By on August 4, 2016

Used cars

There’s been a slow, yet steady change in the automotive marketplace over the last eight years, and you, the consumer, have been the lobster sitting in the pot as the change has occurred. The market has gotten significantly worse for car buyers. The number of franchise and independent dealers has been reduced by almost half. And yet, those surviving dealers have had an unprecedented run of year-over-year growth since 2008.

But as that growth has slowed in 2016, car buyers find themselves paying more money for used cars than ever before. We know that the typical American household can’t afford the typical new car sold in America, but we may soon be approaching a day when that same household can’t afford the typical used car, either. In fact, according to NADA Data, the average used car transaction price in 2016 will crest $20,000 for the first time in history, and will be 59.1 percent of the average new car transaction price of $33,903.

What does all of this mean to you? That buying used may not be the smartest financial choice you can make. In fact, it might not be very smart at all.

The spike in used car pricing can be attributed to a number of issues, but most experts attribute it to two happenings.

The first of these was the Car Allowance Rebate System, otherwise known as “Cash for Clunkers,” in 2009. Nearly 700,000 used cars were taken off the road through the program, resulting in 2.8 billion dollars of rebates. Between 2009 and 2010, used car transaction prices jumped over 10 percent, from $14,946 to $16,474, the biggest jump in history.

The second: Hurricane Sandy in 2012, which caused a massive wave of destruction on the east coast, flooding roughly 250,000 cars. However, despite this massive reduction of available inventory, used car prices didn’t jump significantly in 2012, rising only 3 percent.

To see why used car prices are so high today, we need to go back even further to the economic crisis of 2008.

At the beginning of 2009, there were 20,010 new car franchises in America. Today, that total is 16,288, a decrease of nearly 25 percent. The average mid-size market has 16 fewer dealerships than even five years ago — seven fewer franchised dealers and nine fewer used-car dealers.

But Americans will buy six million more new cars in 2016 than in 2009. Why?

Simple. The mega-stores are selling much, much more than their fair share. In fact, according to NADA, dealers with more than 50 employees now account for nearly half of all cars sold in America. Even more simply, there are fewer stores, but the bigger ones are doing twice the business they used to.

This is bad news for everybody — everybody except the big dealers, that is. Independent lots now have to make even more money per car than they used to, because their volume is down. Conversely, they also have to spend more money per car sold to advertise, because the big dealers get volume discounts from third-party advertising sources.

The net result? Used car prices go up, especially in comparison to new cars. Purely from a price perspective, there has never been a worse time to buy a used car. One can easily argue today’s used cars are also much better than used cars from 2008 — but isn’t the quality of new cars better, too? That’s what enables used cars to be more durable and last longer: new cars are made better.

So what’s the consumer to do? Well, everything points to buying new as being the best way to recoup your investment. If used cars cost more than they ever have (both as a percentage of new car price and in gross dollars), then the new car buyer can be assured that his new car will depreciate at a lower rate than it would have even eight years ago. The impending lease bubble is bad for OEMs, but very good for used car residual values.

It can certainly be said that used car residuals will be better, too — all the data indicates that. However, if the depreciation curve is less steep than it used to be, buying new isn’t nearly as punitive.

So if the Internet tells you that you should buy used, then just smile and point to the data. While buying used might still be a smart play, it’s getting worse, and buying new just keeps getting smarter.

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197 Comments on “Bark’s Bites: Buying Your Next Car New Is Quickly Becoming the Smarter Choice...”


  • avatar
    CoreyDL

    Wonder why they took the picture in front of the “10 cars that are sh!t nobody wants” section.

    On topic though: What sort of discount percentage do the big dealers get on their advertising over the little guys?

    • 0 avatar
      PrincipalDan

      Like a buffet where nobody wants to talk about how things actually taste…

    • 0 avatar
      Adam Tonge

      That is certainly a dog’s breakfast of used vehicles.

      • 0 avatar
        tresmonos

        I’ll take that Ruby Red Taurus X in a heartbeat. Bow-wow

        • 0 avatar
          PrincipalDan

          Good eye, tresmonos. I’d be all over it if it’s AWD.

          • 0 avatar
            CoreyDL

            The Taurus X with AWD was alright, I thought it was the Freestyle AWD CVT that was the problem.

            And I think that one’s a Freestyle.

          • 0 avatar
            PrincipalDan

            Yes Taurus X got 3.5 V6 and 6 speed auto even with AWD unlike the Freestyle which had the woeful little 3.0 V6 and CVT with AWD.

        • 0 avatar
          Adam Tonge

          I agree. I was more referring to the first five in the first two rows. Those B5 Passats, FCA products, and the Mitsubishi crossover (Endeavor?) are going to hurt people. Once you get to the Wranglers, things get better.

          And I wish i could find a Taurus X in that shape.

          • 0 avatar
            CoreyDL

            I can add one of those to me list of four used things to consider. Most the Taurus X examples are all used up, and it sold poorly anyway.

            They’re nice in Limited or EB trims. I’d drive that.

            -redacted FWD example-

          • 0 avatar
            Scoutdude

            All those Jeep products are something that people want and will buy. The only thing in the near side of the closest row that nobody wants is that Mitsu. I’m not saying that those Jeep products are neccecarily a good idea to purchase just that there are a lot of customers for those simply because “it’s a Jeep thing”.

          • 0 avatar
            CoreyDL

            That model JGC is… awful in almost every way. Electrics, thirsty engines, awful trim, etc. The Liberty is also awful. They’re about equal to that Endeavour thing which you never see on the roads.

            Nobody wants that old POS Passat or Jetta MKIV stuff either.

          • 0 avatar

            Those jeeps have kept their value surprisingly well. The liberty is not a great car but I know several owners who got 250k miles out of them so there actually pretty reliable in Jeep terms.
            I’m not sure what to think of the endeavor. You don’t see many but they didn’t sell many. I have heard from a one of the mechanics I trust at a local body shop that they are surprisingly reliable (he has bought a number of them at auctions for his family members) but the trim and paint don’t last worth a crap.

          • 0 avatar
            gtemnykh

            Yeah the Endeavor is another one of those typical Mitsu products where people assume they are junk and their prevalence of BHPH and neglect in the hands of mouthbreathers dictates their reputation, but mechanically they are fairly sound. If you find a clean one, they can actually be a pretty good buy owing to their poor resale due to the poor perception I laid out above. I hate them for the simple fact that they played a part in replacing the beloved Montero Limited and Montero Sport in the US market.

          • 0 avatar
            Adam Tonge

            I say no to the Mitsubishi Galant wagon. No. Smooth talking gtemnykh and his SUV and Russian domestic vehicle market knowledge can’t even change my mind.

          • 0 avatar
            CoreyDL

            Lol, I agree that the Endeavor is shockingly bad, especially the dated interior – which they apparently modeled off whatever cell phone style was sorta popular at the time.

            The Outlander, I think is a different case.

          • 0 avatar
            gtemnykh

            Haha I can’t blame you. I’m sure getting parts for it is no dream, plus the ugly rear suspension that is so exposed and low hanging is offensive to both the engineer and solid rear axle enthusiast in me. Those rear axle shafts are so spindly and exposed! Like a dude with pasty chicken legs in cargo shorts.

            Having said that, here’s a local one that strikes me as a pretty darn reasonable price for a midsize CUV with a V6 and 4wd and low miles, and key thing being it’s from a good neighborhood and being sold by someone with decent command of the written English language:

            indianapolis.craigslist.org/cto/5700634642.html

          • 0 avatar
            CoreyDL

            That Endeavor is 06 MDX money with similar miles! No way.

      • 0 avatar
        3XC

        Back row, far right, is that a red S2000? Black convertible top? Yes please.

    • 0 avatar
      Kyree S. Williams

      It’s just an older picture. No way CarMax is still selling a 2005-era Passat.

  • avatar
    sirwired

    “Well, everything points to buying new as being the best way to recoup your investment.”

    This sentence uses meanings for the words “recoup” and “investment” that I am unfamiliar with.

    I’d say that “everything” points to it being perfectly okay to buy a used car older than would have previously considered wise, meaning it doesn’t matter what the average used car doesn’t or doesn’t cost.

    In addition, the entire article is built on the meaningless statistic of the price of the average used car transaction. (For starters, the average (vs. the median) isn’t a great choice to begin with…) The product mix has shifted over time to pricier models. What would be more interesting is examining the residuals of individual models over time. And adjust the analysis for the age of the cars being sold/bought. If people are selling their new cars sooner, then of course the transaction price will rise; that doesn’t mean that buying used is a bad deal… it’s not as if it’s impossible to buy an older vehicle.

    • 0 avatar
      319583076

      Measures of central tendency are nearly meaningless without measures of dispersion.

      In my experience, most people have a very tenuous grasp of what average means anyway. Hence, we get the reporting they deserve. Hooray for regression to the mean!

    • 0 avatar
      turf3

      Absolutely correct. An “investment” is something you expect to sell later, for more than you paid for it, pocketing the difference as profit. “Recouping” you investment means to break even or profit, as opposed to losing money on the investment.

      99.999% of automobiles are not investments, they are expenses. It is impossible to “recoup your investment” on an automobile unless it’s one of those rare birds that might actually sell for more later than you bought it for now.

      There’s this thing called the English language. There are still a bunch of us old farts who are using it. When we’re through with it, we’ll let you know.

      • 0 avatar
        jmo

        “An “investment” is something you expect to sell later, for more than you paid for it, pocketing the difference as profit.”

        A factory can invest in a new CNC machine it doesn’t mean they expect to see the machine later at a profit.

        • 0 avatar
          JohnTaurus_3.0_AX4N

          Also, “recouping your investment” could mean getting a great service life out of the car. You depend on it to take you to work, pick up your kids, go get groceries, etc. For many, not owning a car is not an option, therefore, you recoupe your investment by getting use out of the car. That is how the car “pays you back”. Not necessarily by making money off of it.

