Here's Why Buying a Used Car is So Expensive in the United States

[MarkC]

Agreed.

I think Scotty is probably right about the used care "pricing guides" being skewed to favor the sellers now that the companies producing them are owened by sellers.

Also, cars are more useful for longer. 25 years ago, a 100,000 mile car was pretty well used up. Now, a 100,000 mile car probably has another 100,000 miles in it. For some cars, 150,000-200,000. Don't we think that this will affect used car prices?

Thanks to all of you who buy new vehicles and trade often. My bank account account appreciates you taking the biggest depreciation hit. I am perfectly content buying vehicles with 20,000 to 30,000 miles and driving them for another 100,00 to 150,000 miles.

This is so true, and I think it is the way to do business. This is how my wife and I got our last three "new to us" cars. The teenager is still driving our 2003 Tahoe with 188,000 miles on it.

And, as for Cash for Clunkers, I agree that it skewed the market, but that was so long ago. Also, the most frequently turned in car was the Ford Explorer. These were the years that the Explorer had the hard-to-recreate instability problem when equipped with certain tires. Given all the bad press, I would think they wouldn't have been particularly attractive used cars.

However, although I'm not an economist, I would think that Cash for Clunkers hurt those of lesser means, by removing all those what would have been more reasonably priced vehicles from the used car market at the time. Obama, man of the people (so long as your people include the UAW)!

 

[UTL]

A truck that I bought in 2005 was 32k, the one I bought last week in basically the same configuration was almost 60k. That may have something to do with it too....

 

[Hohn]

The car market is in a major bubble right now.

Keep your cash handy, you'll be able so score some amazing deals on nearly new repos in a year or two.

 

[HoughMade]

The car market is in a major bubble right now.

Keep your cash handy, you'll be able so score some amazing deals on nearly new repos in a year or two.

I will buy off lease or former rentals. I am not a fan of repos. As my old boss at the dealership used to say: "if they're not making the payment, do you think they're changing the oil"?

 

[rvb]

The car market is in a major bubble right now.

yea, and part of that is thanks to low gas prices.
I bought my truck when gas was $4+. I think I got $7k in factory rebates. For the SAME PRICE I could have gotten a 3 yr old truck w/ 30-60k miles on it....

-rvb

 

[proud american]

Buying a used Toyota or Honda's is like getting new. I have put almost 300,000 miles on 2 Toyota's and still sold them for a great price! Neither burned oil at point of sales.

 

[Hohn]

I will buy off lease or former rentals. I am not a fan of repos. As my old boss at the dealership used to say: "if they're not making the payment, do you think they're changing the oil"?

Yeah, I shouldn't have said repos. The broader point is just a very soft market seems inevitable.

 

[Ingomike]

As with many Ingo threads, the issue is likely affected by most of the points expressed here.

MM

 

[cce1302]

In 2005, I bought a 2002 model with 40,000 miles on it for 40% of what it had sold for new.

I've been watching used car prices increase ever since then. I'd love to see a 2016 with 40,000 miles on it listed for 40% of what it sold new.

In my experience, 2016 cars with 40,000 miles are listed for 70-75% of what they sold for new.

 

[Hohn]

There’s a mom/pop dealer near with a decked out Escalade and 42k asking in the window. It can’t be that old, it looks just like the current model going for 90k new.

 

[mmpsteve]

In 2005, I bought a 2002 model with 40,000 miles on it for 40% of what it had sold for new.

I've been watching used car prices increase ever since then. I'd love to see a 2016 with 40,000 miles on it listed for 40% of what it sold new.

In my experience, 2016 cars with 40,000 miles are listed for 70-75% of what they sold for new.

Just traded in a 2013 Honda Accord with 60k miles. They gave us $11k for it, about half it's original cost. They'll mark that up to 14k, maybe sell it for 13.5. So, yea, I'd say the used car market is pretty healthy. Of course, the buyer of that car is still getting a pretty good deal; a beautiful, well maintained Honda that should last another 150k miles.

From our side of the equation, we applied that 11k to a brand new Subaru, paid cash for the balance, and have a 4WD suv that should last us 10 years or better, and that the wife love's. No payments, and the wife loves, doesn't get much better than that! We don't do the trade every couple years thing, so the new car depreciation hit is not really an issue. And we got a great deal on the Subaru.

