By on December 26, 2008

We used to call it 60-80. You could buy a two-year-old used car with 80 percent of it’s life left for 60 percent of the new car price. Then, as Detroit & Co. started to overproduce ad nauseam, the ratio went down to 50/80. Then 40/80. These days you can pretty much buy a decent two-year-old car (think discontinued Ford, Mercury & Buick models) for about 35 percent of it’s new car price without dickering too hard. So, is that the sweet spot in today’s market? Nope. At least not for the non-enthusiast. The biggest bang for your buck lingers a little further down the curve. Specifically the five to six-year-old commuter vehicle with about 75k miles that has become as popular as an old can of buckwheat. Think Ford Taurus, Buick Regal/Century/LeSabre, Mercury Sable and virtually anything with the name Oldsmobile on it. Sure these are the equivalent of leisure suits for the self-effacing car snob. But I’d be damned if they aren’t the best deals for those who, in Rhett Butler-speak, “Frankly, don’t give a damn.”

Manheim Auctions currently estimates the retail value of a 2002 Ford Taurus SE with 75k miles right at $3100. I would say it’s closer to $3500. But even so, your mom or music teacher would still have a vehicle that can go another 10 years and 120k… so long as it’s well maintained and conservatively driven. A ‘mom & pop’ car if you will. Depreciation works out to about $20 a month. Ironically, the same exact price I pay to have my garbage hauled.

Insurance for these cars is also dirt cheap, since the only way these types of cars will be ‘Gone in 30 seconds’ is if Mayor Bloomberg or Rick Wagoner become president in 2012. Maintenance and parts are also very reasonable; their makers cranked-out a billion engines and transmissions. Finally, your mom or music teacher should be able to invest the $5000 to $7000 saved in something that will deliver a reasonable return over ten years. Perhaps a pawn shop specifically for musicians, or dual citizenship in a country that doesn’t debt itself to death. I’m thinking Costa Rica.

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19 Comments on “Hammer Time: The Sweet Spot...”


  • avatar
    dwford

    These are great cars for dealers too. We can take them in trade dirt cheap, they usually don’t need much work, and we can make a great gross on them.

  • avatar
    anoldbikeguy

    I have been advising people to consider Olds models for this exact reason.

    Three years ago I bought a 2001 Olds Aurora 3.5, with every option but sunroof for $9K. It was from the original owner, a retired GM guy, had 41K miles and was always kept in his garage. The interior looked like no one had even sat in it.

    Now three years later is has 119k miles, averages 25.5 mpg long term and has needed tires and front brakes in addition to the normal maintenance stuff.

    A guy at work had a head gasket go on his Hyundai, so went out and bought a Kia Rio with 137K on it for $3,700 – it has been a nightmare for him, with one thing after another going wrong with it. I had suggested he look for a 4 cyl Alero, which would have been in the same price range with essestially the same fuel economy and in my opinion a way better car no matter how you look at it, but his wife(?) said he could only buy an Asian car because they get better fuel economy and are higher quality – he gets it now, but it was an expensive lesson.

  • avatar
    JT

    My music teacher autocrosses her Honda Fit. Really!

  • avatar

    Heck, a “normal” last gen BMW 3 series is at the 20k mark, for a car that will last at least 200k. Avoid the automatics (they go at 100k) and do routine maintenance. Kewl !

  • avatar
    jckirlan11

    Works for nice rides as well. Check out the value on 2008 Pontiac G8 GT. 40% off MSRP. What’s up with that. Getting near the sweet spot.
    2006-2007 Acura RLs. Getting near $20,000 at auction as well with under 30,000 miles on the clock. I am betting they will be going lower in the new year.
    Now if I could only get a full boat loaded 2009 LTZ Suburban for $30,000. I love that thing. True luxury.

  • avatar
    Deepsouth

    GE Capital lets a ton of these fly twice a month at the local auction. Ford Taurus is my favorite pick as they seem less prone to need major repair.I’ve noticed GM(V-6) products run the risk of needing intake gasket repairs with heavier miles. You can buy $6000.00 car and mover it quicker, with less investment than a new car, and make decent front end gross. We buy these vehicles often.

