Kathuat

I have been looking into buying my first P-Car. I am considering either an C2 or C2S. I want to buy a CPO car as I don't have prior experience owning a porsche and think for 1st time ownership it will buy me piece of mind for several years.

As I researched my purchase more, I have considered CPO cars. However, researching these cars, I found that the price of cars has no correlation to original price. Let me explain:

Let's us assume that an original (new) owner leased a car for 36 months. The MSRP of the car (C2) is $86K and the person leasing the car was able to negotiate a price of $80K and the lease payments were based on this purchase price. Usually 36 month leases have a residual value of approximately 55%. This gives a lease purchase price of $44K. Add $2K for CPO certification and $2K in dealer profit. This gives us a total sale price of $48K.

However, on researching a CPO car with specs similar to one described above it seems that these are priced around $60K. I wanted to ask these members here if they the calculation is wrong or do the dealers have extraordinary amount of profit in these CPO cars? Any advice or insight is appreciated.

Michael_s

1. Dealers need to "bid" on the car and may pay more than the resdiual. Dealers use an online Porsche auction and can bid on cars they want from lease returns across the us. I believe the dealer that gets the return gets preference (maybe not).

2. Dealers are working on margins much bigger than 2K on a CPO car. MUCH!! I have seen some cars marked down by 5K from original asking. They hope someone comes in and buys it at the first offer price (or there about) then reduce it after approx 2 weeks. I assure you most CPO'd cars have more than 2K.

3. CPO maybe around 2K, however this is the paperwork cost. If the car needs brakes, tires, reconditioning, etc. this is all added on top. It's possible the CPO could cost 5K if tires and brakes are required. Don't forget shipping expenses.

997, esq

Part of it is that you have negotiate the purchase price down. The asking price is just that -- a random starting point for negotiations. Back a few years ago (when the economy was still good), I got about 15% off the asking price of a car and I don't think that is too unusual.

Also, the residual is set at time of the the initial leasing of the vehicle -- it is an estimate. It is not necessarily indicative of current market price.

125shifter

First, they should be at the top of the excellent condition range and second they come with a Porsche warranty which is worth at least $2K.

There's some room to negotiate though.

Mark Harris

I would like to know more about this hopefully from an insider. As a big fan of CPO I always seek out not only CPO'ed cars but ones that were originally delivered by the same dealership now selling them as a CPO.

i tend to agree with you, but with no supporting information or knowledge I always assumed that the dealer taking their own lease return back in gets first right of refusal and wouldn't have to compete with other dealers to retain a quality vehicle for resale.

IMHO the crap ends up at Manhiem and eventually at a "Chicago Toy Store" type dealership. The good stuff stays with the dealers. Hence you get what you pay for.

USMC_DS1

Law of supply vs. demand. There's a limited number of CPO cars as compared to the rest. Sounds like an obvious statement but consider that CPO p-cars have to be in top condition, unmolested, and are only available from a p-dealer that narrows down the field considerable... so they tend to command a higher price beyond just the cost of the additional warranty. When I was doing my search for a CPO car 6 months ago I came across the following situation:

1. Excellent '07 C2S with low miles and clean but at an Audi dealer... supposedly belonged to the GM of the A-dealer. No CPO... I came across several p-cars after this at A-dealers... none were CPO and they could/would not CPO them.
2. Came across another nice C2S at a p-dealer in Hollywood, CA. Everything was clean but it had after market shocks... again they would not CPO it unless they reverted everything back to stock... too much cost to absorb.

So the p-dealers seem to only CPO supposedly excellent/clean p-cars w/o mods... lower service cost risk for them. It's no guaranty, however, that the car is 95%-100% though. My '08 CS2 had 46k miles, 1+ yr of original warranty, and 2 yrs of CPO. My Indy's PPI still found an RMS leak(sat on lot too long - 5 months) and broken tail pipe... the p-dealer did tried to convince me that a PPI was not necessary as it was under warranty and CPO. Note: even though the RMS was covered under warranty the SS tail pipe would have cost me $899 out of pocket if I did not have them replace it as part of the sale... otherwise she was clean and had brand new Pirelli's with nobbies still on 'em.

Of course, that doesn't stop you from shopping around for the best CPO deal in the country and negotiating the **** out of the dealer price. Best of luck with the hunt.

ADias

That is because PFS leases are expensive with residuals artificially low. The car is worth far more than residual.

acao

This is correct.

Keep in mind that a dealer who sells or leases a car has no special relationship with that vehicle. The dealership (usually the F&I guy) "holds the pen" for Porsche Financial Services. This means that the F&I guy wears multiple hats. He works for the dealership (hat 1). He also is often an agent for finance companies (hat 2). By "holding the pen," he is authorized to write finance deals for PFS. He has pre-authorization parameters when he qualifies a buyer, and always runs a putative deal by PFS for final approval. When he's asking PFS for final approval, he's asking, "I plan to make this deal on these terms. If I do, will PFS buy the contract from the dealership?" Hat 3 is that he's often licensed (where required) to sell certain lines of insurance such as credit life. Again, he holds the pen for the insurers and can write the deal on their behalf within certain parameters.

Back to leases . . .

