Economic Downturn Means Upswing In Used Car Sales
We reported earlier that the smart money is getting out of OEMs and into parts and used sales. Business Week confirms that while new car sales are tanking, used car sales are on the rise. A Wachovia survey of 40 vehicle retailers shows an increase in used car sales; 28 percent of dealerships indicated that their used car sales were above expectations. Dealers are also reporting greater inventory pressure for used cars, along with greater than expected demand for pre-owned vehicles. Online research companies are also showing significant increases in searches for information about used cars. "Although there was some seasonality, we believe many dealers have lowered their expectations and new car intenders maybe switching to used cars," says Wachovia's Richard M. Kwas in a letter which accompanied the report. "In general, dealers conveyed that prospects are more interested in used vehicles over new." Good news for some, bad news for others.
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My advice if you're in the market for a used car is to still avoid dealerships. A used car salesman is just as likely to attempt to bend you over as is a new car salesman. My last 2 purchases have been from elderly folks who had the cars serviced every 3000 miles whether they needed it or not. Private parties are the way to go!!
Buying a new car is truly a losing proposition. Since strugglig to clean up my debt, one of the big things I've decided never to do again is to purchase a new car and finance it. Given the depreciation and interest you pay in financing, I can't see it anymore. I did (and won't again) finance our 2003 Jeep Liberty when we bought it in 2006, but the only saving grace there is we bought it for nearly half of the original sticker, so the payment isn't "too" bad. Still, the car is worth even less today and being only two years into the note, we owe more than it's worth. Now that my son is about to inherit my trusty 1997 Toyota Tercel, I'm starting to look at a second (actually, third) car. While I'm severely tempted to buy a five year old Wrangler, that would necessitate financing, and I just can't stomach stroking another check to yet another financial institution (thanks, Dave Ramsey!). So, I'll more than likely look at buying a $3000 or so commuter come August. Good thing about cars like that...if maintained properly, you can almost resell a year or two later for close to what the purchase was for (witness again my Tercel...bought for $2500 almost three years ago, and could probably sell for close to that today). In the spectrum of auto purchases, my take is to buy used for cash.
Raskolnikov, I have to disagree: My advice if you’re in the market for a used car is to still avoid dealerships. A used car salesman is just as likely to attempt to bend you over as is a new car salesman. We just bought a low mile used from CarMax for our daughter. They don't pressure sale, put everything on the window, and have a great warranty to back up their cars. I have finally convinced my wife that this is the way to buy instead of throwing it away on a new vehicle. We are in the process of getting her a 2006 Mini-Cooper, loaded with low miles, from CarMax for a great price. Like someone said earlier...you can't get this good of a car, new, for the price. I will never buy new again!
threeer, You are absolutely right. And because of the loan requirements, buying used can be an even worse deal than new when financing. Combine that with the fact that the used salesmen are usually the better negotiators and you can be upside down in a month. People really need to get over their fear of buying a beater. It takes work to get ahead. Do your homework whenever makinig a major purchase. Also, do lots of homework and networking to find a mechnanic and/or learn to fix it yourself. Try the community college or leisure learning. Also, private party is plagued by cheats as well, caveat emptor. Menno, Don't worry, someone will always buy new cars. It will be a long time before our population figures out the cheapest time to own is AFTER 80k.