Cars depreciate so much after leaving the lot, I just can't fully wrap my head around why people walk into dealerships and buy new cars? With transferrable warranty and swerving huge initial depreciation, it makes no sense to me why so many people buy new and cop the huge initial loss.
Am I missing something, or is this an example of consumer ignorance?
FYI, I bought a new car during covid as it was the same price as used, so I do see some of the value.
Sense makes sense. Sense.
you can buy scents for cents
Makes scents.
Haha didn’t notice that
People often say a new car loses 20 to 30% of its value as soon as it leaves the lot. Has anyone ever tried this? Bought a new car and actually sold it an hour later? I bet you would get near the new car price, unless the owner was silly enough to hand the vehicle back to a dealer. Obviously a dealer takes a chunk of every car's sale price for themselves.
I kept my last two cars for 11.5 and 8 years respectively. I keep my cars for so long that honestly I don't care about the resale value. My last car was purchased brand new for $23k, and sold for $8k 8 years and 218k km later. That's less than $2000 per year, less than I spent on fuel every year. I sold it when it started to develop problems. Expensive problems. Even changing the clutch was 30% of the car's value. And that's only one component. Air conditioner compressor fails and the system needs to be rebuilt? $2k. If the transmission fails it basically writes off the entire car.
I know that for 5 to 7 years of the new car's warranty I can have peace of mind. I'm the only owner, I know how I drive. I don't have to worry that someone thrashed the car before me.
Two to four year old well priced used cars are very rare. Theoretically they might be about 30% cheaper than new, but practically that's difficult to achieve. Unless it's an EV. MG dumped the price of the base model MG4 by almost 25% overnight. That did wonders for the resale value of people who already had one.
I have done close to what you suggest.
Won a new car $58,000 in an online comp … Around 2017.
Ended up selling it to same dealership (2 door V8 didn't suit our purposes).
Dealership gave us $42,000 - traded it in for a NEW 4 door V6.
Even though only 17km on clock +++ never left dealership.
Since registered in my name == change of ownership.
At end of day we (/partner) were happy … As a 2 door V8 didn't suit our use case +++ her previous car was close to dieing.
.
Although joke is on dealership … We often drove past - and that V8 (that we won/traded) - was sitting in their sellers lot out the front for well over 3 months (guess not such a market for V8 utes).
That sounds more like you paid a convenience tax and the dealer was fully aware of your desire to offload it combined with the fact that a $ loss isn't felt as acutely when you didn't pay for the car.
The key words are "traded it in". You would have got more if you sold it privately, everyone knows that.
The key words are "traded it in". You would have got more if you sold it privately, everyone knows that.
Think you missed this
Although joke is on dealership … We often drove past - and that V8 (that we won/traded) - was sitting in their sellers lot out the front for well over 3 months
Back then I bought a $20k 2016 Hyundai i30 Manual brand new albeit on clearance (end of 2016) and was able to sell 5 months later for $18500 but it was an interstate buyer who said they couldn't find anything similar below $20k.
Stamp duty is a thing so you lose at least that.
As far as I can tell the whole massive depreciation after leaving the lot thing is an urban myth, presumably spread by used car dealers.
Frankly, I'd be happy to buy a three month old car, if such a thing existed in the used car market, particularly if I could get it for 20-30% off.
It's not like we can't actually test this theory. Demo models driven for several thousand kms by dozens of randoms still typically only attract a $3-4k discount, and these are effectively last year's models by the time the dealer is running them out.
Cars depreciate so much after leaving the lot, I just can't fully wrap my head around why people walk into dealerships and buy new cars?
If you have a source of these near brand new cars that are significantly cheaper, with no strings attached and I can find the model I want then let me know.
Change of ownership == too.
See my post above
Bought a new car because my old one was over a decade old and the plan was to buy a new one in 2025, but it got T-Boned in 2022 …
My plan is to upgrade every 10-15 years
That's my only real worry when it comes to new cars, so many idiot drivers out there and very often there's nothing you can do.
I'm buying my next car to get the most value out of it and don't care what the resale value is. Current car is 22 years old and still runs fine, just a bit too thirsty at 12.5L/100km and I'll guess safety rating is not as good as anything more recent.
Number 1 for me, with a new EV, is safety
That’s why it’s important to have comprehensive insurance when buying a new car :) I’ve seen quite a few cases where people’s new cars have been damaged and they don’t have comp insurance - yikessssss
I have comprehensive on my car (only worth about $4k), because it was basically the same price as just 3rd party.
So many people driving around these days with no insurance at all. Their justification is they say they don't have any money so can't be sued/pursued.
I've heard so many stories where people admit blame, then later blame the other party involved. My $30 dashcam works beautifully, and luckily have not had to rely on it.
Buying new or used has its place, each for a variety of reasons. Any supposed depreciation shouldn't really be a driving factor - you can either afford it or you cant, you either need it or you dont.
As an example, cursory look at the market for my RAV4 (Hybrid Cruiser AWD 2022) has it around the $50k mark. Considering I coughed up $55k including extras and I think new they're almost $60k now, that resale is pretty solid. $5k 'down' in 3 years is nothing.
I would say sweet spot is buying at 3 years old when the warranty runs out.