.

 

[BugI02]

LOLWUT?


"software" doesn't age, it doesn't wear out, it doesn't rust, it doesn't need lubricant...


All this software and computer control is part of the reason cars last longer. I can't begin to imagine how complicated a carburetor and distributor cap would need to be to match a modern ECU.

What about the maps in a ten year old nav system that the manufacturer no longer supports with updates? What about bluetooth connectivity or how far USB downward connectivity goes? There is absolutely some software in vehicles that doesn't age well. What about functionality that can only be accessed electronically, when the systems become old and worn? What happens when the touch screen in your used mazda one day fails to rise from its stowed position within the dashboard? The software can even still be quite functional but useless if you don't have a working interface. I can't help but remember NASA buying spare chips for the space shuttle out of old gaming systems and medical devices on ebay because technology had so rapidly outpaced that year's model

 

[ATOMonkey]

Used car prices are driven by new car prices. If you want to complain about why used cars have gotten so expensive, it's because people are paying absurd amounts for new vehicles. $90k for a Yukon. $75k for a Ram HD. It's mostly the truck/SUV thing that's gotten stupid. By comparison, a new Accord at $30k looks positively like a steal.

Absolutely! That's why we went with the van. Fuel economy is the same or better, interior room is better, and all for half or 2/3 of a new SUV. It's insane...

The number of times a year that I actually need a truck, I can have things delivered or rent a truck. Buying a sedan seems like a non brainer.

 

[ATOMonkey]

What about the maps in a ten year old nav system that the manufacturer no longer supports with updates? What about bluetooth connectivity or how far USB downward connectivity goes? There is absolutely some software in vehicles that doesn't age well. What about functionality that can only be accessed electronically, when the systems become old and worn? What happens when the touch screen in your used mazda one day fails to rise from its stowed position within the dashboard? The software can even still be quite functional but useless if you don't have a working interface. I can't help but remember NASA buying spare chips for the space shuttle out of old gaming systems and medical devices on ebay because technology had so rapidly outpaced that year's model

I see where you're going with this and agree. I can definitely do without all of the gadgets. Sat Nav, blue tooth, etc. can all be done on my cell phone. Why should I pay a ridiculous amount of money to have the same thing work less effectively, and I can only use it in a car?

In my perfect world, I would be able to opt out of all the luxo electronics on a car. All I want my car to do is drive, with as little input from the car into the driving experience as possible.

I like fuel injection, AM/FM radio, and anti-lock brakes. Aside from that, I'm really not interested.

 

[Tactically Fat]

OOh! I like car threads.

I currently drive a 2006 Nissan Altima SE V6. My now-wife bought the car for herself brand new in Dec 2005. She got HOSED on the price ($25k) - but it's lasted a heck of a long time and has been generally trouble-free. Tickling 183k miles on it this week. Just put $2k worth of work into a $1k car. Why? Because $2k is cheaper than $20k for a newer Camry. Funny... $20k in 2019 will get us a MUCH better car than $25k did in 2005/6. Technology and tech trickle-down is amazing.

My wife drives a 2009 Kia Sedona mini-van. We bought it in 2011 (I think?) with 14-20k miles on it (don't remember). That van is now technically 10 years old and has almost 147k miles on it. It has been absolutely rock solid - only needing consumable parts. I think I may put some preemptive work into it by summer time, however. We managed to get a pretty good deal on it when we purchased it; I can almost guarantee I won't be able to duplicate the deal when it comes time to replace it. And while we'd LOVE to have a nice SUV - they're just too much $. Minivans are cheaper, have way more interior space for stuff AND passengers, and the kids can't ding doors.

 

[Mark-DuCo]

I will buy off lease or former rentals. I am not a fan of repos. As my old boss at the dealership used to say: "if they're not making the payment, do you think they're changing the oil"?

Also once some people have accepted the fact that their car is probably going to be repod, they will trash them. My uncle found that out the hard way. He bought a repo that seemed like a great deal. Drove great when he test drove it, but once he got it home and took some long trips the engine would cut out. Came to find out that once the previous owner knew it was going to be repod they stuffed leaves, dirt, and all kinds of crap in the gas tank.

 

[Vigilant]

Buy new and run it till it dies (Ford trucks). I've had good luck with this concept, and never paid for extended warranties. May bite me in the ass someday, but by then, I'll have saved enough to pay for any repair.

