Used car pricing

[Alan A]

This surely can’t go on being this crazy.

I mostly lease. We have multiple vehicles and I rarely keep a car the full 3 years.
We can argue the economics till the cows come home, but it is what it is.

So I leased a VW 2 years and 10 months ago. Paid 33.5k including taxes - 31 and change before tax on a car that was 34k MSRP.

Traded it yesterday for 26.5k on a new SUV off the lot.

So I drove (or more accurately the wife drove) a new car for almost 3 years for 7k. Didn’t pay a cent for consumables other than washer fluid and all the servicing was included.

I’m still in shock. Why would anyone buy a used car in the current market?

[biosurfer1]

Some people don't have an option. Luckily I am not one of those. Been trying to buy the wife a new car for almost a year, but I will never, EVER pay more than MSRP for a vehicle...so we wait.

But you are right, this can't go on like it has and I think there will be a big thud when the other shoe drops.

Then again, I've also thought that about the housing market for years too, but that seems to keep going up. I will say though that the car market is vastly different from the housing market. Still crazy

[pmax]

Why would anyone buy a used car ?
$10K-$15K TCO over 3 years and in perpetuity is a 1st world problem hence there will always be a market for used cars.

[Alan A]

Originally Posted by pmax

Why would anyone buy a used car ?
$10K-$15K TCO over 3 years and in perpetuity is a 1st world problem hence there will always be a market for used cars.

In the current market. Why buy used in the current market was my question.

That cars going back on the lot for the same as I paid for it 3 years ago. An exact same new one is 3500 more with 0.9% financing and a bunch of stuff waived.

[Alan A]

Originally Posted by biosurfer1

I will never, EVER pay more than MSRP for a vehicle...so we wait.

Me neither. Which is why I got a VW rather than an Audi. Wasn’t waiting 5 months or paying over sticker.

[Steve Carlton]

It's a bubble caused by the chip shortage. Used cars going for prices too close to new has been going on for many years, here and there. A friend has a 2018 Grand Cherokee I helped her lease with a payoff at $22,445 that will bring $33,100 from Shift.com, but best bid of the online buyers.

It's a seller's market that might burn out sometime within the next year. Hard to predict when, in my opinion. First the new car inventory has to start to normalize. Last March I was unable to get any equity from my e-tron at the end of its 1 year lease. That's okay- it was the height of insanity when I got it in March, 2020. I got all my money back minus sales tax on a Tesla Model 3 in April of this year. There's still some deals new or used that aren't that bad if you look. It's funny how some customers are currently begging to get a car for MSRP. A year ago they were grinding for $5-6,000 off MSRP on the same car (as an example). Not only are dealers not discounting or charging a premium, there's usually no more factory incentives, which contributed a lot to the big discounts.

[Steve Carlton]

Originally Posted by biosurfer1

Been trying to buy the wife a new car for almost a year, but I will never, EVER pay more than MSRP for a vehicle...so we wait.

I don't know if you're selling or trading in a car when you get a new one, but by the time you wait to pay MSRP or less, the bubble your old car is on will likely diminish. For some, it's relative. Pay $5K more than normal, trade in for $5K more than normal. It depends on the balance in the deal if it's attractive or not.

[wildthing]

I'm buying used because I can't justify a 150K plus 911S, that now has a turbo...

[asphaltgambler]

For us, we had delayed trading / selling our Jeep, continuing to put money and maintenance into it because of the $$ surge in the used market. To the tune of over @1-1/2 years delayed. This Fall it became clear we needed to do something soon as the clock was about go over 200K and the rear main seal started to weep. There were also other issues that needed addressed.

It was agonizing, really, as we knew we would paying a lot more for essentially less vehicle performance-wise than what we already owned - just newer. My wife and I are very calculated in our buying decisions. There is 'timing' for any commodity in any market, up or down.

We could've waited until the Spring but several things would be in play: Our vehicle would be 4/5 months older, more miles and we would've had to fix the rear main seal issue @$1K plus needed maintenance. The other is the time of year, Spring, when is usually an 'up' time in the new / used market as that's when a lot people buy new or new to them, driving the market higher.