  • avatar
    FormerFF

    I would have agreed with you up until recently, but the market has shifted again. The best deal I see is for late model used right now. I’m looking at $15,000 Corollas in AutoTrader, and I see 2015 and 2016 ones with low miles for $15,000. Other similar values are available. The worst deals I see are for low priced used cars. What you get for less than $5000 around here is dismal.

    Having said that, I still will shop for a new car when the time comes. I recently bought a late model used car for my daughter, and it just reminded me of how much I hate shopping for a used car.

    • 0 avatar
      CoreyDL

      I think it still makes good sense to buy a depreciated car, when your -needs- are not for a brand new car. When you’ve already got a car and you’re buying something which isn’t primary DD transport, there’s no need to buy something brand new.

      • 0 avatar
        PrincipalDan

        I think it totally depends on the brand and the level of depreciation and other factors like what does a CPO model cost vs non-CPO used vs new.

        And with Volvo (as an example) you end up with a CPO warranty that is longer than the new car warranty, along with epic depreciation.

        • 0 avatar
          CoreyDL

          Indeed. Nearly new or CPO on a damaged brand like Volvo or Lincoln, or something that’s just died like Scion – that might make much more sense. The luxury version of something is sometimes worth less than the non-luxury version on the used market.

          MKT – Flex
          MKS – Taurus
          I35 – Maxima
          Mariner – Escape

          • 0 avatar
            bunkie

            The price delta between the new MKZ I wanted and the CPO MKZ (a lease return with 18 months and 17K miles) I bought, after incentives was just under 20K. With our trade, that allowed us to pay cash. I have four years of warranty coverage meaning my expenses will be limited to tires. Another way to look at it was that, compared to a loaded Fusion, I got AWD, a V6, the Panoramic roof and the massaging seats, none of which are available on a Fusion. Not a bad deal as far as I’m concerned.

            As with all advice, there are important exceptions. So-called “damaged” brands are great CPO plays.

      • 0 avatar
        VoGo

        Right. But it made a lot more sense to buy used 10 years ago, when you could routinely get an excellent 3 year old car for 50% of what a new one cost. Today, you’ll pay more like 60% of the price of new. The market just does a better job of valuing used vehicles than it did during the Great Recession.

        • 0 avatar
          Lou_BC

          I was in the market for a used truck in 2009 era. I actually started doing some research for friends in a smaller town. It became extremely obvious that there wasn’t much point in buying used. All of the truck makers except Toyota were offering 12k rebates.

      • 0 avatar
        Piston Slap Yo Mama

        I’m with Corey. Our 17 year old Subaru Legacy was a compelling purchase, magnified by Corey’s assertion that a fully depreciated car bookends nicely with a new or new-ish vehicle in one’s garage. We have the luxury to wrench on one car while the other does its job, a safety net many families on the brink of bankruptcy don’t have.

        Another factor not Bark’ed here re. new vs used is this: each passing year in America sees continued declines in our population’s ability to fix their own car. High school shop classes are exceedingly rare combined with the self-defeating perception among some effete people that working on one’s own car is blue-collar, therefore to be avoided. As I was once married to a woman who subscribed to that theory, I can assure you I’m not making it up.

        • 0 avatar
          gtemnykh

          I’m with you Piston Slap, except my other vehicle is an even older but certainly a “tried and true” option (my cared for ’96 4Runner with baby-mileage). I bought a car so low on the depreciation curve that it has only gone up since I’ve worked on the cosmetics a bit in my free time and put a bit of money into maintenance. My (planned) math is $1600 purchase+ $750 in parts will yield a decently reliable and usable daily driver for about 2 years, at which time I’m planning on selling said vehicle for about $2300-ish. That’s some impressively low TCO right there, but not without some sweat equity on my end (I don’t mind at all, it’s a fun hobby).

          It’s funny you mention the stigma of wrenching on your own ride. Back when I lived in a less desirable area, I’d always see people working on cars, right on the street, no one thought anything of it. In my new ‘cool/hip’ neighborhood dominated by yuppies (I guess I’m one myself at this point), I think I’m the only one I’ve seen work on a car. It’s funny to see the very quizzical look on their faces as they walk by my driveway and see me doing a brake job, or doing some light body work. I don’t think it’s derisive in any way, in fact the people I bought the car from a few blocks over are over the moon to see their old car so pampered and rejuvenated.

          • 0 avatar

            I’ve since moved, but in Cheyenne, it’s illegal to work on a car on the side of a public street. It’s read this way by determining that while you’re working on it, it is inoperable. Licensed and insured or not, you can’t keep an inoperable vehicle on a public street.

        • 0 avatar
          wstarvingteacher

          @Piston Slap: You are dead on. I used to teach shop. Have retired and don’t think the school still offers it. My students were typically those who had a very difficult time surviving in traditional classes. Many were non-readers who were in high school. We got them because there was so much “hands on”, never mind that you must be able to read instructions and safety procedures. The things we taught were 21st century but the method of assigning students was immediate post war. Btw, I have no answer. If I did I would have given it when I was still working and not just rant on TTAC. Just wanted to affirm your assertion that it is a sign of the times.

          • 0 avatar
            ...m...

            …i have to question whether all that book-learning was overrated in the end: folks i know in the trades earn a better living than most desk jockeys, these days…

  • avatar
    carrya1911

    Also, credit. There are stupendously low interest rate finance offers available to just about anyone with decent credit on new vehicles, further pushing the math in favor of buying new.

    • 0 avatar

      I wonder if credit isn’t a factor in the used prices. It’s often been said that it’s easier to get financing on a used car with bad credit then new. I know during the great recession (thru 2012 at least) credit scores on average were falling. (my insurance employer at the time had to lower the weight they gave credit scores in risk because it was pushing out to many long term customers during the recession)
      This would seem to drive costs on the late model used cars.

    • 0 avatar
      Big Al From 'Murica

      This is TTAC!!! Where only the stupid finance cars. In these hallowed forums only a CPO car that has been haggled to the point where one is getting it for thousands less than what the dealer paid for it will do!

  • avatar
    krhodes1

    I’ve thought for a long time that there are two ways to buy cars – new, or really used. I have no problem paying for new, it’s expensive but you get what YOU want, and you get the very best years of the cars life. Well used, it’s so cheap you can forgive a lot of sins. So I am equally happy paying $50K for a new BMW or $5K for a used Range Rover. But I won’t pay $35K for a lightly used BMW.

    Almost new doesn’t make sense, not enough of a discount, you have to settle unless you get super lucky, each one is an individual flower which makes pricing difficult, and it is not enough of a discount to lose those best years.

    I would say that hand-wringing over the average American not being able to afford the average new car is a waste of time. NEW cars have always been the province of the relatively well off. There are a LOT of $50K BMWs and pickups sold for every $12K Mitsubishi Mirage in this country.

    • 0 avatar
      CoreyDL

      Yep. I see “nearly new used” and/or CPO pricing and shake my head most the time. Guy here at work wanted van advice and sent me a few CPO Odysseys.

      I say “You don’t need to pay this much!” The 2014 Odyssey at the Honda dealer that’s CPO isn’t worth $5,000 more than the almost identical one at the Toyota dealer that’s not CPO.

    • 0 avatar
      healthy skeptic

      @krhodes1

      >> So I am equally happy paying $50K for a new BMW or $5K for a used Range Rover. But I won’t pay $35K for a lightly used BMW.

      Funny, I bought almost exactly the lightly used BMW you described. So far I haven’t regretted it at all. $15k is a lot of dough to save, and the car still drives as though it were new. It did have the VANOS bolt recall issue that killed the engine, but the dealer fixed it. I would have gotten that issue even if I had bought new.

      I think part of the reason used cars work out so well for me is that I only drive <5,000 miles/year, so I'm not running them into the ground. That's actually a major consideration missing from this article, namely: how much do you drive? For light drivers, used cars make lot of sense.

      Next month the CPO warranty expires, so I'll find out over the next few years whether it was worth it overall. So far so good though.

      • 0 avatar
        30-mile fetch

        Yes, new BMW ownership isn’t the province of those concerned with the finances of it. You’re either sufficiently infatuated with it to ignore the depreciation or are shielded from it by your lease. If you can find one spec’d to your liking, that’s an obvious boon to the second buyer. If not, $24.5K retail for the bazillions of fresh-off-lease 328s with a ~$42K MSRP is a pretty good deal just for the feature list and basic drivetrain performance alone.

        Unfortunately, that car will also remind you that coasting on reputation isn’t something limited to the cheap brands, but at least you’re getting the appropriate discount.

        • 0 avatar
          krhodes1

          The real world depreciation is not nearly as bad as you think it is. My 328! had an MSRP of ~$45K in 2011. I paid ~$39K for it, ex TTL. As of my May renewal, my agreed value insurance policy values it at $29K with 40K miles on it. And based on what I see similar cars to mine selling for retail, I don’t think that is out of line. So $2K a year depreciation. Sure, I would have “lost” less on a Camcord, but I find the smiles per mile way more than make up for the added cost per mile. I have a brand new Camry LE as a rental this week, and it is a hateful device in comparison. Almost no smiles per mile at all.

          Of course, if you simply had to have a 2011 335i with all the boxes ticked, you are in for a lot bigger “loss”. But I suppose more smiles, in theory.

          • 0 avatar
            VoGo

            $16K over 5.5 years is $3K annually.

          • 0 avatar
            30-mile fetch

            $29K? KBB gives a private party sale of $19K for one in excellent condition. There’s one unicorn wagon at the price you listed, but that’s an odd little microcosm. The majority are a steady supply of 2013/14 ex-lease 328s at local dealerships selling retail for $22-26K, and that fully agrees with KBB and the market in my metro area. Someone walking away from a lease would be fine with that because it ain’t their problem, but anyone who didn’t negotiate a big slice off the $40K+ MSRP is looking at some bleak depreciation.

            The heavy presence of these cheap-feeling lease trim 3 series seems like a blow to brand cachet equivalent to Toyota’s push to load Camry SEs into rental fleets. Far better BMWs may still exist in some trims and the 2 series, but the brand’s ambassador to the masses isn’t that impressive and loses a lot of value.

          • 0 avatar
            CoreyDL

            You’re gonna give him heart palpitations, be careful!

