Some New Cars Now Cheaper Than Used Cars

Edmunds.com

Read the full story here

debtisbad

The idea that paying less usury (interest on non-productive money) is "cheaper" than paying more interest on non-productive money, is a pretty depressing way of putting a "positive spin" on our economic woes.

ellamiller

I love reading your posts. Keep up the good work! You recognize, many persons are searching around for this info, you can aid them greatly.

cliknclak2

A one year old certified pre-owned car does not represent what most people buy when they buy a used car. Such a car is very near new and therefore offers little if any savings especially when financing is taken into account as you have done. Most people who buy used cars are buying them several years older with much greater depreciation in effect, often paying cash, both of which makes them much cheaper than new. What a misleading article, probably written buy somebody with close ties to a new car dealer or manufacturer.

jonboy470

Prior to the "carpocalypse" the Big Three had UAW contracts that required them to continue paying salary to furloughed workers. Cutting production, say, in half had minimal effect, other than to spread said labor costs across only half as many cars sold. Perversely, it was "cheaper" to build cars no one wanted than it was to not build them at all.

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.

harrydevlin

One error in the article is to imply that TMV represents the price that people pay for a vehicle. Between factory to buyer incentives, factory to dealer incentives that the dealers pass on to buyers, and just plain bargaining, TMV represents more of a maximum price, than an average or low price, for a new vehicle.

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.

harrydevlin

My sister-in-law recently purchased a new Camry to replace her 21 year old Camry. The one to two year old Camrys were more expensive than the new ones due to all the incentives ($500 loyalty discount) and discounting.

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.

bestviolin

I just bought my first new car ever -- for under $15,000 . After 12 years of the same used car, the maintenance starting being the equivalent of a car payment every month. I started looking for something newer but used. When I did a search on auto trader for cars under 15K with under 15K miles I was surprised to find out the most of them were "new" to get something used, Id have to go with something 20,000 miles +. After several years of expensive repairs (AC, Transmission, tires, breaks, tune-up, belts, batteries) I didn't want to see a mechanic anytime soon.

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.

cwo4gunnerg

I have come very close numerous times to replacing my old 92 Nissan pickup with 205,000 miles with a brand new Frontier $20-25K. But every time I run the numbers I'm blown away at how much money my old 92 continues to saved me even with the replacement of the starter, alternator, radiator, and of course brakes. If you can believe this, when all cost are considered and compared, in the past 12 years alone my 92 Nissan pickup has saved me almost $50,000 over investing in the average of purchasing 1 new truck every 6 years. Unless you are really rich, selling and buying used from and to private owners is the only smart way to go with cash in hand and patience to find the optimal deal.

stever

If you bought a new car instead of used because low rates and/or longer-terms loans kept the monthly payments more affordable, please email PR@edmunds.com by 9/11/15 to connect with a reporter.