Are used cars over-priced?


#1

To me they are. I am looking for basic transportation. Like a basic Toyota Corolla, with just a/c. No power windows or locks, or any other silly options.
That means a model 1832 Corolla. They were on sale new in ads, starting in Jan 2013, for $15,000. So, to me a used one should sell for less than when new.
A new Corolla, lasts 12-13 yrs or150K miles. With the last 50K miles, likely needing repairs, sometimes very expensive repairs. I divide $15K car by 150K miles. Giving a cost per mile of $.10. So, a used Corolla w/15K miles should sell for at least $1500 less than new. However, a used one is priced at nearly
the cost of a new Corolla. If you go in and offer $12000, the dealer will claim you are trying to rip him off. So, I just don’t see used as being a better value for
the consumer. This same pricing holds true with other brands as well.

So, I don’t see used being a better deal for the consumer. I have kept track of costs for cars and trucks I have owned. The lowest cost per mile or yrs of
ownership, have been new vehicles, that I then sold myself or had an insurance loss. Dealers are big advertisers, so you won’t see much about the in the
media.


#2

Cars will bring what the market dictates.

If I was an individual selling a 15k miles Corolla in a private sale and know that it will bring a near new price why should I lower the price? The dealer is no different than a private seller.

A sales manager at a dealer where I once worked bought a new car (Honda) from that facility and drove it for 6 months. Someone offered him 800 dollars more than he paid for it so away it goes.
Did he rip anyone off? Not in my opinion.


#3

The only ones that are over-priced are the ones that sit on the lot for months without being sold. Then they lower the price until they get sold. Then they are sold for a fair price.


#4

It’s a supply and demand thing. I bought my car in spring of 2011, (Cruze) and just got a letter from the same dealer telling me that high quality used cars like mine are in demand, and that they would give me a top dollar on my 2011.

I really like me car, and intend to hold onto it, so I pitched the letter into the circular file cabinet.

Your big problem is, “EVERYONE” wants a nice, decent, basic used Toyota Corolla. Thus, the demand, and the prices, are high.


#5

As others have said…the market dictates the price. If there’s a shortage of used cars then they’ll get a premium price.


#6

Don’t be influenced by the asking price of a used car. They will sell less then a new one. You just have to be armed with current KBB or NADA prices for your area and be a good negotiator. A couple of things you really must be willing to accept to get a good deal. First, is ugly colors or colors that aren’t popular and the second is a manual transmission. The manual transmission is one big item to help assure you will get the lowest price. If you are set n the most basic car, learn to drive a manual if you can’t.


#7

It also helps if you have cash in hand or have a readily available bank draft for the total amount while adopting a take it or leave it attitude with the dealer. Nothing personal, just business.

Car salesmen routinely face people who are kicking tires while pretending to be serious buyers, people whose credit is in the tank after much discussion, or “will be back later”’; only to never return.
With car dealers it’s all about cash flow and the here and now.


#8

Your argument dosn’t show that used cars are overpriced; it shows that one make and model of used car is overpriced…if bought for close to asking price at a new car dealer.

You ask for the most economical option…and then you use the least economical make, bought through the least economical means.

It’s like saying “beer is overpriced” and using stadium prices to demonstrate your point.

Getting cheap, reliable wheels is all about “expoliting inefficiencies in the marketplace.” to do this…

  1. FORGET ASIAN MAKES. These makes sell at a huge premium due to perceived difference in quality. This public perception has a decade-plus historical lag: domestics and Japaneese imports are presently near-parity, yet prices reflect quality differentials that are decades old. This is a marketplace inefficiency…go exploit it!

  2. DON’T PICK POPULAR MODELS. For the same reason as 1.

  3. DON’T BUY FROM DEALERS. Dealers get their choice of used cars, and shunt off the less-desireable ones to auction, etc. The public knows this, the dealer “knows that they know”…and exploits this factor mercilessly! Used dealers are a bit dicey for a novice…I suggest cutting out the middleman entirely and buying FSBO from an aquaintance…or failing that, C-list.

  4. There are age/mileage limits (I used to know them), beyond which financing is much harder to come by. If financing isn’t an issue, buy just on the other side of the dividing line.

I was once in a predicament in which I had $1,000 to get wheels to get out of Tampa, or abandon my personal belongings. I had about given up when I spied a 12 y.o. Olds Cutlass Ciera. No rust, under 100k mi, inop AC, and still on a used car lot that closed the week prior.

I damn near swooned; I knew I’d get that Olds for salvage price.


#9

Used cars are priced at exactly what the market will bear.
IMHO new cars are overpriced. But I believe that the cost is driven by the manufacturers being very highly regulated. How much depends on what study you read. I would not at all be surprised if the truth was around 1/3 of the total cost of the average car. Recognize that much of the regulatory cost doesn’t leave the manufacturing facilities IN the cars, but must still be absorbed by their cost. I do NOT believe that the manufacturers are making unrealistic profits.