          • 0 avatar
            30-mile fetch

            Well, then we shan’t stop there! I’ll mention my $25K used entry level luxury sports sedan money would go to the G37, and say that the Pleistocene era 2.5 V6 in the IS250 is a far nicer engine from a NVH standpoint than the BMW 2.0. And the Lexus has far more comfortable and expensive feeling seats. But, IS200t has landed, so I can’t get too cocky.

            Heart palpitations aren’t necessary, though. Everyone’s favorite brand has something to be ashamed of. For BMW fans, the lease special 328 should be one of them. For me, the shame is a large portion of Toyota’s lineup in the last 10 years and pretty much everything Volkswagen seems to become known for.

            Besides, if given the choice between a new Camry SE and an ex-lease 328i for the same price, I’d probably go 328i. Assuming I could come to terms with the terrible base BMW seats.

          • 0 avatar
            krhodes1

            At an easy real-world 36mpg highway and 0-60 in <6 seconds, I would happily put up with a little noise and vibration, neither of which I find objectionable in the BMW 2.0T. Of course, I owned a succession of Saab Turbos so that engine feels like home.

            But irrelevant, as both my BMWs have 3.0L inline sixes (one with turbo, one without) that make the agricultural Nissan V6 seem like the tractor motor it should be. The V6 in the Lexus really should just stick to Camrys.

          • 0 avatar
            healthy skeptic

            @krhodes

            You describe the car I got, a pretty much loaded 2011 335i at a good discount. Not a steal, but as I said, I probably saved around $15k, give or take.

            I have to say, I think the others are right about your 328i not being worth $29k. My car at 60k miles is probably worth only about $20-$22k right now.

            But you’re right, smiles per mile is very high either way.

          • 0 avatar
            krhodes1

            $39K-$29K is $10K. Ain’t nobody ever paid MSRP for a 328i. Or even a 328!

            I don’t care what they are advertised at, or sold for, or traded in for. What matters is what my insurance pays out, as I’m not selling it. Black and white on the contract, $29K until May 2017 in the event of a total loss (and tax and registration on top of that). And yes, it is a unicorn. Go look for low mileage ’11-12 6spd RWD e91 BMW wagons, and see what the real world prices are. You might need smelling salts.

            But it is just as smart to minimize your depreciation when buying premium cars as when buying plebian ones. Just like a Camry is a good “investment”, so was a 6spd RWD BMW wagon. I’d been looking for a used one for 3 years… In hindsight, I should have bought the 1M that my dealer had an unsold allocation for Euro Delivery. Would have only been $5K more, and it would still be worth $45K. Sigh.

            As for 328i sedans, yeah, you can get a lease return for mid-20s, but those cars were ALL sold deeply discounted in the first place. I don’t find them anything to be ashamed of, perfectly nice car for the price.

          • 0 avatar
            VoGo

            Lesson #1: Depreciation is calculated off MSRP. Industry standard.

          • 0 avatar
            30-mile fetch

            Since most people don’t offload their cars by running them into trees and collecting insurance, most of the people who do buy a 328 will care about what they are traded in and sold for :)

            ” I don’t find them anything to be ashamed of, perfectly nice car for the price”

            I agree, they are perfectly nice for $24K and that’s why I was checking one out. I’m not sure how someone signs the loan for a new one though, the interior’s pretty prosaic and the non-sport seats are terrible. I think the lease queen trim is certainly something for BMW to be ashamed of. Lowering quality and real world transaction price to move volume and gobble up market share for bragging rights or whatever isn’t a noble strategy. It’s Toyota’s current strategy. And it shows in the car. The interior photographs well but is downmarket in person, and it feels like someone intentionally made the seats flat, granite hard, and without any pretense of lateral support.

            I’m a little bummed about it. I was fully expecting to like the car prior to trying it, thinking it would embody a lot of the positive qualities in my Sportwagen and be a nice upgrade in power and agility, but the tactile cheapness and plywood seats just slapped me right in the face before I could get out of the parking lot. Damned if a new GTI doesn’t seem to fit the bill better. Maybe I’ll try to hunt down one with the Sport package’s better seats and reworked interior trim and see if that makes a better impression.

            Keep enjoying your wagon, that looks like a good buy.

          • 0 avatar
            krhodes1

            Nice thing about BMWs is you can order one the way you want it. Get the sport package if you don’t like the base seats. And a more interesting color combo than the gray on blah that the dealer stocks. And for God’s sake, do European Delivery! You will understand what makes these cars great when you are driving one at 135mph on the Autobahn.

            That said, a Golf Sportwagen is almost certainly the car I would have bought had I not had the readies for the BMW, I like them very much. All the car anyone really needs.

          • 0 avatar
            burgersandbeer

            @ 30-mile, base trim 3-series have always been somewhat cheap feeling and unimpressive; that didn’t start with the current generation.

            A 3-series meant a balanced RWD layout, the possibility of a manual transmission, good brakes for the street, excellent steering and great engines as far as performance/efficiency goes. The interior underwhelms given the price point. It’s always been a car that has to be driven to know where the money goes.

            The F30 328i is no different. A 2.0T as the base engine option is unfortunate, but the power and efficiency is there and it isn’t like anyone else has a spectacular base engine either. The electric steering also brings it closer to the pack, but that’s just the way the industry is going.

            Whether the things it does well justify the price when new is certainly up for debate, but I don’t think BMW needs to be ashamed of this car.

            That said, I admit the new C-class raises the bar for what buyers can expect in the interior of this class, and BMW better have something impressive up its sleeve to keep pace.

          • 0 avatar
            30-mile fetch

            Burgersandbeer,
            I can see where you are coming from and agree somewhat. But only somewhat, dang it. A bad practice isn’t made any better by virtue of being a long-standing one. I don’t think the interior of a $40K car should feel cheap. Those in the competition don’t. The powertrain is indeed strong and efficient, but VW has something similarly impressive in a $27K GTI. I quite liked the ride/handling balance and even the oft-maligned steering, but competitors also offer driving refinement (even if the flavor of it varies).

            Really, my complaints would be few if BMW simply put some base seats in there that don’t actively punish you for getting the base car, and paid attention to some of the interior details so it is somewhere in the general league of its competitors and at least feels more expensive than an $18K MkV Jetta.

          • 0 avatar
            30-mile fetch

            krhodes,
            Special ordering and European delivery would be a lovely way to procure a set of wheels.

            But…two kids and a world without pensions says that a complimentary coffee provided by the used car sales manager as I peruse their selection of off-lease grey, light grey, and dark grey sedans–looking for one in which the ignition button finish hasn’t been scraped off by the painted claws of its former owner–is about the best I’m going to get.

          • 0 avatar
            krhodes1

            Them’s the breaks when buying used then. All part of that discount.

            If I couldn’t afford special ordered new BMWs, I’d just buy new Volkswagens.

          • 0 avatar
            burgersandbeer

            30-mile, the base seats in any 3 or 5 series are something BMW should be ashamed of. The sport package is the closest thing to a good value that BMW offers and will fix it, but it comes with some ride compromises. It would be nice if the seats were a standalone option. This used to be possible on the 5 series. Maybe that is still possible.

            As if to rub it in, BMW’s optional seats are amazing. The 21-way sport seats in the E60 are probably the best seats I have sat in. Mercedes and Audi will give you comfortable seats or seats with more bolstering. BMW gives you the automotive equivalent of a metal folding chair unless you pay for the sport package.

            Anyway, I strongly discourage anyone from buying any car thinking they will get over seats that they hate. To me, comfortable seats are one of the most critical features of a daily driver. You probably won’t get used to seats you don’t like at first, and you will resent the car every time you sit down.

          • 0 avatar
            krhodes1

            I actually prefer the non-sport seats. I own one car with and one without. I’m too broad to fit well in the sport seats. I do find that the base seats require the 4-way lumbar support though, which forces buying the premium package. If you are skinny, the sport seats are great.

    • 0 avatar
      krhodes1

      @Vogo

      Only when talking in broad terms, since there is no way to know what every single car sold for, new or used.

      Depreciation on YOUR car is what you paid for it minus what you can get/actually got for it. It would cost ME $2K a year, assuming it gets totaled in the next 9 months or so. Because I plan to be buried in the thing otherwise. At which point depreciation will be completely irrelevant.

      • 0 avatar
        VoGo

        krhodes,
        The definition is straightforward. You can calculate your own costs however you please, but if you use the term in the context of how new cars depreciate, then the point of reference is MSRP.

        • 0 avatar
          krhodes1

          We are talking about personal finances here. MSRP is irrelevant, unless that is what you paid for the car. I could not possibly care less what the average depreciation of a 2011 BMW is, I care what the depreciation of the one I own is.

          This is why most comparisons of “depreciation” are pointless and stupid. Nearly without exception, the cars with “low depreciation”, are not highly discounted, while those that have “high depreciation” are, in any given class of cars.

    • 0 avatar
      fendertweed

      One exception to that may be a lower mileage CPO car with factory warranty.

      For ex., for a lot less $$ than new, one can find a low mileage a CPO Audi (not cheap, but less than new) with a 6 yr. 100k factory warranty.

      • 0 avatar
        krhodes1

        Still not enough of a discount for someone else’s choice of spec and farts in the seats. And possible ill-treatment. And CPO warranties are nothing more than extended warranties chock full of restrictions such. Audi may be different, but BMW’s CPO program is nowhere near as comprehensive as a new car warranty. And you PAY a hefty premium for it. If you simply must, you would be better off buying a similar car privately and getting an extended warranty third-party. I just put the money in the bank.

        Reality is if you can afford a German car new, you can afford to fix that car forever. No extended warranty needed. If you can’t afford one new, you probably can’t afford a nearly new one either.

  • avatar
    sportyaccordy

    There are some important considerations this editorial missed.

    For starters, the obsession with volume making for a glut of cheap barely used cars. Companies from Chrysler to BMW were engaged in some funny money business to pad the books, and now we are seeing the overflow from that.

    Credit is still dirt cheap, and distorts the market a lot. I think that is a big driver.