  • avatar
    63CorvairSpyder

    …Purchased my “sweet spot” in October ’07, a 2002 Buick Century with 38,000 miles from an elderly couple. Paid $5,000, car was like new. Great soft gushie Buick ride, quiet, very comfortable big seats, power everything, great stereo and 31MPG on a trip. I love it. Now has 52,000, all I’ve done is change oil and wash it so far.

    When I was coming out of my 2005 Merc Mountaineer V8 lease in ’07, I was specifically looking one-owner Taurus/Sable, Buick or Olds. They are great values in that 5-6 year range and generally are owned by people who maintain them rather than beat on them. They are pretty invisible to the police as well.

  • avatar
    no_slushbox

    Now that good financing rates require good credit again (just like every other time in US history except for the late 1990s / early 2000s) I am seeing very good prices on used cars that are still expensive enough that most people would have to finance them ($7-8K+).

    But even on the “cash” side of the market there are very good prices cars that most people don’t consider desirable, but that still have some good attributes (gear head arbitrage). Unfortunately I have not been able to convince my significant other how cool an early 2000s Chevy Astro van is.

  • avatar
    ihatetrees

    no_slushbox:
    Unfortunately I have not been able to convince my significant other how cool an early 2000s Chevy Astro van is.

    For the responsible contractor, there’s never been a better time to buy a used work vehicle. Except that 3 months from now it’ll be even more of a seller’s market.

  • avatar
    rottenbob

    > You could buy a two-year-old used car with 80 percent
    > of it’s life left for 60 percent of the new car price.

    How are you defining it’s “life”? 150,000 miles?

    I don’t know what market you’re shopping in, but here in Seattle used cars seem like a ripoff compared to brand new. I regularly see cars with only 50% of their life left with an asking price of about 80% of the original price.

    As for the example of a 2002 Ford Taurus SE with 75,000 miles at $3,100… I just took a quick look on Craig’s list and found one with 135,000 miles at $4,999 and another with 93,000 for $6,888. Those aren’t bargains in my book.

  • avatar
    Hippo

    What does it typically take to get a dealer license to be able to buy at these auctions?

    Ballpark, i figure it would vary from state to state.

    Looks like a hobby.

  • avatar
    toddst

    I picked up a super clean 2000 Park Avenue Ultra with 65000 miles 3 months ago for $4400. This is cheaper than what a same year Toyota Echo with more miles sell for here! It’s loaded (love the heated seats and rain sensing wipers), safe (dual and side air bags) and powerful (has GM’s trouble-free 3800 supercharged 6) and gets decent mileage. What more could I ask for? All I need now is the fedora and box of kleenex for the rear package tray!

  • avatar
    Andy D

    heh heh, 88 BMW 528e purchased in 07 for 500$. 300$ in parts invested, a yr and 10k miles ago. My BIL and I have been doing this for our entire driving careers. Buying clunkers and using them up.

  • avatar
    mhines

    “But I’d be damned if they aren’t the best deals for those who, in Rhett Butler-speak, ‘Frankly, don’t give a damn.\'”
    That would be me. Thanks for the heads up, I’ll be looking forward to bargain hunting this year, more than talking to my banker about that loan.

  • avatar
    V6

    hehe… if i moved to America i’d be first in line for a Buick/Oldsmobile. i love the big old school american luxury cars.

    the resale on larger cars here is amazingly crap. a local Hyundai dealer is selling 2005 Hyundai Getz and 2005 Sonatas for the same price. the Sonata when new cost 60-70% more. even 2007 Sonatas are half their new list price.

    other cheapies are 2005 Mitsubishi Diamantes and Nissan Maximas which you ca pick up for 25-30% their new list price

  • avatar
    Robert Schwartz

    From Popular Mechanics: “Top 10 Used Exotic Cars: Get that Aston Martin for the Price of a Honda”:

    2001 Audi S8, 4.2-liter V8, 360 hp, MSRP $78,975, in Ohio. Pearl with gray leather, 68,000 miles. Nav system, xenon headlights, Bose sound system. $17,999.