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But, but, but, you’ll lose Soooo much money from depreciation buying new.....

 

[cce1302]

Just traded in a 2013 Honda Accord with 60k miles. They gave us $11k for it, about half it's original cost. They'll mark that up to 14k, maybe sell it for 13.5. So, yea, I'd say the used car market is pretty healthy. Of course, the buyer of that car is still getting a pretty good deal; a beautiful, well maintained Honda that should last another 150k miles.

From our side of the equation, we applied that 11k to a brand new Subaru, paid cash for the balance, and have a 4WD suv that should last us 10 years or better, and that the wife love's. No payments, and the wife loves, doesn't get much better than that! We don't do the trade every couple years thing, so the new car depreciation hit is not really an issue. And we got a great deal on the Subaru.

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Yeah, that illustrates what I'm saying as well. A 6 year old car selling for more than 50% of the original, when you used to be able to find 3 year old cars for 40%.

The depreciation thing was more pronounced back then. The original buyer of my car paid 26,000 and drove it for 3 years, putting about 40,000 miles on it. I don't know what he got for the trade, but it was less than $10,000 because that's what I paid. Let's say he got exactly 10,000. So he paid 16,000 to drive a car 40,000 miles for 3 years. I paid 10,000 to drive it for the next 10 years (and got $200 on the trade).

Even if the original buyer had kept it the entire 13 years, he would have been paying $2,000 a year to drive the car that I paid $1000 a year.



in 2014 when I bought my XTerra, one of the dealers was pushing me to buy a 2012 for about $28,000. Or they could have gotten me in a 2014 for $32,000. If those were the only two choices, then the brand new 2014 would have been a pretty reasonable choice.


Both of those were more than I wanted to spend so I went to a different dealer and got a 2011 for $18,000.

 

[JettaKnight]

What about the maps in a ten year old nav system that the manufacturer no longer supports with updates? What about bluetooth connectivity or how far USB downward connectivity goes? There is absolutely some software in vehicles that doesn't age well. What about functionality that can only be accessed electronically, when the systems become old and worn? What happens when the touch screen in your used mazda one day fails to rise from its stowed position within the dashboard? The software can even still be quite functional but useless if you don't have a working interface.

All things that don't affect the car's ability to travel 300,000, ergo, doesn't factor into the post I was addressing. Plus, you've conflated software with the UI hardware.


The software doesn't "get old", the world around it changes. ...yeah, semantics... Nevertheless, it's fine distinction and means that your lifecycle planning needs to adapt. Instead of having a supply chain of replacement parts, you need to retain a dept. that can generate software patches as necessary. Typically, this is going to be with any of those systems that interface with the outside world, e.g. mapping, USB, etc.

Interestingly, I've done a lot of work to allow user software upgrades for "infotainment" devices. No updates were ever released. There were a whole lot of factors, e.g. why spend resources on that when we make something new? It works "good enough", How do we get new firmware to all the users? etc., etc.


Maps are different because that's a revenue stream.

ECU's are different because they don't (and shouldn't!) interface with the outside world, so to speak. Now the problem is when the ECU computer is too tightly couple with all that other crap... car hacking is a big deal.

I can't help but remember NASA buying spare chips for the space shuttle out of old gaming systems and medical devices on ebay because technology had so rapidly outpaced that year's model

That seems really far fetched. I would assume that every chip in the shuttle would have been rad-hardened space rated. But, maybe they used those for ground simulations. We tend to think of the space shuttle as super advanced, but it's nav computer was pretty common - the same as the computers in the B-1B and B-52. Space rated microprocessors are typically far behind the cutting edge and also very expensive. Space is a cold, harsh and unforgiving place.

But, as we both know, that's a hardware issue, not software.

EDIT: Bug, I found an article about NASA's eBay trolling: https://www.nytimes.com/2002/05/12/us/for-parts-nasa-boldly-goes-on-ebay.html

Troves of old parts that NASA uncovers and buys, officials said, are used not in the shuttles themselves but in flotillas of servicing and support gear.

Makes sense. But, like I said, it's not the software, it's the hardware. It's analogous to trolling junk yards looking for the ashtray for a '72 Dodge Dart.

 

[bwframe]

This has turned into quite the informative thread. Interesting perspectives.