Grassroots Car Buying: Buying New better than Used?

Article in the Chicago Trib today is saying that Sandy is contributing more to an already tight used car market and the price for "good" used cars is expected to be up $750-1000 - and expect lots of flood cars to hit the market across the country.

Datsun1500 wrote: It is, A buddy in NY just bought 3 cars here in MD to replace ones he lost in the storm. We were discussing how he wanted to get it all done quickly because prices were about to go up....

I caught a news video shot in one of the harder hit NYC neighborhoods. The car in the background was a really nice looking MR-S, at least it probably was. The poor thing was in front of a house that had been flooded and torched by fires. The lower half of the car looked OK, the upper half and interior looked like a Wicked Witch of the West tribute.

My future BIL went shopping for F150 pickups, he was wanting a crew cab, short bed, 4wd, and XLT package at minimum. I went with him to several dealers where they told him he couldn't afford new(40k+) and proceeded to show him used 2-3MY old ones with 40-50k miles for $36-38k.....He decided that didn't make sense, researched a bit.....and ended up getting a NEW '12 F150 xlt, crew cab, short bed, 4x4, 3.5L ecoboost, and several other options for $33k out the door after rebates and discounts.......he also got 0% interest for 5 years financing as well.

Used prices are stupid right now, I recommend doing research and buying new versus overpriced used.

As for used cars "made up" price, I have had a hell of a time getting dealers to move on a 1-2 year old car price vs. a new car. Again, I think all new cars are somewhat loss leaders at this point, and they're protecting their profit.

Yeah, I agree, but tell that to the dealers....They always have ridiculous asking prices and they will never budge more than a couple hundred bucks.

Am i right in thinking that both of you are talking about the SAME dealers that want you to buy their new cars?

If a new car dealer wont lower their price on a used car below that of their new car, doesnt that seem suspiciously like a contrived antic to get you to buy one of their new cars and be happy about its price (and thus not push hard on it)? Seems that way to me. If they make the new car sale, they dont lose anything by pricing their used cars high, and if someone BUYS one of those used cars, it's a windfall!

I think the fact that the word 'dealer' keeps coming up in this thread is fundamental to the problem that's being described.. just my .02. If you found a 1 or 2 yr old car for sale by an individual at a 'new' price, im 99.5% certain you could pretty easily get that seller down several grand based on the irrefutability of sheer common sense, plus that seller not trying to funnel you into a better sale on one of his other products, and actually wanting to sell his damn car.

Vigo wrote:

As for used cars "made up" price, I have had a hell of a time getting dealers to move on a 1-2 year old car price vs. a new car. Again, I think all new cars are somewhat loss leaders at this point, and they're protecting their profit.

Yeah, I agree, but tell that to the dealers....They always have ridiculous asking prices and they will never budge more than a couple hundred bucks.

Am i right in thinking that both of you are talking about the SAME dealers that want you to buy their new cars? If a new car dealer wont lower their price on a used car below that of their new car, doesnt that seem suspiciously like a contrived antic to get you to buy one of their new cars and be happy about its price (and thus not push hard on it)? Seems that way to me. If they make the new car sale, they dont lose anything by pricing their used cars high, and if someone BUYS one of those used cars, it's a windfall! I think the fact that the word 'dealer' keeps coming up in this thread is fundamental to the problem that's being described.. just my .02. If you found a 1 or 2 yr old car for sale by an individual at a 'new' price, im 99.5% certain you could pretty easily get that seller down several grand based on the irrefutability of sheer common sense, plus that seller not trying to funnel you into a better sale on one of his other products, and actually wanting to sell his damn car.

Yes, it's all an elaborately contrived conspiracy! Man those dealers are good - they manage to fix prices across five states (my most recent car search)!

What you describe is at best unlikely and at worst a horrible business plan. The first dealer to deliberately price used vehicles artificially high would lose all those sales to neighboring dealers. Used cars are higher profit than new cars, especially over the past 5 years.