    And I think the gulf in quality of used cars today vs used cars of even just 10 years ago is understated. A ’93 Accord in ’03 traded hands for probably 1/4-1/2 what a 10 year old Accord of similar condition goes for today… but which would you trust to drive for 5 or so years?

    True, new cars have never been better, but then neither have used cars. Funny money stuff has taken some of the new car depreciation sting away, but at the end of the day you’re still gonna save THOUSANDS by getting a car even a year old. Not to mention they are doing CPO leases too.

  • avatar
    SCE to AUX

    Several thoughts on this…

    Used cars are still cheaper than new, and therefore have a more shallow depreciation curve than new cars. With wages stagnating, this remains an important consideration for buyers.

    The quality of used cars is converging with that of new cars. The days of 80,000-mile engines are nearly gone. Therefore, many used car shoppers figure that there is still a lot of life left in the normal crop of cars.

    Finance rates are low all around, so there isn’t much cost difference between a 4% used car rate and a 2% new car rate, for instance.

    Long warranties by Hyundai/Kia (and worse depreciation) make them excellent used car values. A 2-year-old Hyundai bought used still has 3 years of mfr warranty left in it, plus the balance of 60k miles (both reduced from 10/100 when new).

    On the other hand, I foresee a lot of downward price pressure on new cars. The new car market has peaked, and there is going to be so much discounting that new car transaction prices will fall. After some time, we’ll start to see used car prices fall as well because consumers will gravitate toward new purchases.

    • 0 avatar
      Kyree S. Williams

      Well, the 10-year / 100K-mile warranty on the new cars is only for the powertrain. The bumper-to-bumper warranty is 5 years / 60K miles…but that still beats the industry standard of 3 years / 36K miles for the bumper-to-bumper and 4 years / 50K miles for the bumper-to-bumper luxury marques

  • avatar
    ajla

    It depends on what you buy I think. Something like a WRX or Tacoma seem to depreciate like $100 a year.

    The car I bought new in November 2014 stickered at $34,000 and I got it for $28,000.

    Now I’m sure some OG negotiating superstars on TTAC could have got it for $15k or something, but someone off the street probably would have paid more like $31K. So let’s use my numbers.

    KBB says the trade-in value right now is $20,200. So about $390 a month in depreciation on what I paid. Maybe I’m unrealistic and maybe a new 2008 would have been worse, but that’s still a jagged pill. $390/month buys a lot of maintenance on a used and more-depreciated Panther or W-body or Acura.

    • 0 avatar
      PrincipalDan

      Every few months I’ll compare what I owe on a car loan to what the value of the vehicle is based on a variety of sources. As long as I owe less than what it can be purchased for in current condition I’m happy.

      • 0 avatar
        Kyree S. Williams

        Well, I *was* in that position, especially since my car is the SEL version of the Golf SportWagen, which was hard to come by.

        And then Volkswagen’s scam was revealed, and my car’s value plummeted by about $10K.

    • 0 avatar
      3XC

      My last new car transaction was in December of 2009, on a dark and windswept tuesday night. I parked my hideous trade under the broken light so as to hide its many sins. I didn’t buy from that particular dealer because they had what I was looking for, or because I got a screaming deal on unwanted inventory. I bought from that dealer because they gave me 2700 more on my trade than anyone else, including Carmax. No private sale could have possibly netted me more, because in daylight you could see how the doors and front quarter panels weren’t color matched. No private buyer would neglect to operate the windows and sunroof, finding both inoperational. No private buyer would neglect to pop the hood and see oil weeping from the head gasket against the firewall, or fail to smell said oil, splashed on the firewall, as the engine heated it up and released a burning smell once up to temperature. Most dealers and private purchasers would have noticed black liquid emanating from the exhaust, a viscous substance my engineer friend swore couldn’t possibly be engine oil, but sure felt like it. I would tell a private purchaser about how it drinks a quart a week, how so many things had broken that it was about 25% non OEM parts, and how my 1500 dollar aftermarket warranty paid for itself 4 times over, but I didn’t tell the Nissan dealer any of that. They wanted to make a sale, and they gave me 2700 more than anyone else would have.

      Yeah that was a E46 with less than 100k miles, and I got 6700 for it, and it was worth 4000. It was the worst car I ever owned, and the only one that ever left me stranded.

    • 0 avatar

      Yeah 4Runners and Tacomas are generally better new until their closer to 7 years old when you see some actual depreciation. But I was pricing new Ram tradesmen the other day, then went and looked on auto trader. 3 year old under 40k mile examples were a good 10-15k under what the dealers were offering new, I would have trouble paying new when I can save that much going used.

  • avatar
    MerlinV12

    I spent the last year living on the Car Max website, looking to replace my trusty but entirely spent Saturn. My one take away from this experience is that I can buy a brand new base model Fusion for the same price as a half used up Fusion with desirable, but unnecessary options. It would be highly foolish to go with the later.

    • 0 avatar
      BoogerROTN

      I’ve been looking for a 2013/14 Avalon XLE for a year now, so I too have been “living” on Carmax for several months.

      That said, I recently noticed a ’14 Fusion Energi SE w/13K miles (lease return) that’s listed at $18K; looks to be about $2-2.5K more than a comparable SE (year/mileage/condition). It’s really piqued my interest, in no small part to the depreciation (2014 Energi SE MSRP was ~$39.5K) and the fact that my work commute is less than 20 miles round trip (electric only range is ~21 miles). Considering I tend to keep my cars for around ten years or so (currently driving an ’05 Vibe AWD), I might be the one guy that gets his money’s worth out of a Fusion Energi (thanks to the depreciation & PNW power rates).

      If I could get them to somehow negotiate on price (yeah right, Carmax) and knock $500 off the list price so as to offset buying a 240V/20A charger, I’d probably pull the trigger. If it’s still there on Saturday, I’ll give it a look over…

      • 0 avatar
        Kyree S. Williams

        I’ve been watching the Fusion Energi as well, because it’s a good buy for the money. If you’re savvy and are willing to shop outside of the CarMax ecosystem, you can actually get a Fusion Energi Titanium for that price.

        In fact, here is one *at* CarMax (albeit a ’13) for a reasonable $19K, with 22K miles, and in the rare Ice Storm color. Of course, you’ll pay the transport fees for that if you don’t live near it, but it’s cheaper than a desirably-equipped economy car, all-in.

        This example might even have a factory warranty, still. And Ford’s hybrids have a good track record; I imagine the Energi puts even less stress on the engine than the normal hybrid. My best friend has a ’13 Fusion Energi Titanium. His costs of ownership are so low, it’s ridiculous.

        https://www.carmax.com/cars/ford/fusion-energi/2013/12609846

        • 0 avatar
          BoogerROTN

          The local Carmax lot does have a ’13 Energi Titanium in gray/black for $20K. However, I’ve tired of “black hole” interiors and it’s somewhat surprising how well equipped the SE is at this price point ($18K). I think I will go look at both cars (SE & Titanium) this weekend, if only to see if they are as clean as they appear. It’ll also be interesting to find out what Carmax charges for their ESP on an Energi…

      • 0 avatar
        Scoutdude

        Well the Energi battery isn’t that large so the 110v Convenience cord actually works pretty well for many users. I have a friend that leased a C-Max Energi and that is all she uses to charge with at home. At this point the off lease Energi is a good deal as there is virtually no premium over the standard hybrid.

        As far as the Energi putting less stress on the engine, yes and no. Depending on your access to charging you can go 20 or 40 miles per day w/o firing up the ice. On the other hand when that Ice fires up it has to lug around the extra weight of the larger battery.

  • avatar
    DukeGanote

    There are other considerations that drive the price up: imperatives for environmental concerns and safety. In that sense cars are like computers: newer models are better. For example, I replaced my 2006 Honda Civic with a (then) new 2011 Fit after Number One Daughter spun out on a dark, downhill, wet 35-mph curve (39.094732,-84.343474). The new Fit has stability control, the totalled Civic didn’t.

    • 0 avatar
      SCE to AUX

      Thanks for the coordinates; I can see how that curve could be deceptive in such conditions. Hope your daughter was OK in spite of the ruined car.

      • 0 avatar
        DukeGanote

        Thank you, yes, she’s fine. It’s was a long scrape along the guardrail and twisted underbody that pushed cost-of-repair to the “we’ll just call it totalled” mark for the insurance company.

        However I still dread my cell phone ringing in the night.

        • 0 avatar
          Kyree S. Williams

          Don’t we all dread hearing of our loved ones’ injury or demise in that fashion.

          I’m glad your daughter is okay, and that you were able to put her in a safer car.

    • 0 avatar
      rpn453

      Just make sure the rear tires always have plenty of tread. Stability control isn’t going to help one bit if the rears hydroplane.

  • avatar
    Felix Hoenikker

    Sounds like there is a delay in the expected decline in used car pricing resulting from the large number of cars coming off lease starting with MY 2013. CPO mania and low interest rates may be temporarily propping up used car prices. Sooner or later, supply and demand will resume Bubbles always last longer than you think. But, when they break, the really pop. Think real estate circa 2008.
    As far as the reduced number of used and new car dealers, it’s more on the big 2.5 than the imports. The bankruptcy allowed GM to get rid of dealers more easily than pre BK. The goal was to increase the sales per dealer to match the big Japanese dealers. This would allow the remaining dealers to spend more on their facilities from increased sales volume. I don’t know of any import dealers that shut down around here. I would guess about a third of the domestic dealers closed their doors since the great recession. Most re-opened as used car lots.

  • avatar
    benders

    New vehicle sales cratered from 16 million in 2007 to 10 million in 2009. This has a much bigger effect on used car supply than either CFC or Sandy.

    Only in the last couple years have we reached pre-recession sales. The average age of a light vehicle is 11.5 years so the market is still not caught up from the recession.

  • avatar
    FOG

    Ten years ago, I owned my vehicles. I bought vehicles up to four years behind the current model year. Over the past three years I have switch to leasing only. The monthly cost, for me, on a lease payment was less than the monthly repair costs I started experiencing. Also, I can’t get the deals on four year old cars that I could before. Part of this problem is when I try to find a used car for sale by owner on the internet, I am bombarded with dealers tricking the system.

