized that the automatic door closer didn't work on the driver's door. I was pretty upset -- why was that not found in the 161-point inspection? The tires were also not in the best shape. I fought for new ones before delivery but as you note, I was told that they barely passed Lexus' minimal permissible threshold.
My experience, along with others that I've read on the forums, have steered me toward new vehicles notwithstanding the extra CPO perks.
This is a very informative thread. Looking forward to reading about more experiences with the CPO program. My mother wants a crossover and I've been eyeing some preowned NX F sports.
i found that the Lexus dealer CPO used prices aren't exorbitantly higher than non-Lexus dealer non-CPO used prices. i'm willing to pay the ~$1,000 or so premium on a ~$24K car.
All luxury car maker CPO vehicles are big business -they make such a profit on them so they can offer some great perks. I wondered myself whether I should start buying CPO cars that are 3 years or less old, to avoid the depreciation hit and maybe start saving up more money (retirement or college lol).
I get emails from the Lexus dealership every week, and now phone calls also saying "We have a great demand for your 2013 Lexus ES350 and would be happy to buy it back from you and get you in a brand new car for the same amount of money...." I've told them plenty of times that I keep cars at least til the 10 year mark, but the emails and calls keep coming.
Huge profit margins on CPO for the dealer. Way more than on most new Lexus vehicles. It's basically the equivalent of the dealer using that huge profit margin to buy an extended warranty for the customer.
At least in my experience, I found the Lexus CPO prices to be way too close to just buying new.
Lexus cars are just so reliable in those first 6 years of ownership that something like a warranty extension during that period is pretty useless to me. I'd much rather buy outside the CPO program, pocket that money and just take my chances.
FWIW, I have a relative that owns a car dealership that does both used and new and has been in the car business for a while, and he feels strongly the entire CPO type model is largely a rip off to the consumer.
Considering the prices that Lexus dealers command for CPO vehicles, especially ones that are only 1 or 2 model years old, they ought to be offering some perks beyond those available with a new car purchase.
I suspect that the dealers realize that there are many buyers who don't have any idea about how deep the discounting is on new cars, and the prices that they asking for 1 and 2 year old CPO vehicles are often very close to and, in some cases, even higher than the prices for which a brand new vehicle could be bought. When I bought my new 2017 ES last fall, I also shopped for prices on left over new 2016 ESs. The offers that I was getting for those new 2016 ESs were actually as much as $3000 lower than the prices that the same dealers were asking for 2016 CPO ESs, and those dealers were unwilling to budge much from those inflated asking prices. I'm currently thinking about buying a new RX or NX. As I've been shopping, just like with the ES that I bought, I've seen that the prices that the dealers are advertising (and holding to) for 2016 CPO RX and NX vehicles are in the same range as the prices for which I could buy a brand new 2017 RX or NX. The reason for this is that the dealers are adding a premium in the range of $2500 for the CPO warranty, and that CPO premium is what brings the price of those almost new CPO vehicles close to the prices for which one could buy a new car. With CPO vehicles that are 3-5 years old and that have already had significant depreciation in their values, the extra cost of the CPO warranty is diluted by several years of depreciation, but, on those 1 or 2 year old CPO vehicles, the cost of the CPO warranty makes the decision to buy a CPO vehicle and not a new car a questionable one.
Also, it should be noted that many think of CPO vehicles as being (almost) "as good as new". While that may sometimes be the case, it is not necessarily so. On every one of the Lexus model forums here, there are occasionally threads started by people who buy CPO vehicles and who later find that they have bought cars that were plagued with problems. Just recently, there have been a couple of threads on the ES board started by someone who bought a CPO ES and who, after the purchase, discovered that the car had, at some point, sustained collision damage, and he is now in a nightmare situation of trying to get the dealer to take care of less than satisfactory repairs and issues related to that accident.
Lexus (and other manufacturers) try to give the impression that the CPO inspection insures that the car is as good as new. Again, that is not necessarily the case. Most of the 161 items that are checked are things that any one of us could check for ourselves in less than an hour. They include things like checking to make sure that the car starts, that all of the lights work, that the power windows work, etc. When things like the tires are checked as part of the inspection, their condition is deemed to be satisfactory even if they have as little as 1/3 of their initial tread life left, and the same thing is true with the brakes. So, it would not be unusual for someone to buy a CPO vehicle and have to spend an additional $2000 for tires and brakes within a year of the time that he/she purchases the car.