A new car is owned by the dealer. Like you, the dealer borrowed from PFS to buy that car in its showroom. Like you, the dealer has to pay PFS interest on the car. It is provided to Local Porsche Dealer under a floorplan loan. The dealership is the borrower on the loan, the loan is secured by the car inventory. The lender is PFS. The loan is how all those shiny new cars end up at the dealership. PFS provides generally favorable terms to the dealer such as no finance charge for a certain period (30-90 days) and special rates. Tip: If a car has been sitting on the dealership for 90 days, a dealer has more incentive to make a deal to move it because it's costing him financing.

PFS can also provide floorplan financing to used cars and cars of other makes too.

You want to buy a new car from Local Porsche Dealer. You explore your financing options and decide to lease. Remember that the car at Local Porsche Dealer belongs to the dealer, but not free and clear. PFS finances the dealer's ownership of the car. The dealership draws up a lease. PFS is the lessor, buyer is the lessee. The dealer is NOT a party to the lease, he is a person who writes it up on behalf of PFS. PFS moves the VIN from its floorplan financing book to its consumer lease book. The dealer gets the car off its floorplan loan.

What happened is that the car's ownership changes from the dealer to PFS. Look at your title, it shows PFS as the owner on a leased vehicle. So the dealer bought the car from the manufacturer at cost, financed by PFS. The dealer sold the car to PFS for more than cost, a number referencing the consumer's purchase price. PFS owns the car and leases it to you. You are paying rentals during the lease term roughly representing the depreciation during the lease term.

When the lease term is up, you return the car to PFS. Who can accept the lease return? Anybody that represents PFS, meaning any place where an F&I guy recognized by PFS works. It's not the dealer's car and hasn't been since you leased it.

The dealer, wearing hat 2, accepts the lease return, calls PFS and says "Hey, I have your car." PFS says, "Great, we'll send an agent to do the lease checklist" to look at mileage, tires, condition, etc. Depending on the finance company, the receiving dealer may or may not have a right of first refusal on the lease returned to him. Note that I said receiving, not selling dealer. If they're the same, great. If not, the selling dealer is long gone. The receiving dealer has no sentimental advantage to buying the lease return from PFS. PFS sees it as, "It costs me $2000 to remarket the lease return (recondition, transportation, auction fees). PFS can cut those costs out by selling to the receiving dealer, so a slightly better deal can be had if you want it. Otherwise, PFS's truck is coming by to take the lease return to auction.

sandwedge

Excellent/clean I agree with. W/o mods....I know of one exception. They CPO cars that's been lowered and have after market exhaust and wheels. You can question them all day about how and they'll insist they stand behind it......and they do. Very high volume dealership which may explain how they get away with it. All enthusiasts. Love their attitude. Me: "Will this Tubi exhaust cause warranty problems if my engine blows up?" They: "Only if they can prove that the Tubi system is what caused it which they can't. Trust us. We've been there."

Kathuat

Thanks for all these insights. These answers are great and make a lot of sense. Excellent insight acao.

A follow up question to the one I posted originally. Let's say I originally lease a car. The agreed on sale price of the car is $80K with a 36 month residual value of $44K. The lease is up. I have 2 options:

1. Return the car to Porsche Financial Services (PFS)
2. Retain ownership of the car by buying it from PFS for 44K

If the residual value of the car was originally set artificially low, the car should be a bargain at $44K. Is the lessee not better off buying the car and potentially selling it in the private market place rather than back to PFS. One might argue this might result in an additional profit for the lessee of several thousand dollars thus subsidizing his original lease.

I want to make sure I understand this clearly to be able make rational and well informed decisions.

Also, this could easily be turned into a business opportunity. Someone other than PFS can pay the lessee more than the purchase price and then turn around and sell these cars to buyers who want to buy them. Just and idea and wanted to see if this is being done in the market place.

MrSelfDestruct

In my experience, CPOs are marked up ~$10k.

mousecrab

I like my CPO 06 C2S Cab a lot but I don't know if I would consider the interior of mine is Excellent/clean.
I'm now looking for a shift *** as mine has a chip on the side when I picked up the car and it got worst in less than a month.
Also the PPI states brakes are 80% and 90% but when I brough the car to a local shop for safety inspection after less than 300 miles of normal driving the report shows 40% and 60%. I don't trust this shop at all, just it is a requirement before I can get my plate but I really don't know if what PPI states is true either.
One last thing... the tire filling compressor is missing...

saeyedoc

I think one of the keys to understanding this is the difference between wholesale and retail value of a used car. Yes, the residual is often lower than the retail value of the car, but comes in very close to the trade value. You can often buy the car out and sell it privately for a profit, but that can be a very time consuming and bothersome project. Most people who lease cars don't want to be bothered by that.
It's true that the dealer you turn it in to doesn't just get to buy if for the residual. If it's worth more than that, they pay more.
By the time the dealer gets the car up to CPO standards and pays for the warranty itself, adds in profit, you're looking at more than $10k difference. Dealers can make more on a used car than a new one.

kosmo

i dont think so. I salesman once told me "its not that much".

dansen

On the current market price, CPO are about 10% more, ($6000).
$2000 for Cert.
$3000 for tires/brakes and detailing
$1000 for doing it.