    That being said the vehicle I just leased for an unbelievable low month payment and deposit retails for 44K! Even if I were able to get the deal way down, I couldn’t afford the monthly hit to buy one. I can’t begin to understand how a 44,000 vehicle can lease for under 200/mo.

    • 0 avatar
      sirwired

      Repair costs on a relatively new car were exceeding your lease payments? What on earth were you driving? Because any car that is not a complete pile of junk has very few repair costs up until at least 120-150k…

      • 0 avatar
        burgersandbeer

        Even cars that are complete piles of junk should cost less to repair than payments on something new. Even at a cheap $200 a month lease that’s $2400 in repairs a year, which can repair a lot.

        Strictly speaking about money, repair is always cheaper. It’s the hassle/opportunity cost of the downtime, the shadow of the flat bed, and dated safety equipment that tip the scales back toward new.

    • 0 avatar
      Pete Zaitcev

      One problem with the lease-only strategy is that you cannot modify leased vehicles, unless in inconspicuous ways. My car has a few holes drilled in various interior panels. I have non-standard seat rails as well, although I saved the factory rails and may return them before trading it. At least I still have the factory transmission.

  • avatar
    28-Cars-Later

    “One can easily argue today’s used cars are also much better than used cars from 2008”

    Hahahahahahaha.

    “Purely from a price perspective, there has never been a worse time to buy a used car.”

    Stop shopping at CarMax then.

  • avatar
    shedkept

    GM offerred 20% off at the beginning of July for Sierra and Silverado half ton trucks. A quick note to a very large multi-dealer franchise and it jumped to 25% off. Now, how in the heck can Black Book and KBB and NADA compensate for what amounted to $15K off sticker on a new vehicle? That’s roughly the depreciation number for driving it off the lot (1st year).

    I like used cars but if they’re giving new ones away why bother?

    • 0 avatar
      Lou_BC

      shedkept – agreed. Local GM dealers were offering 20%. With those kind of prices buying used makes zero sense.

    • 0 avatar
      SCE to AUX

      I predict more of this. I got my 13 Optima Hybrid in mid ’14 for 25% off MSRP.

      At the time, I was considering a used 12 Sportage for only a few thousand less (which needed some work), which made no sense once I saw the discount for new.

  • avatar
    stevelovescars

    Having been shopping for cars lately, I’d add that the value of used cars varies a lot depending on make. About 6 months ago I helped a friend buy a CPO Lincoln MKZ AWD for half of the original MSRP from a dealer with incentivized financing. It wasn’t bringing any premium over a used Fusion (old body style) despite the original prices. Last week, a friend found a brand new Fiat 500L (a leftover 2014) at a local Fiat dealer who is closing his doors for $16k (the MSRP was about $25k). Yeah, I know, but she liked it a lot. The only used cars we could find locally that met her criteria and were under $15k had no warranty, anyway.

    Also, this article seems to assume that one can only buy used cars from dealers. The FSBO marketplace is alive and well and full of great options. Financing is also more readily available today outside of dealers, making this option more viable to people with decent credit.

  • avatar
    bricoler1946

    “Recouping your investment” is that after the 30% depreciation hit after driving the new car out of the show room. History shows the new owner takes the biggest hit, I’d sooner buy a used CPO with warranty, I’ll still take a financial hit but not as bad. Investment to me means taking a risk, i.e, as in stocks and shares, certainly not with a motor vehicle.

    • 0 avatar
      JMII

      Agree. For me its hard to justify the price of a new car when a 2 or 3 year old, off lease, CPO vehicle is 90-95% as good at 60-70% of the price. Buying used sure made my wife’s Volvo a lot more affordable as the asking price new was insane.

      Other advantages to used are the history of the car is established, you know what tends to break and what the real world mileage is. Often times the new owner is nothing more then a guinea pig. Sure the warranty covers most factory failures but design flaws aren’t going away. Those things haunt you forever, like VW window regulators for example. Who knows maybe people like having monthly meetings with service advisors at the dealership, they often have donuts in the waiting room.

      • 0 avatar
        brettc

        Those donuts can be very expensive donuts depending on how old your car is.

      • 0 avatar
        krhodes1

        Trouble is, unless you are willing to settle for an off-brand, it’s 90% as good for 80% of the price. Sure, you can get a deal on a used Lincoln. But you know what? You can get a deal on NEW Lincoln too. And either way, you are stuck with a Lincoln. Which is fine if you really want a Lincoln, but I am not big into settling. Even if it’s “a good deal”.

      • 0 avatar
        burgersandbeer

        Design flaws are not always permanent. Parts are updated throughout a car’s life cycle.

    • 0 avatar
      ect

      The last time I bought a used car was in 1973, so I fess up to not being typical.

      Since I left the corporate world, (i.e. no more company car), I’ve noticed in recent years is that depreciation is not as steep as it once was. When we last car-shopped, the choice was to buy new for $40,000 or used for $20,000 – but used was 4 years old, and the previous generation. Looking at an 8-year horizon, the cost of ownership is about the same, but buying new meant (a) getting the package we wanted, (b) getting a 4-year bumper-to-bumper warranty, (c)avoiding the unknowns of a used car and (d) getting the newer and better-equipped generation of the vehicle.

      To my mind, buying new was the obvious choice.

  • avatar
    mikey

    Here in the Greater Toronto Area, several factors have had a huge impact , on vehicle marketing. The Real Estate market , has gone insane. Property values are skyrocketing. That situation generates a lot of cash, with people dumping their 60 year bungalow in Toronto for $700 K. They take the money , and flock 40 miles east,and pocket $300 K . Now they have a long commute, so a reliable vehicle is a must.

    Ontario just introduced very stringent ,safety check standards {mandatory at vehicle transfer }. A lot of smaller, low end ,vehicle lots have vanished. The bigger non franchise places,only stock newer, low mileage vehicles. The transaction price, is on a par with the franchise places. Private sellers,need to calculate, the cost of the safety check into their price….Tires, brakes, steering components, repairs can get pretty ugly. Any vehicle that needs big bucks, is going to the wrecker.

    The winner here, is the big franchise lot. A buyer with a decent trade in, and good credit, can drive off in a new car with no worries, and a payment he can live with.

    The other factor, would be the U.S exchange rate. The full-size extended/ crew cab trucks, are extremely popular here in the burbs. Good, clean trucks are fetching, top dollar at trade in. They sit on the lot for a few days waiting for someone, to offer big bucks. Chances are ,within a week, a car carrier, will load them up, and their on their way to the USA. The dealer recovers his costs, and pockets, a few bucks. I’m sure the same situation is taking place, at the BMW and Merc dealers.

    I also think the ever present “baby boomer” factor. Personally i,’m 62 years old. I don’t want to screw around, with the “hit or miss” of the used car buying experience.. Been there, done that. These days i want to get into my car, and know its going to get me there. If it doesn’t i call the dealer, and tell him to fix it. I will be 66 by the time my power train warranty runs out. I may opt to keep my Mustang, and eat the escalating repair costs ? Or i may trade my very clean, low KLM car in. I will not buy a used car ever again

    • 0 avatar
      Scoutdude

      Yeah with exchange rates where they are at now we are seeing a lot of late model used cars at dealers that were imported from Canada. The one thing to watch is that some mfgs are not honoring the warranty on those imported cars.

      • 0 avatar
        Lou_BC

        Not long ago it was the opposite. We have family in the lower mainland Vancouver region and almost every vehicle on their street came from the USA.

        Another issue affecting purchases is as Mikey described but also due to people remortgaging based on the ballooning equity in their homes and buying higher end new vehicles.

        • 0 avatar
          CoreyDL

          Ugh, people are so stupid.

          “I’ve found myself in a fortunate situation, better take on more debt via depreciating assets!”

          • 0 avatar
            Lou_BC

            CoreyDL – it is stupid. Canadians have the smug habit of looking down upon the foibles of those south of us but often don’t learn from them or feel immune since or “social” system is so much more superior. “It can’t happen here.” We are heading towards our own 2008.

        • 0 avatar
          Scoutdude

          “Another issue affecting purchases is as Mikey described but also due to people remortgaging based on the ballooning equity in their homes and buying higher end new vehicles.”

          This a million times. I’m in real estate and the number of houses coming through foreclosure that someone refinanced for way more than the original purchase price is staggering. You’ll see the house that they payed say $100k for many years ago that near the peak they did an 80/20 for every penny they could. So now they have $350k in debt on a house that isn’t worth near that much when they were 2/3 through paying off that original $80K mortgage. When I click through to the google street view the number of those homes that have luxury vehicles, large RVs and boats is very high who’s model year just so happens to coincide with when they took all that cash out of their house.

          So yeah the house as a cash machine accounted for a number of new fancy car purchases leading up to the market crash.

          • 0 avatar
            CoreyDL

            I thought you had said you were a teacher, and before that a mechanic? Have you had lots of careers?

            Just wondering.

          • 0 avatar
            Scoutdude

            Yes you could say I’ve had a number of careers. Through college I worked as a mechanic at a shop, then on my own and flipped a few cars per year.

            After college I got a job as a sales rep for a few years until I started my own mobile auto repair business. Around the same time I started investing in real estate.

            Then I had kids and started just doing contract work for other shops.

            Much later I started the “teaching/coaching” gig for fun. When working as a mechanic got in the way of my fun, I was sore at the end of every work day and the market recovered, I decided to focus on real estate and get my license.

            Going to write up an offer this afternoon for a “Fri at 5pm” review deadline and just signed my contract for the 16-17 school year yesterday.

          • 0 avatar
            CoreyDL

            Cool! Thanks.

    • 0 avatar

      @mikey,

      Right on…

      There were 200,000 used vehicles exported from Canada to the US in 2015, and this year it should be close to the same number.

      Dealers in Canada are paying strong money for specific used vehicles, and sending them to an auction where they are bought by US buyers.

      Many Canadian vehicles replaced Hurricane Sandy vehicles a few years ago.