#10

The 2014 Corolla is a new design, likely to have some bugs in the first few model years, plus it is bigger, harder to park, has options some people don’t want to have to pay for, and folks who buy used cars may be going after the current-design Corollas (2013 or older) while the getting is good, driving up the price. That might be one explanation.

Another might be that the ads you see in the newspaper quoting $15K for a new Corolla, well, believe it or not, it is possible it isn’t actually possible to purchase one at that price. When you go, they’ll say they only had one, and it is already sold. But they have another super-duper one with blue-tooth and a rear window defroster which is only $21,000.

Take a look at the Kelly Blue book used for used car values, it is usually fairly accurate. I think you can get this info on-line gratis these days.

One more idea, you might have better luck looking for a 3 or 4 year Corolla with 60,000 miles on it.


#11

Unfortunately, Corollas (and Civics) have grown into family cars. Their places in the market have been filled by the Yaris and the Fit.

I had a new '76 Corolla, and later a new '82 Civic 4-dr. They were both great cars, and in both cases I traded them only because my needs changed. I wish I still had the '76 Corolla. I loved that car.


#12

GeorgeinSanJose is correct about those ads touting some low price on a vehicle. Note that the fine print usually has a Stock Number attached to it and that Stock Number does not exist anymore by the time a potential customer generates some foot traffic on the lot; which is what the ads are designed to do.

It can be very murky and varies from dealer to dealer, but dealers often have those stock numbers coded so a sales person can tell at a glance what they have invested in a car, what the real bottom line is, etc.
One letter means this, 3 numbers there mean that, and so on.


#13

"Forget Asian makes"
That’s true if you are referring to Honda and Toyota. But, when GM sold the Corolla as a Nova and later a Prism, I bought three of them ( at differnt times of course) at a price much less then I could get a comparably equipped Corolla. There are some Asian cars like Hyundai and Kia that are cheaper new and cheaper used. The benefit of Buying a little more expensive Corolla is, you have a much easier buyers market when it comes time to sell. In Uncle Henry’s I sold a plethora of cars. I waited on the Chevys and the Ford and had to beat perspective buyers away with a stick on the Toyotas, Honda and Subaru we owned. The Prism and Novas actually were cheap new and mearly as good resale as a Toyota it seemed. People looking for them used, knew what they were new.
I will say this. Had 3 Toyota Corolla clones and was never disappointed in any of them ! Nothing broke on any when had them.


#14

Good comment Dagosa. The GM/Toyota plant in Fremont California, they really had the mojo going for quite a long time. The cars they built there – some were branded “Toyota”, others “Geo” – were all top quality. Design and Production. The best of what Asia had to offer combined with the best America had to offer.

Alas, 'tis no more. That plant is now building Teslas last I heard.


#15

Yeah, I don’t dislike Japanese cars, but the used market for them suffers from “irrational exuberance.”

My dad’s fiscal advice to me was “Bet long shots to win; bet favorites to place or show.” My advice is “Buy Japanese new; buy domestics used.”

(And yes, I could handicap horses before I had my learner’s permit… :wink:


#16
Buy Japanese new; buy domestics used.

I know a guy who’s selling a used Vega.


#17

"buy Japanese new, domestic used"
If that does have some relevancy, it pretty much depends on how used you are talking about. At some point when the car is an absolute beater, it may matter more what parts are newest then what make it is.
But, if it’s a well care for off lease vehicle with fewer then 10k miles, we might as well be talking new.

Besides, when so called foreign made cars were more distinguishable by how few people could work on them, domestics had a clear edge. Now, if an independent can’t work on a Honda, Toyota, Kia, Hyundai and others, he is out of business. Back when Saturn used a Honda motor in it’s van, it was a better car and perspective car buyers smart enough to pick up on it benefit by buying it new or used.

Quick, name me an American car that doesn’t have Asian made parts in it ! The question has no answer !
Besides, practically speaking, once bought, ALL CARS ARE USED.


#18

“No power windows or locks, or any other silly options.”

That’s a pretty rare combination. Almost no one want’s a new one like that.

In 2007 I bought a one year old Matrix (essentially a Corolla hatchback) with 8k miles.
I wanted a stick shift base model without the “XR” package, which includes lower body molding that I find tacky (ricer) looking.
I shopped around and found one with the “power” package (power door locks and windows) and got it for $4000 under the new sticker price.
I also got the Toyota extended warranty for half price.
It’s all about negotiation. Buy near the end of the month etc.


#19

“I know a guy who’s selling a used Vega.”

I wouldn’t want a 1970s Japanese car, either.


#20

Mike, it wouldn’t happen to be a '72 Vega in Mohave Gold with a rear spoiler…would it???
I always wondered what happened to mine.