Automobile Used Versus New????

[CBnCO]

Unfortunately, we are not in an area where we can rely entirely on public transport (none!) or bike riding (harsh winter weather), so cars are a necessity to get our family around and I've started shopping for a pickup truck (4x4, trailer pulling, dog hauling, and camping)..


I'm amazed at the current state of the used market and it's a bit of a conundrum. Common logic historically was to buy a 2-4 year old vehicle and let the original owner absorb the big depreciation years. If lucky, you still get some portion of the factory warranty and a relatively modern vehicle that you can then drive until its useful life is over. But, what I'm seeing now is strange.

For example, comparing two vehicles with similar features, one five model years old with 125K miles is listed with an asking price of $15K and with all the end of model year incentives, a new one is around $30K. I'm keenly aware that the new vehicle will have higher sales tax, registration, and insurance costs and I'd certainly have to factor the delta into a full analysis and I've never really wanted to buy a new vehicle. That said, if I assume the useful life of the vehicle is 250,000 miles, the used vehicle above has half (125K miles) of its life left and just based on purchase price would cost the same per mile as the new one. I would expect the miles in the second half of its life, with no warranty and increased probability of maintenance & repair costs, to be appreciably cheaper than the miles where the vehicle is fresh and including the initial factory warranty period.


So, it would seem to me that in a pricing situation like this it would be actually better to buy the new vehicle, drive it for five years, sell it, and buy another new one. Am I missing something? And, what exactly would drive a market to behave like this? I would think in my example above the used vehicle would be in the $8-9K range, appropriately discounted for wear and tear and increased maintenance inherent with an older vehicle. I'd love to hear your thoughts or insights?

[lbmustache]

The average car still depreciates "normally." SUVs and trucks tend to have low depreciation, trucks especially. Certain brands or models will hold value better than others (Subaru, a Toyota Tacoma, etc.). This likely explains the numbers you are seeing because you are shopping for a truck.

[GuitarStv]

A truck will be much more difficult to drive in winter weather than a car or even a minivan with winter tires.

[CBnCO]

The average car still depreciates "normally." SUVs and trucks tend to have low depreciation, trucks especially. Certain brands or models will hold value better than others (Subaru, a Toyota Tacoma, etc.). This likely explains the numbers you are seeing because you are shopping for a truck.

Maybe you are right on the truck market; but, still a bit logically backward to me. Maybe buying strategy has to be adaptable to the market

[CBnCO]

A truck will be much more difficult to drive in winter weather than a car or even a minivan with winter tires.

I recall a previous article here about the effectiveness of FED and snow tires versus 4WD; however, we still have hauling, dogs, towing, camping, and lots of rugged dirt roads. I don’t think the chassis’ and suspensions on the passenger vehicles you site are designed for many of these functionsTtucks and truck based SUVs are not the most economical; but, donserve a purpose for some applications.

[Adam Zapple]

Just my two cents here but I sold my Toyota Tundra and bought a Toyota Highlander used with fewer miles for about $4500 less than I got for the Tundra.  I do all the things you mention and have not missed the pickup.  One or two occasions I just borrowed a truck for a large haul.  I obviously don't know your situation completely, just suggesting you figure out if you really really need that truck.  My $6000 vehicle can do most of what my truck did without all the extra cost.

[inline five]

Toyota pickups especially the Taco have very high resale value. The Tundra is a better "deal" although it's a much larger truck. Toyota's in general I would probably only buy new unless it was a used Prius that you can normally get for a song because people are afraid of battery issues.

[MilesTeg]

A truck will be much more difficult to drive in winter weather than a car or even a minivan with winter tires.

Snow tires and a bit of weight in the bed, and you are just fine. No vehicle should be driven without snow tires in the winter anyway and sand is cheap ;)

Entirely separate from whether or not you have a good purpose for having the truck, hah.

[inline five]

I grew up in NH, always had FWD cars with regular tires on them, never once got stuck in snow despite the large amounts we got up there. Way too much emphasis on all of this junk IMO. My first car was an '87 Honda Prelude I drove through several winters.

[JoJo]

I ended up buying a new cargo van (for camping).  The used were ridiculous - just a few 1000 off the new price, many with 100,000-175,000 miles.  And with the new, I got all the options (specifically back up camera has been so important).

[GuitarStv]

A truck will be much more difficult to drive in winter weather than a car or even a minivan with winter tires.

Snow tires and a bit of weight in the bed, and you are just fine. No vehicle should be driven without snow tires in the winter anyway and sand is cheap ;)

Entirely separate from whether or not you have a good purpose for having the truck, hah.

It's possible to make any vehicle drivable in winter conditions, but a truck (even with snow tires) is going to be harder to drive than a car or a minivan.  It has a higher center of gravity, and will be light in the back which makes it slip easily.  While you can carry around a bunch of unnecessary weight to overcome one of these disadvantages in the winter, you're not going to be able to overcome the other.

[CBnCO]

I ended up buying a new cargo van (for camping).  The used were ridiculous - just a few 1000 off the new price, many with 100,000-175,000 miles.  And with the new, I got all the options (specifically back up camera has been so important).

Yeah, this is just a strange circumstance and the central point of my post. Who would even buy one of the used ones versus new?

[CBnCO]

A truck will be much more difficult to drive in winter weather than a car or even a minivan with winter tires.

Snow tires and a bit of weight in the bed, and you are just fine. No vehicle should be driven without snow tires in the winter anyway and sand is cheap ;)

Entirely separate from whether or not you have a good purpose for having the truck, hah.

