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Automotive Legal Information - February 18, 2004


Certification: Know What You Are Purchasing
By E. L. Eversman, Esq.

When manufacturers initiated their "certified pre-owned" vehicle programs, (or CPO as some manufacturers call them) they brought a new dimension to the used vehicle market. By once again accepting product liability for a car or truck that had been out of direct control, manufacturers effectively wrapped a cozy blanket around a segment of the used car market and boosted consumer confidence in purchasing pre-owned vehicles. The programs have largely been successful, doubling in sales between 2001 and 2002 and increasing over 14% in 2003, according to Autodata Corp. and Automotive News Data Center. Because of the effect the manufacturers' programs have had on the used vehicle market, other interested parties are trying to get into the act.

What is involved in a manufacturer's certified pre-owned program?

U.S. states' product liability laws hold manufacturers responsible for design and manufacturing defects found in their vehicles. If a vehicle was not designed properly or if there was a problem with particular components or an element of the manufacturing process, manufacturers can be held responsible for harm which results from those defects. Accordingly, manufacturers operate under great pressure from consumers and governmental bodies to create the safest automobiles possible.

Because of the liability auto makers incur whenever they release a product in to the stream of commerce, they warn against making any changes to the car or truck that are not recommended for service or maintenance. If the vehicles are changed due to damage, neglect, enhancement, or other activity not recommended by the manufacturer, the auto maker may be entitled to disclaim ongoing responsibility for them.

When manufacturers undertake the reselling of their vehicles under any certified pre-owned program, they are once again releasing products in to the stream of commerce and will be held accountable for ensuring they are defect-free. As a result, auto makers cannot afford to allow vehicles which have suffered collision damage, have been altered or now carry aftermarket parts, or which have been neglected, stolen, hail damaged, in floods, or have a questionable warranty or service history into the CPO program.

Due to the issues of liability and cost, manufacturers assure buyers that their CPO vehicles have been meticulously scrutinized for damage, service history, wear and tear, and indicia of neglect, alteration, or abuse. Thus, by certifying that the vehicle has met its standards and by offering a new warranty as part of the purchase, the manufacturer essentially gives buyers a guarantee that the car is safe, roadworthy, and dependable.

Who else offers "certification"?

As with the advent of the misnamed extended warranties, insurers and service contract providers have jumped into the certification arena. Certification by these companies, however, means something very different than a manufacturer's certification. National Auto Care, for example, is a company offering service contracts and programs through dealers. The company has begun advertising a "Certified Program" which it claims will allow dealers to "certify any vehicle [on the lot] not eligible through the manufacturer's certified programs." (NAC advertisement, Automotive News, January 26, 2004, p. 40.)

NAC's program, however, is not the rigorous review of vehicles that the manufacturer ensures. Instead, the program allows the dealers to inspect the vehicles and make a determination as to whether the vehicle can be "certified". Apparently, the certification is sold to each individual consumer through the dealership's finance department and is something neither paid for nor underwritten by the dealer. The program appears to be another species of service contract or insurance policy under a new name and is not comparable to the assurances and product liability risk undertaken by manufacturers.

Certification: What's in a name?

Understand that there is an enormous difference between a manufacturer's certified vehicle and one purportedly certified through some other program. Pay careful attention to the order of the words declaring this certification. If the vehicle is presented as "Toyota Certified", it is Toyota who is making the certification and offering you the auto maker's assurances as to dependability. However a claim that the vehicle is a "Certified Toyota" could mean that it has been certified by anyone. If you are seeking reliability and an assurance that the previously owned vehicle has been vetted by the manufacturer, pay a visit to the auto maker's website to review the specification checklist and to find locations where you can buy a genuinely manufacturer certified pre-owned vehicle.

As National Auto Care's advertisement indicates, its certification program will allow dealers to certify those vehicles failing to meet the eligibility standards for the manufacturer's program. The point to note, however, is that a vehicle failing to meet the manufacturer's strict eligibility standards has no business being marketed as a "certified pre-owned vehicle". A representation of certification can only lead to confusion and to consumers paying for a label that does not mean what they believe it does.

E. L. Eversman

The information provided in this column is for information purposes only and should not be construed as legal advice. You should always consult an attorney licensed to practice in your Country, State, and/or Territory as laws vary from Country to Country, State to State, and Territory to Territory. The author is delighted to share information but cannot be responsible for damage or adversity encountered by reliance upon that information and urges you to consult with local counsel.

The above article is provided for the interest and entertainment of our visitors. The views expressed in this article are only those of the author, who is solely responsible for the content. AutoGuide.net does not endorse any of these views, and is not to be held responsible for any of the content provided in the above article.

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