More likely is that the mainstream car companies are all desperately chasing increased volume on platforms they can sell across the world. Greater volume = lower cost but slimmer margins, which are passed on to the dealer. New cars have slimmer margins across the board (again, I'm writing about the higher-volume manufacturers - Honda/Toyota/Ford, etc.).

So there's no profit in new cars, but you have to sell them to have a viable franchise. So what do you do? You protect your true profit centers: used/reconditioned cars, service and financial products.

The level of distrust and paranoia about new car dealers is really entertaining. They're business people in business to make money. Shifting prices indicate a shifting market, not some sort of elaborate price-fixing conspiracy (or to be fair, I should say the former is far more probable than the latter). And yes, in my research private-party used cars carry a slightly lower premium as compared to a CPO/Certified used car, but not more than the value of said CPO/Certified warranty.

Again, we're in the $500-1,000 range on a ~$25k car. So a 2-4% price difference between private party used, dealer CPO and brand spankin' new. Much, much lower than the common-knowledge "30% depreciation for driving off the lot."

speedblind wrote:

Vigo wrote:

As for used cars "made up" price, I have had a hell of a time getting dealers to move on a 1-2 year old car price vs. a new car. Again, I think all new cars are somewhat loss leaders at this point, and they're protecting their profit.

Yeah, I agree, but tell that to the dealers....They always have ridiculous asking prices and they will never budge more than a couple hundred bucks.

Am i right in thinking that both of you are talking about the SAME dealers that want you to buy their new cars? If a new car dealer wont lower their price on a used car below that of their new car, doesnt that seem suspiciously like a contrived antic to get you to buy one of their new cars and be happy about its price (and thus not push hard on it)? Seems that way to me. If they make the new car sale, they dont lose anything by pricing their used cars high, and if someone BUYS one of those used cars, it's a windfall! I think the fact that the word 'dealer' keeps coming up in this thread is fundamental to the problem that's being described.. just my .02. If you found a 1 or 2 yr old car for sale by an individual at a 'new' price, im 99.5% certain you could pretty easily get that seller down several grand based on the irrefutability of sheer common sense, plus that seller not trying to funnel you into a better sale on one of his other products, and actually wanting to sell his damn car.

Yes, it's all an elaborately contrived conspiracy! Man those dealers are good - they manage to fix prices across five states (my most recent car search)! What you describe is at best unlikely and at worst a horrible business plan that would crumble at the first sign of competitive pressure. The first dealer to deliberately price used vehicles artificially high would lose all those sales to neighboring dealers. Used cars are higher profit than new cars, especially over the past 5 years. More likely is that the mainstream car companies are all desperately chasing increased volume on platforms they can sell across the world. Greater volume = lower cost but slimmer margins, which are passed on to the dealer. New cars have slimmer margins across the board (again, I'm writing about the higher-volume manufacturers - Honda/Toyota/Ford, etc.). So there's no profit in new cars, but you have to sell them to have a viable franchise. So what do you do? You protect your true profit centers: used/reconditioned cars, service and financial products. The level of distrust and paranoia about new car dealers is really entertaining. They're business people in business to make money. Shifting prices indicate a shifting market, not some sort of elaborate price-fixing conspiracy (or to be fair, I should say the former is far more probable than the latter). And yes, in my research private-party used cars carry a slightly lower premium as compared to a CPO/Certified used car, but not more than the value of said CPO/Certified warranty. Again, we're in the $500-1,000 range on a ~$25k car. So a 2-4% price difference between private party used, dealer CPO and brand spankin' new. Much, much lower than the common-knowledge "30% depreciation for driving off the lot."

My friend who works at a Nissan dealer has sold more than one used Versa that ended up being more out the door than a new one. The higher interest and people with less money who don't do their research and are trying to "make a deal" makes it very possible and likely. The same dealer got some poor bastard for nearly 40k for a used Mustang GT, because he wanted the car with "relatively low monthly payments". Sure the monthly payments are low because they are spread over 7 years, but he could have gotten a brand new GT and paid the same amount every month and have it paid off in 5 years. Its crazy. That interest rate makes a BIG difference!