So we bit the bullet, it was a long and tough decision. My thought is we basically paid $4-5K over in a normal market, but received @$1500 more on trade then what my research indicated. No regrets (regerts!) as we made the best move based on our lifestyle and budget. Hopefully the replacement will last just as long (10 years) and give the same or better service with less cost

[stevej37]

I expect a dealer mark-up in these conditions.
If a person wants to buy a used car for the same price as a new one...go for it.

[MBAtarga]

So you spent $7k over 3 years and had nothing to show for it.

Instead - someone could spend $7k for a used car and still have transportation after 3 years.

[Arizona_928]

Different mindset. ^^^

Profit is profit. Lose is lose. That's why they say vehicles are a liability. Could be an asset if you are savvy.

[Steve Carlton]

Originally Posted by MBAtarga

So you spent $7k over 3 years and had nothing to show for it.

Instead - someone could spend $7k for a used car and still have transportation after 3 years.

$7,000 over 36 months is $194/mo. It's hard to own anything with maintenance and repairs for much less than that. A good lease on an economy car won't cost much- maybe some scheduled maintenance, probably no tires or brakes. In 2018 I got my niece into a $26K Forester with about $1,000 out of pocket for $185/mo including tax. Pre-pandemic when deals could be amazing.

[Alan A]

Originally Posted by MBAtarga

So you spent $7k over 3 years and had nothing to show for it.

Instead - someone could spend $7k for a used car and still have transportation after 3 years.

No maintenance costs and a bumper to bumper warranty on a daily driver is worth every cent of the monthly nut to me. This wasn’t about the economics of lease vs buy - you do you and I’ll do me.

It was about how crazy it is that a car that usually depreciates around 50% only dropped 20% in 3 years, but I can still buy a new one for MSRP.

[aigel]

The issue here is that most cars currently cannot be bought at MSRP - at all. Markups around here are at least 5% for something boring, anything nice, 10% or more. A 992 GT3, about 30-50% currently.

I read that used cars are up 40% since early 2020. I bought a new truck and paid over MSRP but I will get it back on the old truck easily. Waiting a little for xmas to pass and maybe first people to get into their tax return checks.

No leasing for me. I buy new more often now but drive until I get tired of it, 5+ years, maybe even 10. Every year you can stretch it, you can get a better return. Modern vehicles don't really need much up to 100k miles, which is 7 years for me. Also the tech hasn't changed much on the actual vehicles. Safety, performance, gas mileage, all is pretty flat. It is only the center console screen you may like better on a new car.

[john70t]

Originally Posted by Alan A

No maintenance costs and a bumper to bumper warranty on a daily driver....

So I can return a dinged-up lease vehicle five years later with the original oil still in the engine?
The lease market is a predatory system.
There is no golden rainbow.

Originally Posted by Alan A

but I can still buy a new one for MSRP.

No. We can't. I disagree.
Markups are hidden in every contractual clause.

The pressure on the used car market affects everyone.
Those who need to drive daily to get to work on time, more so.
And that is what the economy runs on.

[pmax]

Originally Posted by Alan A

In the current market. Why buy used in the current market was my question.

That cars going back on the lot for the same as I paid for it 3 years ago. An exact same new one is 3500 more with 0.9% financing and a bunch of stuff waived.

If 3 years is how long you plan on keeping a relatively late model car say 6 years new or so, do not buy used.

[Bob Kontak]

Originally Posted by pmax

If 3 years is how long you plan on keeping a relatively late model car say 6 years new or so, do not buy used.

What?

[peppy]

My SIL just sold her Subaru Legacy sedan for $700 more than she paid for it new including taxes and tags. The car has 33k on it and she had just had it fixed where my brother hit a deer. Sold it to Car Max.

[ckelly78z]

Originally Posted by MBAtarga

So you spent $7k over 3 years and had nothing to show for it.

Instead - someone could spend $7k for a used car and still have transportation after 3 years.

The 2013 Mustang I bought for $9500 cash 2 years ago is probably still worth that amount....so 2 years with no depreciation. I will probably keep it for another 10 years, and still get $5000 for it. That equals 12 years for $4500, which is $375 a year, or $31.25 month (different mindset indeed !).