I've seen plenty of wrecked cars with clean carfax reports, it can't show up if it's not reported. If people don't go through insurance it wont be listed.
Carfax isn't bad, it's not the end all be all of a good clean car. Every used car should be taken to a competent outside mechanic for an inspection from a party that has nothing to lose or gain. I have people bring me Audis and VWs for prepurchase inspections quite often. I had an independent shop threaten to sue because the sales manager came in with a Touareg and the potential customers to get it inspected, the sales manager they guy was so confident that th car was perfect he offered me $100 cash if I could find anything wrong with it... i found plenty wrong with it and he went off the handle.
I've seen some pretty shady things with used cars at my old dealer when I was with VW. A lot of cars get cheap low quality replacement and maintenance parts. IMHO opinion the buying a used car from a dealership, the quality of the car is going to vary considerably by the type of clientele that goes there. For example I looked for a good condition, taken care of, full time 4WD large truck/SUV for almost 2 years while I was still at VW and I didn't find anything that fit the bill. Within a month of working for Audi I was considering multiple different trucks we had, that's when I bought my 4-Runner, 2011 loaded limited with 29K miles spotless inside, minor cosmetic damage outside, and all of the maintenance records from day one serviced at the Toyota dealer. Point being the luxury market brings in a LOT higher quality used cars then the dealers selling entry level offerings.
Also CPO is the way to go but not all CPO is created equal. To CPO a VW it's pretty basic, on an Audi it can't have any curb marks on a wheel, you need to measure rotor thicknesses, tread depths in 3 spots per tire, the load rating on the tires have to match and it has to be an OEM approved tire, even down to OEM floor mats, the check list is super in depth, a CPO Audi is a like new car.