Customers pay more to get safety, reliability of ‘certified used’ autos

A used car is a used car is a used car, right? Not anymore, say auto manufacturers, whose certified used vehicles have created an option for buyers between the new and used-car markets.

“‘Certified used’ is the industry’s fastest-growing segment because not everybody can afford to buy a new car, and they want a used car that’s going to be safe and reliable,” said Paul Pejza, manager of General Motors Corp.’s certified used vehicles division in Detroit.

Several GM officials from the automaker’s headquarters were at Daniels Chevyland in Colorado Springs on Tuesday to promote the program.

Daniels is one of 3,900 GM dealers out of 7,000 in the nation that sell certified used vehicles — a manufacturerbacked program on latemodel, low-mileage used GM vehicles. The vehicles undergo a 117-point inspection before they’re sold and get repairs on problems. Buyers get an extended factory warranty, a vehicle history report, new carlike financing and perks such as 24-hour roadside assistance. For peace of mind, consumers pay more than they would for a typical used car.

“Used-car customers want to feel like a new-car customer, they want the same bang for the buck,” said local dealer Elizabeth Daniels, a member of a GM dealer group that’s involved in the certification program.

“Certification says the dealer has inspected it, repaired it and stands behind it,” she said.

The concept has become a hot industry trend because it’s allowed manufacturers to turn the used-car buying experience into something similar to the new-car buying experience, said Philip Reed, consumer advice editor for Edmunds.com, a Santa Monica, Calif.-based online automotive site, and author of “Strategies for Smart Car Buyers.”

Every major manufacturer now offers a certification program, he said.

“When you shop for a new car you assume everything’s perfect, and you don’t get that opportunity with a used car — unless it’s certified,” he said. “You’re protected up front and in the long run, but you get some of the advantages of a used car, which is a pretty good price break over a new car.”

Of the 14.3 million used cars sold at franchise dealerships in the nation last year, 1.6 million were certified, each having undergone similar inspections by factory-trained mechanics that cover everything from tire tread wear to engine function.

Dealers get the late-model vehicles, usually having fewer than 60,000 miles, from customer trade-ins, expired leases, company vehicles and manufacturer auctions open only to franchise dealerships, Pejza said.

“Vehicles have to meet all our criteria before we can certify it. Response locally is very good because it’s a very good value for the money,” said Rick Dymek, sales and leasing consultant at Lexus of Colorado Springs, which does a factory-mandated 161-point inspection on its certified preowned vehicles.

Buyers pay more for the extras, like repairs that were made and an extended warranty, than they would for a used car that doesn’t carry the manufacturer’s certification sticker.

Consumers typically pay an average premium of $1,680 for a certified used vehicle, according to a 2006 study of used-vehicle sales and certification by J.D. Power and Associates.

Reed notes that that average includes certified luxury cars that cost more. A certified 2005 Chevy Malibu fourdoor LT sedan with 35,000 miles would sell for $15,191, roughly $900 more than the same model noncertified, according to Edmunds.com’s price comparison of new, used and certified used vehicles.

Independent used-car dealers, which last year sold 13.7 million used vehicles nationwide, may also do their own certification process. Instead of a manufacturer warranty, independent used-car dealers typically sell a service contract, Pejza said.

Ed Hayes, owner of the city’s oldest used-car dealership, Hayes Motor Co., which his family opened in 1938, said he thinks manufacturerbacked certification programs are good. Still, buyers should be wary of certification programs by independent usedcar dealers, he said.

“You have to be very careful that you buy from someone who knows what they’re doing,” he said. “Sometimes, certification is a sales gimmick.”

Hayes doesn’t provide a certification program but does give customers, at no extra charge, a vehicle history report and generally sells vehicles less than two years old that have factory warranties.

“The vehicle history is as good a certification as you can get,” he said. “And if our cars need something not under warranty, like new tires, we’ll fix it and not charge the customer.”

NUMBERS

2006 U.S. CAR SALES

New: 16.5 million

Used: 42.5 million

USED CAR SALES

Franchise dealers: 14.3 million

Independent dealers: 13.7 million

Private sellers: 14.5 million

Certified at dealerships: 1.6 million, a 132 percent increase from 2001, when 708,000 were sold

SOURCE: ADESA Analytical Services