I'm sure that there are instances where the purchase of a CPO vehicle is a "good buy", and that is more likely to be true with a 3-5 year old CPO vehicle. In other instances, especially with the 1 or 2 year old CPO vehicles, it is questionable whether buying the vehicle is a better choice than buying new, and that is the case even with the extra perks that come with a CPO vehicle.
...I believe I got an awesome deal. I paid $31,000 for it and it has pretty much every conceivable option, was a local trade they maintained since new and it has just over 25,000 miles on it. The original sticker price was over $44,000 and, based on what I've seen, that was a very good deal. They were asking $32,500 initially.
Not only do I have the unlimited mileage warranty for thew next 4 years, but they will also cover maintenance for the next 2 years with valet service. The car was beautifully detailed and they put new tires and discs all around, so I should be good for at least another 25,000 miles. I foresee selling this in a couple of years and getting another trade or off lease.
I researched this model thoroughly and don't believe I paid too much. Were there cheaper ones out there? Sure, but they were either higher mileage, had a sketchy history (accident), or no warranty. I've been a BMW driver for over 15 years, so this is quite a change for me.
Last edited by Swishbro; 07-22-17 at 06:56 AM.
Reason: Updated info
i've seen 2013-2014 ES non-CPOs with NAV and about 36K miles on them for about $22K or so. you can get a CPO for about $23K. so the CPO premium of about $1K (4.5%) is worth it for all of the CPO perks IMO. however, that CPO premium really seems to climb (percentage and obviously absolute dollar amount) and not be worth it on "almost new" CPOs 0-2 years old. the buyer sweet spot is 3 year old vehicles both for highest depreciation and lowest CPO premium (best overall buyer price) IMO.
The CPO standard for both tires and brakes is one half (1/2) original tread or pad depth.
Most OEM tires have between 9/32" and 11/32" when new so 5 or 6/32" would pass muster.
The CPO standard for both tires and brakes is one half (1/2) original tread or pad depth.
Most OEM tires have between 9/32" and 11/32" when new so 5 or 6/32" would pass muster.
But saying "half of original tread" is misleading because it does not mean the same thing as "half of original usable tread". Tires are no longer legal when they get to 2/32" and most people would want to replace tires well before that and, at least, by the time they get down to 3/32". So, a tire that has 5/32" of tread left only has about 2/32" of usable tread left. If that tire started with 9/32", that would mean that it only has 1/3 of its original usable tread left.
For me and for many others, going into a winter, I would want to be replacing tires, at a minimum, when they got below 5/32". So, while a tire with 5/32" would pass CPO standards, that would be a tire that I and many others would feel needed to be replaced almost immediately.
i've seen 2013-2014 ES non-CPOs with NAV and about 36K miles on them for about $22K or so. you can get a CPO for about $23K. so the CPO premium of about $1K (4.5%) is worth it for all of the CPO perks IMO. however, that CPO premium really seems to climb (percentage and obviously absolute dollar amount) and not be worth it on "almost new" CPOs 0-2 years old. the buyer sweet spot is 3 year old vehicles both for highest depreciation and lowest CPO premium (best overall buyer price) IMO.
I don’t know what CPOs you are finding at that price, but they are likely not clean. All of the clean CPO are at $26k +, at least in my area. Also, CPO carries a much higher premium than $1k.
I don’t know what CPOs you are finding at that price, but they are likely not clean. All of the clean CPO are at $26k +, at least in my area. Also, CPO carries a much higher premium than $1k.
Cool link! I just ran a search in my area for a 2013/14 with 36k miles, or less. Lowest was $26.2k, so it may be area dependent.
I just searched for a 2013 UL, like mine, within a 200 mile range. I found 1 that has about 3k more miles and no ML being offered for $30! That seems crazy.
07-12-17, 03:55 PM
Does Lexus treat CPO buyers better than new car buyers?