      Franchised dealers that participate in the manufacturer CPO program have an additional advantage over the independent used car dealer.

      Where the independent used car dealer has an advantage is with used vehicle that are lower priced than the franchise dealer and obvious slightly older, as well as catering to folks that are credit challenged.

      The difference in Canada, the average Canadian consumer places a higher priority on paying for mobility, having peace of mind, than owning a vehicle.

  • avatar
    zoomzoomfan

    I bought a 2016 Mazda6 Touring (mid-level model) in October 2015 for 26k or so. Traded in my old car for $5,500 and put $1,000 down and ended up with a loan of around $19,000. The previous car was paid for in cash when I bought it, so it of course had nothing owed on it.

    I looked at CPO Mazda6s and even regular used ones and they were all around 21-22k with average miles. Literally 3-4k less than the brand new one I got with 6 miles on it. I figured over the life of the loan (and depreciation-wise), I might as well get a new one – especially since I got a better rate with new than with used.

    And, when it all boils down to it, being the first and only owner of a car feels nice as long as it doesn’t put you into a financial bind that doesn’t feel nice.

    My principal balance on the car now is right around 17k and according to Edmunds, it is worth 21-22k. As long as the amount owed stays less than the amount it’s worth, I am happy.

  • avatar
    28-Cars-Later

    @shedkept

    I would check the fine print on that offer; which MY? Which configuration? Did the MSRP suddenly jump $3K on say an MY17 to compensate?

    Here’s some reality, and yes the first one had eight miles on the Odo.

    MY16 Chevrolet Silverado Crew Cab LT 5.3 4×4

    07/13/16 Manheim San Antonio $32,000 8 Avg MAROON 8ET A No
    07/21/16 Manheim Dallas-Fort Worth Regular $43,000 738 Above BLACK 8ET A No
    07/06/16 Manheim New Jersey Regular $24,800 2,831 Below WHITE 8ET A No
    08/02/16 Manheim Orlando Regular $35,000 3,255 Above BLACK 8G A Yes
    07/07/16 Manheim Louisville Lease $33,700 4,445 Avg WHITE 8ET A Yes
    07/13/16 Manheim Kansas City Lease $30,800 4,786 Below WHITE 8ET A Yes
    07/21/16 Manheim Detroit Regular $36,205 7,929 Above BLACK 8ET A Yes
    07/26/16 Manheim Pennsylvania Regular $33,900 8,679 Avg GREY 8G A Yes
    07/27/16 Manheim Nashville Regular $32,500 9,142 Avg SILVER 8G A Yes
    07/29/16 Manheim Pennsylvania Lease $30,500 9,434 Below WHITE 8G A Yes
    08/03/16 Manheim Nashville Regular $30,800 9,633 Below BLACK 8G A Yes
    08/01/16 Manheim Nashville Regular $32,000 10,124 Avg BLUE 8G A Yes
    07/21/16 Manheim Chicago Regular $32,000 10,222 Avg GRAY 8G A Yes
    07/27/16 Manheim Detroit Regular $32,800 10,525 Avg SILVER 8G Yes
    08/03/16 Manheim Nashville Regular $32,500 10,635 Avg GRAY 8ET A Yes
    08/02/16 Manheim Ohio Regular $32,700 11,096 Avg BLUE 8G A Yes
    07/13/16 Manheim New Jersey Lease $34,000 11,205 Avg BLACK 8ET A Yes
    07/07/16 Manheim Tampa Regular $35,000 11,480 Above BLUE 8ET A Yes
    08/02/16 Manheim Statesville Lease $33,800 11,599 Avg WHITE 8G A Yes
    07/20/16 Manheim Dallas Regular $41,000 11,975 Above WHITE 8ET A No
    08/03/16 Manheim Nashville Regular $32,800 12,033 Avg SILVER 8G A Yes
    07/19/16 Manheim New England Lease $33,000 12,035 Avg BLACK 8ET A Yes
    07/07/16 Manheim Southern California Lease $34,750 12,563 Above WHITE 8G A Yes
    07/12/16 Manheim Riverside Lease $34,500 12,639 Avg GRAY 8G A Yes
    07/19/16 Manheim Statesville Lease $34,000 13,249 Avg RED 8ET A Yes
    07/21/16 Manheim Fredericksburg Regular $33,200 13,265 Avg GRAY 8G Yes
    07/06/16 Manheim Georgia Lease $33,000 13,508 Avg BLACK 8G A Yes
    07/12/16 Manheim Statesville $34,300 13,961 Avg SILVER 8ET A Yes
    07/19/16 Manheim Ohio Regular $37,000 14,054 Above BLACK 8ET A Yes
    07/29/16 Manheim Pennsylvania Lease $29,000 14,119 Below SILVER 8ET A Yes
    07/29/16 Manheim Pennsylvania Lease $33,400 14,849 Avg SILVER 8ET A Yes
    07/29/16 Manheim Pennsylvania Lease $30,500 15,793 Below BLACK 8G A Yes
    07/29/16 Manheim Pennsylvania Lease $33,200 16,959 Avg WHITE 8ET A Yes
    07/18/16 Manheim Louisville Regular $41,200 19,533 Above Gray 8CY A No
    07/14/16 Manheim Dallas-Fort Worth Lease $32,400 19,844 Avg SILVER 8ET A Yes
    07/07/16 Manheim Dallas-Fort Worth Lease $32,900 20,174 Avg BLACK 8ET A Yes

  • avatar
    healthy skeptic

    I think that from somewhere in the 1990s until recently, there was a kind of sweet spot in terms of bang for your buck on used cars, and it reaches back well before the Great Recession.

    In decades past, used cars were cheap, but also generally junky and unreliable, and buying one a risky endeavor. But it wasn’t just a matter of rationality and economics. Growing up middle-class in the 80’s, I remember a social stigma against buying used. Right or wrong, it was seen as an option for the poor and the desperate, kind of like shopping at the thrift store. It might have been an acceptable option for a teenager’s first car, but if you were prospering and living the American dream, you were supposed to have a shiny new car in the driveway every few years.

    In the 1980s, the general quality and durability of cars started to increase dramatically, beginning with the Japanese. By the 1990s, this rise had crept into the used car market, but the social stigma still existed, artificially suppressing demand. Therefore, if you didn’t let the stigma affect your buying decisions, good deals were to be had.

    Today the stigma is pretty much gone, erased by necessity if nothing else. There are other factors, but I believe the decline of that stigma had a role in reducing the relative value of used car deals.

  • avatar
    Michael S.

    I’d argue that the expansion of sub-prime credit, and the growth of the trading thereof, has also had a large impact on this. It’s easier for sub-prime consumers to finance much larger amounts with almost nothing down. They pay more in interest, but that doesn’t phase many of them.

    As for the comments about value, resale, etc., cars are not investments. They are, and always have been, appliances. “But a new car depreciates 10% when you drive it off the lot,” you might say. Well, so does a refrigerator. They’re consumable, depreciating assets.

  • avatar
    don1967

    Factor #3 behind the U.S. used-car price bubble: Frugality is “in”.

    Everyone wants to be the proverbial Warren-Buffet-in-a-rusty-VW. So badly, in fact, that we will pay outrageous prices for a 90,000 mile Honda Civic, convincing ourselves that it is a sign of intelligence. Gotta love human nature.

    • 0 avatar
      SCE to AUX

      … only to discover that the Civic needs to have its airbags replaced ASAP.

    • 0 avatar
      chrishs2000

      Bingo. The “get-something-for-nothing” crowd is becoming overwhelming. I’m selling a vehicle on CL and I’ve never turned away so many idiots in my life. On at least 5 separate occasions I have said “you get what you pay for” and walked away without even letting them sit in the vehicle, because the first thing they do is try to beat me down on price. And all of these people spend weeks or months looking for cars, spending hundreds of dollars to end up saving hundreds of dollars on a car that may not be the best but that they ‘got a good deal on’.

  • avatar
    yamahog

    The only winning move is not to play the game – at this rate I’m going to drive my car until new cars become sufficiently compelling. What does a new car offer a good 2000 car? Marginally better real world fuel economy (in a world with $2/gallon gas)? Marginally better safety (in a world of declining fatalities)? Bluetooth connectivity (retrofitable for $200)? Adaptive Cruise control (only available on cars that cost near 30k except for the Civic)?

    Used car dealers are a sham. If you want in with a good car, they’re going to give you an offer that’s at least $2k below the price at which they’ll list it. And the car you buy has a similar mark up. You’re letting them capture thousands of dollars in surplus value.

    • 0 avatar
      CoreyDL

      “Used car dealers are a sham. If you want in with a good car, they’re going to give you an offer that’s at least $2k below the price at which they’ll list it.”

      You must have missed the day in econ class where they covered capitalism. You’d presumably prefer the dealer made $0 profit, and purchased your car, conditioned and resold it on their lot for… nothing?

      • 0 avatar
        Lou_BC

        Those lefty commies out to ruin everything or was that free market capitalists?

      • 0 avatar
        28-Cars-Later

        You must also remember used car dealers have nearly a captive market on product supply they have achieved through collusion. New car dealers *are* members of a captive market based on their franchise. Now if John Q. Public could scrape together the capital and compete honestly on the block, I wouldn’t complain in the least. However the barriers for entry are specifically designed to prevent JQP from ever participating in the “market”.

        Generally speaking I’m sympathetic to a point on overhead costs, feeding my family etc but dealers make most of their money on the back of 20% of their customers (see 80/20 rule) and in order to do so, someone is being shortchanged.

      • 0 avatar
        yamahog

        Yeah I must have slept through capitalism day when I picked up an econometrics degree.

        Here’s my issue – the barriers to entry shield the industry from competition that might make them operate in a more efficient way. That’s not to say used car dealers don’t add value, but the value prop just isn’t there for me. I know exactly what sort of car I want, and I’d rather arrange my own detailing (the last used car I bought still had the prior owner’s receipts in random paces, CDs in the CD player, and a pocket Bible in the emergency kit. And call me crazy but collecting thousands of dollars in value for executing a title transfer and a basic vacuuming doesn’t mesh.