Another good example, a brand new FRS/BRZ will cost you the same as a low mileage s2000 right now. Sure the s2000 was nearly a 50k car new, but I believe the FRS is an amazing value. I mean we are talking brand, spankin new. Warranty, the color you want, YOUR own car.

Bought a new car this morning - over $4K in incentives and discounts put my out the door price at more than $2,000 under sticker after all tax/tag/fees. Buying a used model of the same car locally with 15,000 miles on the dial would have saved me only about $2,000 at signing and the car wouldn't have come with nearly as comprehensive a warranty.

That was my experience. I prefer used, but the lady-friend was nearly been killed in a car wreck so we had to have something safer than an old tin box. Looked at lightly used that all costs the same or more than their brand new counterpart, went new.

Current used car prices are high because supply is down. When the economy crashed people stopped buying new cars, so the 3-4 year old cars that would normally be getting traded in right now don't exist.

We needed a family hauler - I could pay 10-24k for used vehicles at 5-9%, or buy a new Grand Caravan for 17k. It was cheaper than the (more heavily optioned) used vans on the lot.

Dave Ramsey has some great ideas, but some of his math needs checking, and some of his data is well out of date (interest rates, for example). I have a female friend who follows his advice religiously, she buys cheap crappy cars that cost her an arm and a leg to keep on the road..... "but at least she doesn't have monthly payments". (She's not a DIYer, which of course has significant impact on the math.) Me? I really like that I pay $200/month for my wife to drive a safe vehicle that has a bumper to bumper warrantee. It's worth that to me, and if you crunch the numbers, it's not that much more money than an older vehicle. Even IF you do the work yourself.

There are many instances where buying new and KEEPING the car is nearly the same cost as buying used.

Current used car prices are high because supply is down. When the economy crashed people stopped buying new cars, so the 3-4 year old cars that would normally be getting traded in right now don't exist.

That, and people actually giving in to it and buying them at new prices. So it's a supply AND demand problem. Namely that the demand is largely made up of people ignorant of cars and the car market.

What you describe is at best unlikely and at worst a horrible business plan.

I could say the same thing about shopping new and used cars at a dealer that prices them the same..

I really think your 'no profit in new cars' assertion is a belief that helps the dealer more than it helps you. If only everyone could be convinced that there was no profit in new cars, dealers would have such an easier time selling them at full sticker..

Shifting prices indicate a shifting market, not some sort of elaborate price-fixing conspiracy.

Or at least, not any more of one than the norm. It's not paranoia, it's just business. How come every dealer knows what they pay for XYZ and you would have to try a decent bit to find out? Why would thousands of people across the country go the effort of keeping those secrets? That's just how business is done, and it involves secrecy and deception.

As far as the 30% thing, thats a high number, but the general concept is real enough. I guarantee if you bought a car, drove it 5 or 7k miles over the course of a few months, and tried to sell it back, you'd get an offer corresponding pretty closely to that concept.

Really, it all comes down to hard-driving buyers and sellers. They generally dont deal with each other, and that's why all these things coexist in the car market. Hard driving dealers sell cars with 7k miles to soft buyers at the price of new after buying them at a 30% discount from soft sellers. Soft buyers buy used cars at new prices from hard sellers.

Hard-driving buyers find soft sellers and take their lunch money. It's a hell of a lot harder, and it seems that people shopping new sure get in a hurry to make a purchase and really dont put the time and work in to playing everyone else off each other and trying to find out their secret numbers, so they end up buying things at full price.

I never realized it was a conspiracy that dealers were in business to make money.

Of course they are going to charge what the market will bear, and pay as little as possible for used vehicles. An educated consumer should still be able to get a good deal.