It's possible to make any vehicle drivable in winter conditions, but a truck (even with snow tires) is going to be harder to drive than a car or a minivan.  It has a higher center of gravity, and will be light in the back which makes it slip easily.  While you can carry around a bunch of unnecessary weight to overcome one of these disadvantages in the winter, you're not going to be able to overcome the other.

Totally agree on the FWD & snow tires for winter driving; however, my original post was really a comment on the strange pricing I was finding on the used market..still don't quite comprehend the logic of buying one of the relatively high mileage used vehicles versus new?

[neo von retorch]

So, it would seem to me that in a pricing situation like this it would be actually better to buy the new vehicle, drive it for five years, sell it, and buy another new one. Am I missing something? And, what exactly would drive a market to behave like this? I would think in my example above the used vehicle would be in the $8-9K range, appropriately discounted for wear and tear and increased maintenance inherent with an older vehicle. I'd love to hear your thoughts or insights?

The above is true if and only if depreciation is truly linear, and transaction costs are very, very low. (And of course, registration and insurance are comparable or within a small margin.)

If you really do intend to use a vehicle in a similar manner for 10+ years, then buying a new vehicle and driving it the entire time is probably nearly as economical as buying a 5 year old vehicle and possibly replacing it in 5 years, and always having a 5-10 year old car instead of a 0-10 year old car.

This all varies with make, model, trim level, etc. Pickup trucks, for example, have a huge spectrum of configurations, trim levels, and features. In your use cases (snow, trailer, dogs, camping), you only need good tires and the towing package, and since it's a truck with a lightweight bed in the back, you end up needing 4WD. You don't need power sliding rear windows, luxury trim levels, power adjustable pedals... you don't need a backup camera, because the most difficult backing up is with the trailer attached, which obscures the camera, but it's still "nice" to have since the huge truck makes basic parking more difficult.

People point to Toyota, because sometimes people feel like they MUST get a Toyota, and they tend to hold their value well. But if you check out previous generation American trucks, you can get a solid deal on a truck with 80-100k on it. A 2013+ GM will cost a lot more than a xxxx-2012, and most will have the industry average 10-12k / year on them. Ford will follow roughly the same pattern.

It's easy to use this "apparent" pattern of "perfect depreciation" to justify a newer vehicle, but it's unlikely to reflect reality accurately.

[robartsd]

A truck will be much more difficult to drive in winter weather than a car or even a minivan with winter tires.

I recall a previous article here about the effectiveness of FED and snow tires versus 4WD; however, we still have hauling, dogs, towing, camping, and lots of rugged dirt roads. I don’t think the chassis’ and suspensions on the passenger vehicles you site are designed for many of these functionsTtucks and truck based SUVs are not the most economical; but, donserve a purpose for some applications.

It shouldn't be too difficult to find a car or minivan that can tow up to 3,500 lbs. The rugged roads might still be a reason to choose a truck or SUV - consider how rugged the roads are and how often you travel them as part of the cost/benefit analysis.

[wageslave23]

I agree with you, I think because Toyota and Honda have such good reputations people over value their used cars.  I would buy new if you can't find a reasonable used Toyota, but keep it for a long time because there is the time and hassle and transactional costs of switching vehicles every few years. 

[RWD]

A truck will be much more difficult to drive in winter weather than a car or even a minivan with winter tires.

I recall a previous article here about the effectiveness of FED and snow tires versus 4WD; however, we still have hauling, dogs, towing, camping, and lots of rugged dirt roads. I don’t think the chassis’ and suspensions on the passenger vehicles you site are designed for many of these functionsTtucks and truck based SUVs are not the most economical; but, donserve a purpose for some applications.

It shouldn't be too difficult to find a car or minivan that can tow up to 3,500 lbs. The rugged roads might still be a reason to choose a truck or SUV - consider how rugged the roads are and how often you travel them as part of the cost/benefit analysis.

Minivans can often tow 3,500 pounds, but I doubt you'll find any modern cars rated that high.
https://axleadvisor.com/towing-capacity/

[FallenTimber]

Trucks aren’t for everybody (especially around this site), but if you need to tow, there’s no substitute for it. Winter driving is fine in a car or minivan if you’re on paved roads in the flatlands. And trucks are indeed terrible in the snow. But if you truly need to haul a trailer, no car, van, or SUV will suffice.

We have an F-250 for hauling and ranch work, but we also have a Ford Escape with a 3,500lb tow rating. However, a Ford Escape, just like a minivan, car, or crossover SUV is not meant to tow. They don’t have the gearing for it and you’ll ruin your vehicle trying. We tried pulling a 2,000lb teardrop camper with it and could barely maintain 25mph up the mountain passes, with the dashboard lighting up with overheating warnings (in 50 degree weather). Stopping is another issue I won’t get into, but suffice to say I cringe seeing 4-Runners towing 8,000lb travel trailers.

Anyway, mentioning the word “truck” around here always ends up with replies questioning the necessity, so I figured I’d drop in my two cents.

Regarding used versus new, with trucks, I’ve found the sweet spot is to buy a truck with around 60-80k miles (usually around $18k) and sell it with around 110-130k miles (usually around $15k). Avoid the hit of buying new, and avoid the hit of driving a truck into the ground before selling.

[ketchup]

When you say you need a truck for "dog hauling" I assume you mean at least 6-8 dogs right (otherwise any ol' car would do the trick)?  A van would definitely be better for that.  I know a professional dog handler with a 2012 Chevy 3500 van and she has I think ten full-size crates set up in there with plenty of space to spare for all the dog show shit and lots of towing capacity.  And she lives almost a mile off the road in rural Michigan.