        Around here, used car dealers (as businesses) sell for a very handsome earnings multiple which suggests the market sees them as low-risk investments. And I’m inclined to agree, they’re aren’t many areas that are zoned for car dealers, and pulling the proper permits / licences is a political process.

        I wouldn’t presume to tell them how much they should charge me. Just that their value capture is unpalatable and thusly I decline to participate in the market. What more could you ask for? And in a normative sense, I wonder whether their value capture would be lower if things were more competitive.

        • 0 avatar
          VoGo

          I dunno, aren’t CL, ebaymotors, cars.com, autotrader and cargurus credible alternatives?

        • 0 avatar
          sportyaccordy

          Your analysis is either negligent or intentionally perpetuating a double standard- new car dealers do, at most, the same amount of work as used car dealers, and more realistically less as they aren’t going out to auction to get new cars. And yet the profit on new car sales is generally much higher than it is on used car sales.

          Plus there is value in the time and money spent by a used car dealer in handling/guiding folks through the paperwork, offering some kind of warranty (even if only for 60 days or w/e), getting the Carfax and reconditioning a car vs buying a car truly as-is from Joe Sixpack. Each method of getting a car comes with its own benefits and caveats but in my experience buying used from an independent dealer has always been best.

          • 0 avatar
            Scoutdude

            NO with the transparency that the internet has created used cars are the profitable side of sales in a new car franchise. Of course the real money is in the service dept.

        • 0 avatar
          Kyree S. Williams

          My dad bought a 2007 Sonata SE V6 in late 2011 that had a baggie of marijuana in the sun visor.

  • avatar
    JuniperBug

    The fact that the average person can’t afford the average car doesn’t say much… except that consumers, on average, buy more car than they can afford. That’s not news in North America, and hasn’t been for a long time.

    The fact remains that cars offer more space, safety, power, fuel efficiency, convenience, and durability for the money than ever before. If people continue to buy $40k, 5,000 lb overpowered vehicles to drive down to the store for some milk when they realistically can’t afford to do so, just because credit is dangled before their eyes, that’s a problem on the demand side, not the supply.

    Buying new vs. used all depends on how much of your cash inventory you’re willing/able to park into a vehicle, and how the calculations of cost vs. utility work out in the current vehicle market and your individual vehicle needs. (Someone who drives a lot of miles will have different utility needs than someone who doesn’t.) I agree that it appears that used cars used to be a better value than they are now, but that doesn’t mean they’re not potentially a worthwhile value now. My 17 year-old car has served me just fine the way I’ve been using it the last 5 years, costing a tiny fraction of what a new one would have.

    People like to buy “luxury,” and that’s fine when you can afford it. The fact is that most people who are drowning in debt trying to make the payments on an “average” car would have all their vehicular needs (but not wants) met by a car costing half as much, and then they wouldn’t have to cry about today’s cost of living being so unfairly high.

    I’ve been reading finance blogs the last week, and it’s illuminating to watch people with fairly regular incomes become financially independent in their 30s and 40s. I ran the numbers and discovered that it’s fairly doable if you buy only what you actually need to live a good life, invest a good portion of your income into stable index funds, and ignore what the TV and your neighbours say.

    • 0 avatar
      krhodes1

      Certainly true. When I made something like the median wage, I simply did not buy new cars. I bought $5K used cars and worked on them myself. Could I have swung the note on a $20K car then (15-20 years ago) – sure! But I would not have had money for other things. I have never had any interest in being “car poor”. But unless Maine is very different from much of the rest of the country (which may well actually be true), nobody I know does the things that people on here say are widespread. I don’t know anyone who is struggling to make their car payments because they bought too much car. Or maybe my friends and family are just smarter than average. :-)

      I do think how much car you can afford is very much a sliding scale – I make 2.5X as much money now, but I am comfortable spending 10X on a car, because my basic cost of living hasn’t changed at all. Same house, same lifestyle, more money. Even spending 10X on cars, I am sticking more into savings every month than I spend on cars, by a lot.

      Really, I think a far bigger issue is being “house poor” or “apartment poor”. I know lots of people who are trapped paying far too much of their income for housing. Cars are chump change by comparison, and it is a whole lot easier to get out of a car than out of a house. I’ve related the story of my best friend who bought a house with his wife they could just about afford, then split up leaving him with a huge mortgage AND a child support payment on a house so far underwater it might as well be a submarine. Ooops.

      • 0 avatar
        CoreyDL

        I keep telling people, “Dude stop being poor.”

        They won’t listen.

        • 0 avatar
          VoGo

          Right? I keep telling poor people: “Why do you work 3 jobs just to feed your kids and pay the rent? Get just one job – say, partner at Morgan Stanley, and then you can live in a palace!”

          But they don’t listen. They just go back to cleaning my boots, muttering under their breath in Spanish.

          • 0 avatar
            JuniperBug

            Nobody’s claiming that life can be easy when you’re trying to support a family on minimum wage.

            Average people, making $40-50k, on the other hand, can, if they stopped spending their money – and money they don’t have – so recklessly. http://www.mrmoneymustache.com among other sites maps out exactly how, and it’s very simple: spend a lot less money than you make.

            There are unfortunate people even in our rich countries, but many who are in debt or broke are that way because they’re foolish with money. The very fact that people with an average salary in the US can’t afford the average new car cost (which is more than double what a decent new car can be bought for) hints strongly at this fact.

          • 0 avatar

            I read a lot of those financial blogs and have tried for years to raise capital with a family. And after enough looking I came to three conclusions. One most of the bloggers make and spend more then they let on. Two if they really make that little they live in an incredibly cheap area. Three They saved a lot of money before they had kids. http://www.mrmoneymustache.com/2016/04/01/mmm-spending-2015/

            I compared myself to Mr money mustache based on the above posts. My costs are similar with some higher like Gas as I still work and need to commute and I still have a mortgage but I beat him in other places. You know what I’d be bankrupt at 50k a year and luckily I make more then that but I really just scrape by.
            And I live in a 1,000 sqft house worth less then 200k
            Drive 15 year old cars
            Don’t take vacations
            Never travel
            Go out to eat 4-5 times a year
            Save nothing no 401 nothing
            Have cheap Tmobile cell plan.
            But I do live in a high cost area (but in a cheap town in an expensive state)
            Have high taxes
            Have 3 kids.
            With 1 or no kids my income would be pretty easy to live on.
            I’ve done the budget thing many a time the only real luxury I have is cable TV and well the $60 bucks a month more then internet wouldn’t buy me much so I leave it.
            The real killer for me is medical Some years it costs almost nothing but when multiple 3k dollar deductibles hit there not much you can do.

          • 0 avatar
            28-Cars-Later

            Probably should try muttering to themselves in English next time.

    • 0 avatar
      DukeGanote

      Mr Money Mustache rules!
      http://www.mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit/

      • 0 avatar
        gtemnykh

        That article went from zero to frothing-at-the-mouth-ranting-hippy in no time at all.

      • 0 avatar
        SSJeep

        I cant stand Mr. Money Mustache and his financial evangelista brethren. His idea of saving money is to purchase some scaled-down econobox, mount a trailer hitch on it, connect a custom fabricated hitch-mounted cargo rack to the back, and use that abomination as a highway vacation vehicle. Never mind the injury factor if said overloaded econobox meets a semi on the interstate doing 75mph.

        ALL of the financial advice gurus, bloggers, radio hosts, and televangelists fail to recognize one very important fact – our mortality. We arent going to live forever, and no matter how much we exercise, eat healthy, stay out of the sun, save every penny we make, many of us wont make it past retirement. Many of us will make it to retirement, but with our health compromised enough to impact our quality of life. Thats the facts, jack.

        So slamming away every dollar in the hopes of being the next “Warren Buffet in a rusty vehicle” while frittering away every day pinching pennies – while at the same time ones odds of death increase every day seems absurd to me.

        We should be glad that there is widespread availability of various financial instruments with which to pay for life-enhancing goods and services. Sure, some people will mess up and extend themselves more than they should, but that’s what bankruptcy is for. Those with good credit will likely get loans at the rate of inflation. Those who mess up badly declare bankruptcy, keep most of their stuff, and have a mark for a scant 7 years (which can be reduced significantly by starting good credit habits after bankruptcy). There is no debtors prison here.

        The one thing that Mr. Mustache has right is to avoid overextending ones self on a house. A house that is too large is just a massive vacuum attached to one’s wallet, and the governments take of taxes on said large house will only go up and up…

        • 0 avatar
          krhodes1

          Amen Brother!

          You only live once, and ain’t nobody ever seen a hearse towing a U-Haul trailer…

          Though that said, that would be a highly amusing bit to put in one’s will… :-)

        • 0 avatar
          DukeGanote

          O? Mr Money Mustache retired at 30… Seems quite cognizant of mortality to me. Jacob Fisker in his mid-thirties.
          http://earlyretirementextreme.com/so-long-and-thanks-for-all-the-fish.html
          Ultimately it seems to me you either go for the “He who dies with the Most Debt Wins” treadmill, or realize that you can live within your means and for your own goals.

          • 0 avatar
            krhodes1

            Or you can go for a happy medium. There is certainly such a thing as too much debt. But I also think that in an era of frankly *stupid low* interest rates, there is such a thing as avoiding debt for no good reason. And it is not debt if you have the money to pay it off at anytime (or in the case of a car, equity enough to make it go away if necessary).

            As for “retiring early”, why? I absolutely love what I do for a living, and plan to do it or something like it until I physically can’t anymore. My Grandfather retired relatively young, moped around the house for about six months bored out of his mind, and went back to work for 20 more years.

          • 0 avatar
            SSJeep

            I dont disagree, but Mr Mustache is likely not “retired” as much as he is “self-employed”. He writes a blog that generates income through advertising and click-through revenue along with interviews and speaking engagements. That isn’t retirement.

          • 0 avatar
            DukeGanote

            Doing what you love is right, rather than doing it because you (or your spouse or children) feel addicted to surpassing the Jonses. MMM is pretty up front about his blog income, for example: http://www.mrmoneymustache.com/2012/03/16/get-rich-with-blogging/

    • 0 avatar
      SCE to AUX

      Agreed on the miles statement.

