Car Buying Tips: The Contrarian's Guide to Used Car Buying
In the late ‘90s, a popular consumer magazine claimed a certain SUV rolled over easily. This study was strongly debated; I doubt anyone remembers who was right. But the damage was done. The vehicle fell out of favor into the one-way pit of corporate neglect. As the dust settled, I purchased a used example of this otherwise reliable, well-built machine at an exceptionally low price. After five virtually trouble-free years, I’ve decided to replace my ‘98 Isuzu Trooper with something newer. And so begins my hunt for undervalued quality.
The contrarian investor buys stocks that are cheap and currently out of favor. He seeks shares whose price has been depressed by bad news or a temporary setback, which otherwise represent sound investments. These principles apply perfectly to the art of buying a used car. For those willing to venture outside of the Honda-Toyota mix of political correctness, amazing values await.
A contrarian buys quality. These days even so-called second-rate automobiles may possess excellent quality. If you can stomach the fact that your car is not quite the class leader (whatever that is) and resist the social pressures to “buy the best” (whatever that is), you can save an enormous amount of money on a used car, and not lose much of it later.
After considerable contemplation, I’ve concluded that the sweet spot for American automotive value is currently $16k. For sixteen Grover Clevelands, you can purchase a wide variety of gently used 2006 models, still under warranty and mechanically fresh. While we’re not talking about budget boxes here, it is true that 16 large won’t buy you a lot of what I call automotive fluff: leather and fancy electronics. Pay less and you’re looking at too much compromise (tinny doors are endlessly annoying).
Sixteen thousand it is. So what’s out there for contrarian car buyers?
Let’s start by eliminating the obvious. Hondas and Toyotas are immediately disqualified. We’re looking for a vehicle that’s suffered the slings and arrows of outrageous depreciation. Toyondas just plain don’t. Again, we also want quality, so Volkswagen drops entirely from our list. Unfair? Possibly, but both J.D. Power’s mob and anecdotal evidence suggest that VW quality’s leaves everything to be desired. And out goes VeeDubs’s familial relation, Audi.
In this pursuit, domestics rule. FoMoCo has plenty to offer the curious contrarian. A quick internet search unearths a fleet of sub-$16k 2006 Ford Fusions, a textbook casualty of the Detroit resale curse. The Fusion score high marks for drivability and reliability, yet sells for the same price as an econobox on the used market. As do the Five Hundred/Freestyle, which should take an even bigger hit when Ford re-renames them the Taurus/Taurus X.
In fact, just about any Ford product holstering the Duratec 3.0-liter engine qualifies as a suitable candidate. Mazdas equipped with ye olde six, the MPV and Mazda6 S wagon (not the sedan or the hatch), are decent, second-tier cars that sell for peanuts on the used car market. Pistonheads note: the Mazda6 S is a particularly attractive (i.e. unloved) stealth wagon.
One can’t talk about cheap— I mean, undervalued cars– without taking a good hard look at Chrysler cast-offs. Amateur CSI’s will find plenty of dried contrarian drool on used Town and Country minivans with three to ten thousands miles, selling for the magic one six.
The Magnum, Dodge’s chop top load lugger, rocks; or, I should say, sinks like a rock. With a little digging, you can find a well-loved 2006 Magnum SXT that listed for $26K selling for $16K.
Chrysler’s proto-CUV, the Pacifica, can also slip into our price range. And while the anti-green hedonist inside me craves a stripped 2006 Grand Cherokee or Commander, they fall just north of our self-imposed budget. Damn.
For the ultimate target-rich environment, type Saturn in the Search box. You can buy a used Ion for about the same price as a good washer and dryer set. I am especially impressed with the Ion Red Line— an imperfect sports car for sure, but redeemable at the right price.
And for the really daring contrarian, take a look at the crop of domestic minivans on their final death march. The Ford Freestar and Chevy Uplander may be hideous, but the discrepancy between msrp and what’s it gonna cost me is staggering.
The old adage says that a fool and his money are soon parted. If only it were that simple. A proud Camcord buyer easily pays $21k or more for a brand new model, replacing it every few years.
But the contrarian, with the clarity of an economist, pays $16k for a gently used Fusion or the like with a similar feature set. And then banks a $5,000 buffer to cover any (real or perceived) differences in reliability. Just who is the fool now?
Niky on May 17, 2007boredlawstudent: Wern’t the failure rates of the Ford auto trannies in the Millenia and 626 frightenly high? Your answer is here: Sid Vicious: In a total apples to apples comparison, the Mazda 626 was 40% less money than an Accord. Same condition, miles, options, etc. Now at 236K mostly trouble free miles, it’s tough to argue that the Honda has better durability than the Mazda in this one case. Just stay away from the crappy Ford supplied slush box……. As long as you don't go for an AT, a 626 is a pretty decent car. I've had one myself. jjacob9105: I look at the cost of ownership in terms of cents per mile. For the cheapest Fusion vs. the cheapest Accord, 2007 new vs. 2006 used, Edmunds had these figures for the first five years: Accord new, 53 cents, Accord used, 55 cents Fusion new, 56 cents, Fusion used, 49 cents I'm flabbergasted why more people don't look at it that way. Here where I live, people do tend to sell cars (mostly Hondas and Toyotas, due to their "great" resale value) at three years simply so that they don't lose so much money on the resale. Of course, babying a car and keeping the mileage low to protect the all-important resale value gives them a "cost-per-mile" that's outrageously high to my undervalued Mazda.
Brendan Moore on May 18, 2007
Good article, and we have come at the subject from a similar angle at Autosavant. Lots of bargains out there if you are somewhat savvy about both the cars and their values in the secondary markets. If you want see our take on it, go to Autosavant.net, and look on the right-side column. We update every month. Personally, all I buy is used cars for myself, and new cars for the significant other (she does not like getting her car fixed, ever). But, I don’t care about that, and the bargain is too good to ignore. With the shakeout in full-size trucks and full-size SUVs occurring, those already dropping prices will suffer further insult in the next couple of years, and conversely, used Chevrolet Aveos are starting to plateau in price a little bit at the auction, as opposed to dropping like a rock the first two years. Anyway… great article.
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