    2002 BMW 745i, 4.4-liter V8, 333 hp, MSRP: $67,850, in California. Gray with gray leather. 65,000 miles.
    $17,300.

    1990 Bentley Turbo R, Turbocharged 6.8-liter V8, 300 hp, MSRP: $167,400, in Connecticut. Black with saddle leather. 77,500 miles. Originally owned by 1989 World Series MVP Dave Stewart.
    $24,988.

  • avatar
    RogerB34

    Early 2008 we purchased a retro 1967 Ford Galaxie now a 2005 Sable LSP with 25k miles out the door for $11.5k. Good senior hauler.

  • avatar
    KalapanaBlack

    jckirlan11 :
    December 26th, 2008 at 10:03 am

    Works for nice rides as well. Check out the value on 2008 Pontiac G8 GT. 40% off MSRP. What’s up with that. Getting near the sweet spot.
    2006-2007 Acura RLs. Getting near $20,000 at auction as well with under 30,000 miles on the clock. I am betting they will be going lower in the new year.
    Now if I could only get a full boat loaded 2009 LTZ Suburban for $30,000. I love that thing. True luxury.

    There’s a 2008 LTZ – gray, chrome 20s, navigation, according to the description – in the paper from a Chevrolet dealer (GM certified, no less) with “less than 10K” for $24,800.

    Nobody wants those things. They’re already dirt cheap.

    Also, new 2009 Impalas in LS trim are going for $18k new around here. They are for sale for exactly $100 more than a base Malibu LS four-cylinder by the same dealer in the same newspaper ad.

    One year old LTZs with 10k are $19k, and there’s a GM Certified 2008 SS with 5k on it for $22 grand.

  • avatar
    KalapanaBlack

    rottenbob :
    December 26th, 2008 at 12:19 pm

    > You could buy a two-year-old used car with 80 percent
    > of it’s life left for 60 percent of the new car price.

    How are you defining it’s “life”? 150,000 miles?

    I don’t know what market you’re shopping in, but here in Seattle used cars seem like a ripoff compared to brand new. I regularly see cars with only 50% of their life left with an asking price of about 80% of the original price.

    As for the example of a 2002 Ford Taurus SE with 75,000 miles at $3,100… I just took a quick look on Craig’s list and found one with 135,000 miles at $4,999 and another with 93,000 for $6,888. Those aren’t bargains in my book.

    You’ve gotta look, and be lucky. Most of the good deals are gone when I call.

    I spent 2 years shopping for a “new” used car (in college). Looked at a million Intrigues, Regals, Diamantes, Galants, Tauruses, and anything else I liked at below $5,000. 90% of used cars are misrepresented, whether it’s the dealer that tried to tell me the coolant leak on the ’00 Regal GS was normal, or the DC-area ’99 Diamante seller who said the nonworking fuel gauge, tachometer, and odometer and all-too-working (i.e. always lit) check engine, “TCL OFF,” and “SRS” lights were “just a cheap sensor.”

    Still, there are good deals, in many different places. I passed on an absolutely showroom ’02 Intrigue with 80,000 mi for $4900 (this was nearly two years ago) because it didn’t have a sunroof. It had the bulletproof 4T65e four-speed auto and the fantastic Northstar-derived 3.5L DOHC V6. Chrome wheels (a problem at this age, unfortunately), auto climate, Bose stereo, leather, heated seats. Everything worked perfectly, and there wasn’t a door ding or scratch on the silver body. It was literally pristine.

    I ended up getting a 2002 Diamante LS at a dealer auction. It had 117k mi (at 137k now, with nothing done other than brakes , tires, and oil changes), a burnt out fog light, and a few rock chips in the pearl white paint, but the interior was and is in great condition, and it’s absolutely loaded (Infinity stereo, 6-CD changer, heated leather, moonroof, auto climate, stability control). The cars are known for failed heater cores, requiring hours of labor (dash removal) and a bill upwards of $1500. This had just had it done less than 1000 mi before it hit the auction by the previous owner, presumably to boost his trade-in price on a new Mustang GT (as if). Price he paid for the repair: $1760 and change.

    I bid on the car, and it passed through without any other bidders. The Ford dealer selling it wanted more than my $3500 bid. It passed through again, and I bid the same. This time, they bit. Out the door, taxes and all, $3750 give or take. Book was between $6000 on the realistic end and $12,000 on the ridiculous, Edmunds.com end.

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