Some New Cars Now Cheaper Than Used Cars
Edmunds.com Member, Administrator, Moderator Posts: 10,315
edited December 2014 in General
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Fleet sales were the primary means to move this inventory, but were undesirable, as the fleet cars all ended up on the used car market in short order, thus competing directly against the new cars the Big Three were simultaneously trying to sell at retail.
The auto bailout allowed the Big Three to shred their UAW contracts, including the furlough provision, which also allowed them to slash their rental fleet sales operations and concentrate production on meeting retail demand. Rental agencies now must buy cars on terms much closer to retail sales; they are in turn induced to turn over their fleets at a lower rate. They need buy fewer cars to maintain a given fleet size, which means fewer late model used cars on the market. Supply and demand means those cars now cost more, and are less competitive against the Big Three's new cars.
The effect ripples even to import brands (Honda, Toyota, etc.) who never engaged in large-scale fleet sales, as those models compete against models that were sold to fleets.
It's always amusing to look at the newspaper and compare used fleet sale prices from car rental companies to new car prices from dealers, especially in July and August just before the model year change. Would anyone buy a 2012 Toyota, that's been a rental car, for $500 less than a brand new 2013 that has one year more of warranty and hasn't been driven by 100 different people during its rental period? Apparently yes!
As another commenter pointed out, the new less expensive than used is only true for used cars that are only one or two years old. After that, there's sufficient depreciation that the used car is less expensive, though still not a good deal if you do the math of the expected service life versus the cost per year.
The 0% financing was also a good deal even though she had to give up another incentive to get it. $20,000 put into a 2% five year CD, was a better way to go than paying cash and taking the incentive.
Finally settled on a new Ford Focus SE 2014. After some haggling I go it a brand new car with a 3 year warranty included for under 15k, out the door it was closer to 17K, but I had a $2000 trade in.
I used to follow the used car is a better deal philosophy, but it seems that if you are willing to go with a lower priced model, they can be quite a deal.
I also must add that I was surprised that the "standard" options on todays basic cars were as good or better then the options on my fully loaded 2002. Like Bluetooth and digital displays. Not to mention an array of upgraded safety features.
If buying a luxury or high end car---Yes used is always better. But for basic good quality standard cars you cannot beat some of the new prices as well as the piece of mind that goes with it.