The History of Factory Certified Pre-Owned
To my recollection, the term Factory Certified Pre-Owned entered the used car market around 1995.
What brought it about was consumer confidence had risen in the pre-owned automobile industry. Consumers realized that cars were simply lasting longer than in previous year models. It was getting more common to see a car with 100,000 to 150,000 miles on it. The exterior finishes looked good and still had a glossy appearance after a good wash and wax. Many of the mechanical issues that had plagued earlier year models had been completely eliminated with computer controlled fuel and ignition systems, refinements in suspension and zero tolerance machining of precision parts. And because the newer units were so much more expensive, buying a pre-owned automobile over new was not only in vogue but was also touted as being street smart.
The car manufacturers had dug themselves into a hole. Model year after model year, the price of their new cars had increased. With the increase in their sticker price, car manufacturers had to show the consumer an improved car from the previous year. As a result, while new cars were well equipped and very refined, they were also very expensive and depreciated extremely fast.
Before the day of Certified Pre-Owned, the challenges to the new car dealer were enormous because there were only two choices. First, the new car dealer had to sell from their new car inventory. If the consumer would not or could not buy from the new inventory, the dealer would then move his customer to the used car inventory. Because of the contrasting difference in the price between new versus used, car buyers would quickly come to a conclusion that new cars were simply over-priced. To give relevance to the suggested retail price of the new car and in an attempt to keep the car buyer from going elsewhere and possibly changing brands of automobile, Certified Pre-Owned Units were marketed as "not new and not used but Certified Pre-Owned". This placed a third category of car in the market place that was priced between the new car and the used car. Instantly, the potential car buyer had the choice to go all out and buy new, he coul d go to the used car inventory or he could go with a Certified Pre-Owned Unit and pay between the new and used price classes.
When boiled down, Certified Pre-Owned vehicles are nothing more than a marketing tool. It is a way to lure a consumer to a new car dealer's facility and convince them to pay more for a used car if the consumer won't buy a new one.
Here is something to consider. The biggest selling point to purchasing a Certified Pre-Owned Unit is that those vehicles are fully inspected and serviced prior to selling......The same way that Accurate Auto Sales markets all of their Honda and Acura inventory. Fully inspected and fully serviced.
Want to read more? Go to our article entitled Certified vs. Non-Certified.