Volkswagen has announced a new used car program called WorldAuto that greatly expands its certified pre-owned program. Of course, there are good and bad elements to the program.
WorldAuto by Volkswagen, as explained in an announcement by the company, focuses "on both pre-owned Volkswagen and non-Volkswagen vehicles." The primary reasons Volkswagen created this program is because it has been experiencing explosive growth in new car sales. It, according to VW figures, "recently reported a 35.6 percent increase over prior year sales and 26 consecutive months of year-on-year growth in the U.S., [and] posted 6,864 certified pre-owned sales - a new record for the month of October."
All those new car sales mean lots of trade-ins. Without this new certified pre-owned program, VW dealers had two choices: sell the used cars as ordinary used cars without special warranties or ship them off to auction. Neither option is as profitable to the dealership as being able to sell a used car as certified pre-owned.
According to a VW of America press release, "WorldAuto is a unique Volkswagen-sponsored used car program that includes automobiles outside the Volkswagen brand. Volkswagen dealers will have the advantage of offering not only Volkswagen vehicles, but also different brands of cars that are inspected and protected through a third-party provider, with the attributes typically found in standard Certified Pre-Owned (CPO) programs. To date, every Volkswagen dealership has passed the comprehensive internal training requirement for the WorldAuto program."
Uh-oh. Being administered by a third party means Volkswagen itself isn't backing the program entirely. You're, in effect, buying an insurance policy for repairs to your used car. That's a problem depending on how stringent the requirements are for covered repairs and if there are any applicable deductibles and things like that.
According to VW spokesperson Corey Proffitt, "The Volkswagen CPO units are backed by a VW warranty administered through our new car warranty program. The difference in this and the World Auto QPO is that the VW CPO repairs may only be performed at a Volkswagen franchised dealer. The QPO repairs may be repaired at any one of over 2,000 dealerships in the US and Canada."
That's a good element to the program that enhances its value somewhat. At least if you buy a used Chevy from the program, you might be able to get it fixed at a used Chevrolet dealer.
"We developed the WorldAuto program to enhance used vehicle values and support the Volkswagen Dealer Network in providing excellent customer service," said Scott Weitzman, General Manager of Volkswagen's used car programs in a press release. "Through WorldAuto, customers can choose from a wide variety of high-quality used vehicles on the Volkswagen dealership's WorldAuto lot. We are strong in the used car market, and if you want to grow, you need to attract new customers that will trade other brands. We're not growing with the market, but above the market. We're supporting our dealers."
WorldAuto vehicles are defined using two different program names: Certified Pre-owned (CPO) for eligible Volkswagen vehicles and Quality Pre-Owned (QPO) for eligible non-Volkswagen vehicles. Vehicles that qualify for the WorldAuto program may be up to six years old and have up to 75,000 miles on the odometer. The CPO warranty is a two-year or 24,000-mile (whichever occurs first) comprehensive limited warranty administered by Volkswagen of America, Inc., which starts when the new vehicle limited warranty expires, or on the date of sale of the CPO (whichever occurs later). Every CPO Volkswagen vehicle comes with:
- 24-month/24,000-mile Limited Warranty
- Two years of 24-hour Roadside Assistance (provided by a third-party)
- 112-point dealer inspection report
- CARFAX Vehicle History Report
- Complimentary 3-month Trial of SiriusXM Satellite Radio
The QPO warranty is a one-year or 12,000-mile (whichever occurs first) limited warranty which starts on the date of sale of the WorldAuto QPO. The QPO warranty is administered by the JM&A Group of companies, among the largest independent providers of automotive finance and insurance products. Every QPO vehicle comes with:
- 12-month/12,000-mile Limited Warranty
- One year of 24-hour Roadside Assistance (provided by a third-party)
- 112-point dealer inspection report
- CARFAX® Vehicle History Report
- Complimentary 3-month Trial of SiriusXM® Satellite Radio
As you can see, the quality pre-owned vehicles are really just used cars with a little extra protection. The big difference, beyond the 112-point dealer inspection report, is the 12-month/12,000-mile limited warranty.
According to Volkswagen, WorldAuto vehicles are inspected and reconditioned to like-new standards by Automotive Service Excellence (ASE)-certified technicians. They come with the peace of mind customers seek: comprehensive warranty coverage, roadside assistance, rental coverage and more. For more information about the WorldAuto Program, log on to: VWused.com.
Bottom line on WorldAuto comes down to the bottom line on what the dealerships will charge for these used cars. They are not traditional certified pre-owned (just like the Motor Trend program isn't) so consumers should not expect to pay the same for them. Expect a reasonable split between what a dealer would charge for a regular used car and a certified pre-owned.
How can you determine that? Go to a site like Edmunds.com and look up the prices for a non-certified and certified pre-owned. For example, a 2010 Malibu sedan would have a dealer retail price of $13,792 and a certified pre-owned price of $14,696. The difference is $904. Off the top of my head, I'd say multiply the difference by 40% and that's what a "quality pre-owned" vehicle at a VW dealership would be. In this case, about $360 for a price of about $14,150.