For example I bought a 2014 Cayman S in 2017 - original price ~$150k - I bought it for $105k which was a good 30% discount after 3 years - today, 10 years on from the original manufacture, I could still sell it for $75k which is half its new price. Total depreciation in my 7 years of ownership is max 4% per year. It's been incredibly cheap to run too.
No you just got lucky because the cars all went up in value past covid years.
I sold a 7year old car more than I bought it but I wouldnt call that 2% appreciation per year.
I sold a 2006 Elantra in 2016 for $4k and last year i checked they were selling for $7k 😅
Yep, this
Why buy new?
- choice of options, color, trim.
- full warranty
- assurance it hasn’t been flogged or mistreated
- removes risk of fraud/dodgy seller
- possibly low finance costs
- low hassle, no need to chase lots of sellers
- for some, the prestige of a new vehicle
I have owned two brand new cars, and many, many cheap bombs. I can see that there are plenty of people for whom paying an extra few thousand dollars a year in depreciation is worth it for minimal hassle, as they have plenty of money.
For normal people, a used car made sense before COVID, and presumably is starting to make sense again.
I’d also say there are “car people” who want a nice car, and will get the nicest they can afford, and there are people who just want transport.
If your budget stretches to a 3yro European sports car, but you just want transport, then buying a new versus used Corolla is kind of academic, both options are substantially below your budget ceiling.
But a car person will spend time and effort to get the best they can, and to them buying a Corolla at all if you can afford a nicer car seems silly.
stop being poor, buy new
If you consider rebirthing as brand new, I only buy brand new cars
It’s all about the new car smell
I buy new car smell car scent
That makes scents. Cheers
yes I want to know that the farts in the driver seat are all my farts.
Depends on the car.
A used Toyota LandCruiser series 70 costs more than a new one.
I was looking at Audi RS3s. They cost the same used as new.
Buy a car that a lot of people want, and is in short supply, and the price doesn't go down on the way out the showroom door.
If the value does go down a lot, question your judgement that you bought that model.
I have a Hyundai I20N, which is an enthusiasts car that's hard to get new. I paid just over $40k a year ago and I was lucky to get it. At the time one year old used models were going for well over $40k and are still high-$30k. Same kind of deal for the Jimny.
paying $10K+++ for a 9 year old i30 (which should only be worth $3K) etc, is for suckers
Ahh the old, why doesn't everyone just buy used.
That will pressure the manufacturers into making brand new used cars for everyone to buy.
do you buy new or used, phone, TV, PC, fridge, lounge?
Have you noticed how womens used underwear is really expensive .
@Jimothy Wongingtons - is this true?
Can’t say for sure, as the ones I get are bundled into the monthly onlyfans premium subs I’m on
Particularly in Japan where they have vending machines that sell used school girl undies.
Why new:
To flex on those stalking your socials (even if it means you will never financially recover from this transaction)
For authentic new car warranty
For new car smell
The thrill of victory when you finally wear down the sales person after 69 visits and 420 hours of negotiations to get that free tank of fuel thrown in.
You don’t get floor mats thrown in? Chump!
taking into account stamp duty on newish cars and the new price isn't much different
I buy 5-year-old cars. That’s where you generally get the best price-to-value ratio in my opinion. <60,000 km, logbook with full servicing history (at official/registered dealerships), RACQ check, no accident history, model with a reputation for reliability. I’ve had 12 hassle-free years of motoring with my current car, which was 5 years old when I bought it.
However, this strategy may no longer be relevant in this era where we are currently transitioning to EVs and hybrids. The price of petrol has been unstable and is likely to go up in future. More recent models may be better value nowadays taking into consideration the future of motoring.
My FIL is a veteran. He doesnt pay sales tax/stamp duty. So he buys a new car every 2 years, and usually trades in the "old" one for equal or sometimes more than he paid. He doesnt put huge kms on them either, and they are always garages , so they are in near new condition.
His current car is a lexus. He negotiated like a mad person for it and was happy with the price, then the sales person said " that's inclusive of stamp duty" which meant he got it even cheaper than the negotiated prive that he was stoked with.
I bought my second last car from a dealer who had a deal with a charity. The charity would buy a new car (they are exempt from stamp duty, etc). After 6 months or 14,000(?) Kms (which ever hits first) the dealer buys the car back. I forget the intricacies of it all but I ended up buying a 6 month old /12,000km 2014 outlander aspire DID for ~$13,000 less than the brand new models sitting in the show room. I'm still driving it. (Just had the first major repair required for it - clean out of the intake manifold and egr)
So I can support our struggling new car salesman, the true Aussie battler.
A lot of people buy new cars these days for "work", i.e. Uber, and write it off when filing their tax return. Unless you're wealthy, or you can claim some of the costs of that new car back in some way, I don't see the point of buying a new car for most financially struggling people. Not worth it.
Only people that should be buying new cars are:
Buying a car new outside of this is financial suicide imho.
Am I missing something, or is this an example of consumer ignorance?
User cars always carry the risk of hidden issues….
some top end cars at the top of the market often appreciate not depreciate after purchase ie ferrari 458 speciale, porsche 911 gt3, mercedes sls, so go figure - no suckers there
That makes sense. Cheers