New vs used is a matter of priority and how much you value your time. In my case the time spent with the kids is worth much more than saving the cost of the monthly payment especially to have a reliable vehicle under warranty. Even in a $ and cents perspective, my monthly payment is low enough that if I was to do more than 3-4 hours of repairs per month (not unreasonable at 32k miles / year) a used car would be more expensive based on the value of my time.

mguar wrote: In reply to speedblind: I've been telling people that for decades.. Buy used drive the wheels off it and sell it to the junk man.. My current vehicle is a 1997 4x4 1/2T pick up with 406,000 miles on it I bought new. Other than routine stuff it's cost me $1000 to get here. Tires last 85,000 miles I get 19 MPG most of the time. and it has hauled home as much as 4000 pounds at a time (I used it when building my home and it carried most of the 55,000 bd.ft. of wood and nearly everything required to build this place.. Not only that but it hauled my enclosed race car trailer all over the country. It's almost so well trained that I can hook the trailer up and head it to California or To the Bahama's and it knows the way without any guidance.. It's so comfortable that I can make San Diego from Minneapolis stopping only once for 4-6 hours for some shuteye at a road side rest.

why has this been collapsed ? I've looked at his other posts and they seem legitimate ... as does this and the one that follows ...

canoe for car guys?

and i cant find ANY of mguars posts. he was a very welcome addition to the tech stuff in the board. wonder what happened?

He got banned for being pretty douchey. Turned out to be more welcome as an addition to Margie's patio than anything.

Dusterbd13 wrote: canoe for car guys?

Thanks. deleted.

Dusterbd13 wrote: and i cant find ANY of mguars posts.

some of his posts are still around
http://grassrootsmotorsports.com/forum/off-topic-discussion/a-what-is-itbarn-find/56947/page1/ http://grassrootsmotorsports.com/forum/mguar/comments/

btw I found out that if you go through Costco your price on a new car is about 300 bucks less than dealer invoice

JoeyM wrote:

Dusterbd13 wrote: canoe for car guys?

Thanks. deleted.

Dusterbd13 wrote: and i cant find ANY of mguars posts.

some of his posts are still around http://grassrootsmotorsports.com/forum/off-topic-discussion/a-what-is-itbarn-find/56947/page1/ http://grassrootsmotorsports.com/forum/mguar/comments/

yeah .. I found his posts, while not as insightful as some on here (not mine LOL ) but certainly no worse than LOTS of others .... didn't seem to be trying to spam/sell anything, just expressed his opinion without calling anyone names ....or acting in a excessively douchey manner ..... oh well .. it is what it is

I was looking at trucks and new cars only 6 months ago and I ran into the same problem as the OP. Prices are ridiculous on new AND used cars. It doesn't help that insurance is ridiculous along with parts prices.

You buy a $50k new diesel truck (dont go wild with options...god thats sad that the new Ford high end diesel is at 73k), then pay $1500-2 grand more a year for the insurance, personal property taxes are $600-800 more, and then parts prices on new fangled trucks have risen..

Just in the insurance/property taxes, you could put $2000-2500 a year away for maintenance, and very rarely would a vehicle be even close that in maintenance.

I did a quick cost analysis, and saving mself $30k in up front cost, another 2-3k in insurance/taxes was worth picking up a $20k truck only 5 years old, and not even concern myself if I spend $1-1.5K in maintenance (which is high for a DIYer like myself).

I can see why my generation/newer generations are moving away from vehicles. Its not just the cost of the car that is ridiculous, it is all the insurance/property taxes/place to garage it/maintenance that sucks up additional cost.

dculberson wrote: I always wonder who it is that pays the higher price for the more used up car. Must be bad credit customers or something.

I think it's the same folk that pay more for a used widget on ebay than if they bought it new at the store.

Currently watching a used Harley security system that's already $20 over the OEM Harley dealer price, and has 4 more days to go.

Went through the same thing shopping for a golf tdi. New was only a couple grand more and the interest rate was 3% vs. 6%.