      My mother bought a 2002 Altima in 2010 with 70k miles on it, for cash. Today (6 years later), it has 80k miles. In that time it has only needed a set of tires, a crankshaft position sensor, and a prop rod clip.

      A new car for her would have been insane.

  • avatar

    If it flies, drives, floats or fucks – lease it.

  • avatar

    Totally agree Bark, and thanks for sharing this data. What I have found doing this everyday across the country is that 1-2-year-old used cars from mainstream brands (non-luxury) don’t offer a ton of savings once you compare the new prices after discounts. Once you get into 4-year-old cars and older, there are some savings there, but you sacrifice warranty.

    Of course, luxury brands are the wildcard due to their rapid depreciation. Some brands hold value better than others and once you factor in the new discounts the gap narrows. While other brands drop so fast you can pick up a steal with very low miles.

  • avatar
    Cactuar

    As a cash buyer with average-guy income, I’m more comfortable spending 10-15k than 35k on a car. I just can’t bring myself to buy the new car, it stings too much.

    I think easy credit is the reason why people are numb to these astronomical prices. Paying cash makes the cheaper used car more appealing!

    • 0 avatar

      Yeah I mean I but older cars (under 6k) but always cash. I will need to get a new family hauler soon and may have to stretch up to 10k, I’m amazed at how many miles some of these 10k cars have on them. Back in the early 2000’s cars with 150k miles were worth nada. I can’t get me head around payment buying. I would always look at the top number and get pissed at myself for not buying used.

      • 0 avatar
        SCE to AUX

        My son’s recent purchase of an 07 Sonata cost $7000 out the door; it had 80k miles, but it’s pretty clean.

        While shopping, it was depressing to see the junk available for the same money he paid – stuff that’s been wrecked, smoked in, leaky, shredded interiors, bad drivetrains, bald tires, leaky engines, or laden with aftermarket nonsense.

  • avatar
    dukeisduke

    Yeah, that’s an old picture – I don’t see an Chevy C(r)aptivas.

    • 0 avatar
      PrincipalDan

      Yup, every Captiva I see has either a rental car barcode on it or a CarMax/AutoMax sticker on it.

      • 0 avatar
        Kyree S. Williams

        Since GM quit making the Captiva Sport in late 2014, it has pretty much been phased out of rental fleets.

        As for why you don’t see a picture of the Captiva (a more-recent car), this is a very old picture. I mean, they have B5 Passats, Mk.4 Jettas, Endeavors and Freestyles on the lot. I think I even see a Stratus in the background. Those cars are far too old for CarMax to be selling these days,

        Also, it really wasn’t a bad car at all. In some ways, it was better than the consumer-level Equinox.

        • 0 avatar
          PrincipalDan

          Mr. Williams – the funny thing is in my area the Captivas always seem to command a slight premium over an Equinox of similar year and similar condition. That I cannot understand.

  • avatar
    deanst

    A lot of overlooked facts in this argument. Used car prices are high because supply is low – annual new car sales dropped from about 17 million to 10 million during the financial crisis, and are still below the prior peak. As these are the source for today’s used cars, you can see that there is a huge shortage versus historical norms. Cash for clunkers is irrelevant next to this factor.

    Additionally, lower interest rates have helped the consumer by more car than they have in the past. Combine lower rates with longer loan periods and it is estimated that consumers can buy almost 30% more car for the same monthly cost. Used car prices are therefore also higher because the consumer is buying a more expensive car.

    Another factor is the mix shift from cars to SUVs. If you want a deal on a vehicle buy a used car – leasing companies are already incurring losses on residual values on over half of their leased cars. On the other hand, they have great gains on SUV residuals. Want a used SUV? Expect to pay more.

    Lastly, the notion of fewer car dealers being able to demand higher prices is nonsensical. To suggest that since there are “only” 16,000 places to buy a car, you must pay more is a bit ridiculous. It has never been easier to research and find a used car. If anything, firms like Autonation have shrinking gross margins, meaning better deals for consumers and going out of business signs for the mom and pop stores.

    • 0 avatar
      VoGo

      This comment scores on all counts.

    • 0 avatar
      Kevin Jaeger

      Yes, good points all around. While the Baruth brothers are always entertaining writers they do tend to show a weak grasp of finance and economics when they venture onto those topics.

      But the main point is quite valid that new cars today can be good value once you factor in incentives, unusually low interest rates and a bit of a shortage of supply of used cars.

    • 0 avatar
      Mathias

      @deanst: you’re spot-on as far as the ‘missing cars’ from the recession goes.

      With the recent record-setting sales, I’d bet that there are a lot of 3-year-old lease returns that are attractively priced. The Chevy Cruze may become the spiritual successor to the Prizm — if it holds up in the long run. The prices are certainly right.

      Down at the low end of the market where I like to shop — south of $3 — it’s as grim as it’s ever been. To my mind, it’s just not worth it. I have a number of craigs searches cued up, and I check several times a week, and maybe two, three times a month I see somebody’s grampa’s car for sale for what looks like a good deal. Maybe.
      Better hope the air conditioning isn’t weak; there goes the grand you saved.

      I think Bark’s arguements are too facile, and he doesn’t sound like he’s put serious effort into used-car buying, but he has a point.

      I’m known at work as the go-to guy for used cars, and I’ve had some epic junkers — I had an ’85 Chevy conversion van as my daily driver ten years ago — but the cars in my driveway now were all bought or leased new. It’s just not fun anymore.

      • 0 avatar
        gtemnykh

        “The Chevy Cruze may become the spiritual successor to the Prizm — if it holds up in the long run.”

        As much as I love the Cruze, I quite seriously doubt that. The Corollas that the Prizms were based off of (90 series, 100 series, 110 series) are some of the most stupendously durable and reliable compact cars the world has seen. Stupid easy to work on, and parts are cheap. You can find these beauties in such wonderful locales such as third world Africa, Afghanistan, and of course my near-and-dear Siberia.

        youtu.be/5qMgMZSBmkE?t=26
        50k rubles ($850ish) for an older running “Sprinter” variant with plenty of life left in it and a million times better built than a brand new Lada.

  • avatar
    dal20402

    It very much depends on the car you’re buying.

    Buying a late-model car of a volume Japanese brand (Honda, Toyota, Nissan, Subaru), or a nearly new truck? Bark’s conclusion is probably right, although his analysis assigns way too much effect to 700k C4C cars and way not enough effect to something like 15M cars that just weren’t produced in the first place during the recession.

    Buying a late-model volume domestic car (not truck)? You can probably find a rental return at enough under new-car transaction prices to make buying the used one worth it.

    Buying a late-model luxury car? For God’s sake, buy used. You’ll get, in many cases, a 1/3 discount for a car that still has much more than 2/3 of the useful life. You can even pay for a good warranty by going CPO. If you absolutely have to have a new one, a lease is often a better option than a purchase.

    Buying a late-model performance car? Buy new, unless you know the previous owner personally. Most late-model used performance cars on the market have indifferent and often abusive owners.

    Don’t want to spend an amount anywhere close to a new car? Then you’re buying used (and, in today’s market, probably with a significant part of the useful life already gone).

    • 0 avatar
      Scoutdude

      The C4C effect on pricing was at the low end of the market, the really used, used cars. The lack of new car sales is what is having the effect on the late model used car pricing.

      • 0 avatar
        CoreyDL

        Looking around here lately, it’s really impressive just how -many- miles you can put on a modern SUV/truck and it still be serviceable and usable.

        Tahoes and Yukons from 00-06 all day long with 200+K miles on em.

  • avatar
    brettc

    From my searching for a replacement for my TDI, I have found that nearly-new hybrids (at least the C-Max) go for a lot less than a brand new one. So there is that.

    When I get my payout from VW I really don’t have any interest in taking out another loan so I’ll likely be buying an undesired gently used/CPO hybrid.

    • 0 avatar
      dal20402

      When I leased my C-Max Energi I found the opposite, at least on the Energi with its tax incentive.

    • 0 avatar
      Kyree S. Williams

      I was looking at the Fusion Energi, myself. There are tons of loaded examples for under $20K, with under 50K miles. This for a car that, in Titanium trim, had an MSRP of $44K or so…although the people who bought them new got tax breaks and they probably sold for closer to $38K in the first place.

  • avatar
    dusterdude

    @dal20402

    Nailed it. I’d just add that if you bought a late model Japanese car, it still MAY be worth it to buy gently used if you have access to cheap credit (ie secured line of credit) and your plan on owning for < 5 years (vs. "driving it until the wheels fall off" )

  • avatar
    jthorner

    One big advantage of a new car is that it is full of brand new, OEM quality wear parts. Tires, brakes, suspension bushings, struts, engine ancillaries, transmission, etc. are all things which wear over time and can be very expensive. Many vehicles cost upwards of $1000 for all new brand name tires. Brakes all the way around can easily be another $1000.

    That ex-rental car with 30-40k miles on it might have new tires, but there are likely bottom of the barrel bargain tires. Other wear items are already deep into their useful life.

    Need a minivan? You can put a nicely equipped new Dodge Grand Caravan for $17k-$21k depending on the option package. Need a full sized sedan? Impalas and Chrysler 300s can be bought for silly cheap money. Want a basic midsizer? Most of the major brands will make you a great deal if you don’t insist on larding up the option list.

    Need a not great but serviceable cute-ute? Again, head to your CJDR dealer for crazy cheap prices. Is the four year old used Toyonda competition with 50k+ miles on it at similar money really a bargain???

    As to the original article, blaming this situation on mega-dealers is mega-bunk. The problem is that from 2008-2011 we had multiple years of deeply depressed new vehicle sales. That created a hole in the late model used vehicle inventory which will take several more years to slowly fill in. Meanwhile, rental car companies are keeping their vehicles twice as long as than they did a decade ago, and that cuts the number of used vehicles coming on the market from them in half. That problem is further compounded by Uber and Lyft putting a dent in the business vehicle rental market.


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