The March issue of Perspective produced by NADA Used Car Guide explained how dealers can structure their inventory and make a presentation to a potential buyer about how they may be able to score a luxury model even if they only have a mainstream unit budget.

By leveraging the possibilities of a certified pre-owned vehicle, NADA UCG showed that by looking solely at retail prices ― without getting into the discussion of overall cost of ownership ― someone looking for more content and premium features can essentially trade mileage and newness for a considerably upscale model by choosing used over new.

With this tactic in mind, NADA UCG analyzed which used luxury vehicles ― model year 2012 and newer ― could be purchased as alternatives to mainstream compact cars and mid-size sedans

“While the prospect of buying a new car fresh off the assembly line can be enticing, there are cases in which consumers can find a comparably-sized used luxury vehicle within three model years of a new mainstream model for the same price,” analysts said.

“Although $20,000 is a relatively small budget to shop for an automobile, a significant percentage of car buyers purchase compacts, which fall right around that price point,” they continued.

Here is a rundown of some of the models NADA UCG found to have fit this strategy:

“For many younger drivers, which include recent college graduates and young professionals, cost is of great concern as careers are just getting started and student loans need to be repaid,” analysts said.

“Millennials are savvy, selective shoppers looking to get the most value for their money,” they continued. “These image-conscious consumers with a penchant for premium features are faced with a question of how to purchase a luxury car on a strict budget. For them, the answer resides in the luxury compact car market.”

And younger buyers aren’t the only ones who might want one of these vehicles. Another demographic analysts cited as an example are empty nester Baby Boomers who have no need for utility to carry more than a few family members.

“Similar to how young buyers must stretch what little disposal income they have, it is critical retirees make best use of their nest eggs,” analysts said.

For potential buyers who might have even more money to spend, NADA UCG found a host of luxury options of potential CPO luxury models that might cost about $25,000. Analysts see this group as individuals ages roughly 40 to 51 who are mid-career professionals with children in their teens.

“As such, they have more mature tastes from the standpoint of design and performance and require cars with more interior space that can accommodate both adults and older children,” analysts said.

With those considerations as a backdrop, NADA UCG pinpointed a variety of luxury models that might be appealing, including:

And furthermore, if dealers find a potential buyer with even more potential purchasing capacity, NADA UCG offered a lineup of vehicles for budgets that can extend up to about $30,000 with luxury-vehicle traits such as all-wheel drive, impressive power and higher performance. That group included:

"Anyone in the market for this sized vehicle ― be it from Generation X or any other demographic ― can feel good about their options when it comes to finding exceptional cars on a limited budget,” analyst said.

Highlighting Positives of CPO

NADA UCG reiterated that one of the benefits of buying a used late-model luxury vehicle is its warranty coverage.

“Luxury brands come with longer new vehicle warranty periods than their mainstream counterparts, so all of the vehicles on our list could still be covered under their respective new vehicle limited warranties, assuming the vehicles original in-service date and mileage fall within the warranty period guidelines established by each manufacturer,” analysts said.

For the 2012 model year, NADA UCG pointed out that Lincoln, Volvo, Acura, Audi and Mini vehicles all came with bumper to bumper warranties of four years or 50,000 miles. Infiniti was even better with four years or 60,000 miles of coverage.

“Although warranty coverage for this group of vehicles is beginning to run thin in terms of both time and mileage, buyers will find comfort in knowing they are still covered for a short period if any post-purchase issues are encountered,” analysts said.

For customers worried about warranties running out on used models, NADA UCG emphasized that dealers need to stress how CPO programs can be an attractive avenue to consider in alleviating any potential concerns.

As many dealers know, all CPO vehicles must meet certain criteria involving mileage and condition. Any deficiencies found following a rigorous inspection process are corrected and the vehicle is reconditioned to like-new condition.

“Once the automobile passes through this multi-point inspection, it’s ready for resale as a CPO vehicle. One of the many benefits of buying a CPO vehicle is that it’s backed by a warranty, which covers any future problems, just like a brand-new vehicle warranty,” analysts said.

NADA UCG acknowledged that it is important to note that CPO warranties vary by manufacturer in terms of how long the vehicle is covered and what parts and services are included.

“Often a manufacturer will honor the remainder of the original new car warranty on their factory certified used cars along with an additional short-term bumper-to-bumper coverage package,” analysts said. “However, other car manufacturers may not transfer the original factory warranties and instead offer a new bumper-to-bumper coverage package.”

NADA UCG went on to mention that another factor to consider is the difference between a manufacturer-certified vehicle and a dealer-certified unit. Manufactured-certified vehicles can be repaired at any like-branded dealership. A dealer-certified car may have to be returned to the dealership where the buyer purchased the vehicle for any necessary work to be done under the warranty.

“Purchasing a CPO vehicle does come at a premium, and buyers should expect to pay approximately $750 to $3,500 more than a comparable non-certified model,” analysts said. “Often, CPO vehicles are offered with reduced-rate loans which could balance out the premium down the road.”