Drive Time
Used-Car Sweet Spots
The prices of used cars now reflect what they are actually worth.
By Jessica L. Anderson, Associate Editor, Kiplinger's Personal Finance
January 2010
For the first time in a long time, used-car values aren’t being buffeted by skyrocketing gas prices, economic fallout or the side effects of a government stimulus plan, such as “cash for clunkers." Auction prices (for dealers) and retail prices (for consumers) are stabilizing, and cars are actually being sold for what they’re worth. “There are no smokin’ deals out there right now,” says James Bell, executive market analyst for Kelley Blue Book, “but the prices are fair.” This should be true for the next few months, as the new-car market -- the breeding ground for used-car trade-ins -- recovers.
Good deals. Worried owners of vehicles from struggling brands who would rather dump their vehicles than deal with the unknown are putting good cars on dealer lots. Fiat’s takeover of Chrysler operations has hurt the resale values of Chrysler and Dodge cars, says Bell. (Jeep is insulated a bit by a stronger brand and loyal customers.) Saturn and Pontiac, fresh off the GM chopping block, are bruised as well. We found plenty of 2008 Saturn Auras priced below the Edmunds.com dealer retail value, which is based on average transaction prices. For example, on AutoTrader.com, we found an Aura XR with 24,650 miles for $14,777 ($3,212 under Edmunds’s price).
Fair deals. With the cost of gas less of a concern these days, prices on fuel-efficient compact cars have retreated. And with more hybrid models than ever on the market -- including some popular 2010 models, such as the next-generation Toyota Prius and the new Honda Insight and Lexus HS250h -- a lot of owners are trading in to trade up. So you have more choices among used hybrids, which are selling for less than they were a year ago. Plus, lower prices on the 2010 models are helping to push used prices down; the new Prius starts $1,000 lower than last year’s model, and Honda’s Insight stickers for another $1,200 below that.
Used hybrids don’t come cheap. But you’re more likely to find a reasonable deal than you would have a year ago, when used models commanded new-car prices. The selection was sparse for a 2007 Honda Civic hybrid, but we found a certified one with 48,500 miles for $16,250 ($1,150 under Edmunds’s price). Jesse Toprak, of TrueCar, an automotive-data company, warns that hybrids usually stay on the lot less than two weeks, compared with 60 days for the typical used car.
Prices for large SUVs and pickup trucks have rebounded since plummeting in the face of spiking gasoline costs in 2008, but they should edge lower again as more vehicles come back onto the market. A search for a 2007 Ford Explorer yielded plenty of results priced near the Edmunds dealer retail value. For example, a certified XLT with 26,700 miles on the odometer listed for $16,893 ($576 under Edmunds’s price).
No deal. Prices on family sedans have been stable, but they don’t fluctuate much anyway. “There are always plenty of them and plenty of people who want them,” says Mark Scott, of AutoTrader.com. Also in high demand: late-model, low-mileage certified pre-owned vehicles, which have passed the manufacturer’s rigorous inspection and come with an extended warranty. With fewer vehicles coming off-lease, expect supply to be tight and prices to rise.
The availability and price of used cars depend on the season. For example, four-wheel-drive vehicles are popular in the snow states starting in December, so you’re better off shopping when the spring thaw hits. Or you may be able to find a better deal by searching long distance. Convertibles are few and far between in the northern states, but you’re likely to find plenty of ragtops in the Sunbelt year-round. If the price of a plane ticket to pick up your new ride or the cost to transport it ($800 to $1,200) won’t erase your savings, you may score big.
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Reader Comments (8)
Posted by: bob at 12/05/2009 11:20:12 AM
.....how old can I go back on Saturns and still get a good deal for the name problem? ( please send me an answer - even if it doesn't get published.)thanks.
Posted by: Larry at 01/25/2010 11:39:25 AM
Hi Ms. Anderson: I am looking for a used cars and intersted in a BMW 325i &328i from 2004-2008, but I heard that they have a lot of problems compared with Lexus IS 250 & 350. Please gve me your opinion. Thanks.
Posted by: Mr sales at 01/28/2010 02:25:55 PM
Why do you peeps bash the car guys with all of your Oh They Can't do That now! You do know we have peeps that depend on us to pay the bills and help them tru life. I mean, when we walk into the food store, they don't give us our fodd for free because wer'e car dealers! Keep that in mind next time you write a story (about) car sales...!
Posted by: Jessica Anderson at 01/28/2010 02:45:33 PM
Hi Larry, Jessica Anderson here, author of this column. In response to your reader comment, BMW 3-series gets average to better than average rates for reliability from Consumer Reports ('05,'07 and '08 were the best years--'06 was a redesign and there always seem to be kinks to work out the first year). The Lexus IS got better than average to much better than average rates in that year span (excepting '05 when there wasn't enough data to rate the vehicle). I think hands down the Beemer is more fun to drive, but your money might be better spent on the Lexus. Good luck with your decision!
Posted by: matmx881 at 01/28/2010 08:48:56 PM
I sold motorcycles and other stuff when I was younger, and then started selling cars. I sold new Nissans, Volvos and Mercedes mostly before they moved me to the used car dept. People think on new cars they should be able to buy them at cost but when I bought an egagement ring and furniture they didnt sell it too me for cost, and when my parents bought a new pool and put a new lining in it they didnt get it for cost. The thing is just like car business the owners have bills to pay too. I worked at a great dealership for years and was thought well and never ran into problems if your honest up front then in the end there's nothing to worry about....I've had to work for some places I wouldn't sell my family a car and those places are what gives salesmen...in that business a bad reputation. I don't work there any more after being honest to a customer i sold a car to and it cost me my job. I start at a new one selling Hondas. But I guess my point is give us a chance some of us are good and do what we say!
Posted by: Ray at 03/01/2010 01:37:46 PM
I have a 2007 Infinity M35 for sale. It has 35K mills and is in great condition. It is services at a Infinity dealer in T.O. It comes with a pre paid maintance plan to 50K. What should I sell it for?
Posted by: The Equalizer at 05/05/2010 05:01:38 PM
@ Ray...you might have better luck selling your Infiniti if you learn how (to spell) Infiniti. It drives me crazy when people put a "Y" on the end. It's a car not a loudspeaker!
Posted by: Fishing Sam at 09/19/2010 09:10:57 AM
Help, Both my husband and I lost our jobs with the Recession, we are now both starting new jobs with better pay, but our credit score has changed due to late payments. It could be 1 or 2 months before we get back on track, I need a vehicle because mine is starting to break down ALOT. Where do I start in trying to finance, It will be November or December before I go to a car lot to buy. I have tried to do my homework on best deals and models. This is stumping me on finance because of credit score decreasing even more with credit checks and I'm already in the upper 500's. Please give me advice on where to start Please. Thank You.