Author Topic: economic booms - better or worse for used cars?  (Read 3404 times)

nereo

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economic booms - better or worse for used cars?
« on: December 16, 2014, 06:43:14 AM »
Something I've been kicking around and wonder if anyone here has any data or observations...

when the economy is growing and the stock market is climbing, do mustachian-type cars (used, high-MPG, 50k+ miles) sell for more money, less money, or are their prices uncorrelated to the economy?

On one hand when the economy is rolling, nation-wide spending goes up and there are more customers overall, suggesting people could ask more for used cars.
OTOH, more new cars are purchased when the economy is doing well.  this suggests (to me) that there would be more used cars out there, since it increases the total number of cars.

any one care to chime in?

Le Barbu

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Re: economic booms - better or worse for used cars?
« Reply #1 on: December 16, 2014, 07:08:39 AM »
New car prices are a lot more in line with economy then used one. In 2008, new cars where almost 30% off compared to 2007. Used car prices are little more tricky. When economy do well, more new cars are bought (more used cars available) but at the same time, more peolple want a car and drive more (les used car available). When economy suck, more people decide to keep their car (less used cars available) but some have no more money to own one (more used cars available). Sum of this will probably be like zero influence on used car prices.

A used car should be at least 8 years and 100k miles to fit into this definition. The more "used" the car is, the least influence economy has on its price. IF my plan was to upgrade my car, I would do it at the moment economy tank, just to help the one who are in trouble because the bought to much in the boom ;)

GoldenStache

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Re: economic booms - better or worse for used cars?
« Reply #2 on: December 16, 2014, 07:34:46 AM »
(In the US)

Economy and price of oil (gas) cause major shifts in the price of a used cars.  The used car market is finally back to pre cash-for-clunkers that really shifted (increased) the cost of used cars because of the lack of supply.  When the economy was tanking (09-11), the US car companies that got the bailouts were forced to give sub-prime car loans (seriously) to help aid their recovery.  This created a buying boom when the market was going down.  Now there is a glut of repossessed cars that trickle down into used car lots (lowering the price).

When the price of gas hit $4 a gallon the price of large used trucks falls.  Side story, my coworker actually had 2 3500s one for her and one for her husband, and were paying over $1,500 a month in gas.  She sold her trucks (owed what they were worth so $0), bought two brand new little fords and ended up saving over $1k a month with the new payments. 

If you are looking to buy a high MPG car, right now is the time to do it.  Very high MPG cars were probably not the ones that were being repossessed but having more cars on the lot lowers the price for all.  If you are in CA I would think an economy boom would increase the demand for Teslas, possibly increasing the amount of used hybrids that are being sold (very big leap I realize) not every owner of a Tesla was a hybrid driver, some possibly drove a Porsche.       

bzzzt

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Re: economic booms - better or worse for used cars?
« Reply #3 on: December 16, 2014, 09:12:07 PM »
High MPG cars should be getting cheaper with gas prices falling. It's funny how fuel prices/money crunches make the average consumer act.

Used car prices are still high compared to before cash for clunkers. I was buying economy cars around tax time for basically scrap price ($300-400), fixing whatever the problem was, and selling them for $1000-1500. These days, people want $800-1000 for the same car that needs work and it's 5 years later!

Thegoblinchief

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Re: economic booms - better or worse for used cars?
« Reply #4 on: December 17, 2014, 08:47:36 AM »
I think with high-MPG cars it's all about gas prices, not necessarily what the economy at large is doing.

A local Mustachian friend wants to ditch his newer hybrid for something older and cheaper (but still high MPG), but gas prices these days make hybrids a tougher sell, so he's considering waiting it out to try and $500-$1,000 more for it if gas goes back up.

nereo

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Re: economic booms - better or worse for used cars?
« Reply #5 on: December 17, 2014, 09:29:17 AM »
I think with high-MPG cars it's all about gas prices, not necessarily what the economy at large is doing.
well - here's to hoping that this recent drop in fuel prices will free up more high MPG used vehicles while making someone willing to pay for my older, lower mpg one. 
In any event, it seems that the surging economy and lower fuel prices makes this a better time than most for purchasing a used car - selling might be another story but i'm never going to get all that much for a 10 year, 200k+ vehicle.

ketchup

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Re: economic booms - better or worse for used cars?
« Reply #6 on: December 17, 2014, 09:47:50 AM »
I'm hoping the dropping oil prices lower the value of high-MPG cars short-term.  I hope to upgrade to a '99-'06 Honda Insight this spring if everything goes as planned, and that would be a nice extra benefit.

minimustache1985

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Re: economic booms - better or worse for used cars?
« Reply #7 on: December 17, 2014, 09:59:46 AM »
I agree for used cars that gas prices are the largest contributor to pricing, the economy at large more so for new.  Pre-MMM and *needing* a more reliable car for my first post-college job, I  bought a new Civic in 2008; I looked at used cars like crazy, but because gas was over $4 a gallon for the first time every used vehicle with decent mileage was priced at an insane premium.  Meanwhile the economy was crap so new cars were being sold for less than normal, I think I spent about three grand more on a new car with no miles instead of a used one with 60-70k miles on it.  In hindsight I could have kept my old car longer and waited for the used market to get reasonable again, but there is no use looking backwards and I plan to have this car for many more years to come.

All that to say if you want to shop for a high mpg used car, I think now would be a great time.