David Perry’s 1998 Honda Civic CX had given all it could.
He had racked up 172,000 miles since buying the car from a friend in 2002.
It had, I think, like 90,000 miles onto it when I bought it, and then I took it to 262,000, said Perry, who lives in Nashville and relies on his wheels to get to and from work at The Village Chapel, where he is audio-visual coordinator. Yeah, I pretty much squeezed the life out of it.
The little Civic was in need of major work and just wasn’t worth fixing. So Perry set out to discover a similar replacement: somethingsmall and reliable, fuel efficient and with a manual transmission, which he prefers.
It wasn’t easy.
If you wish to find an old used car that’s been pretty well wrung out, then you’ll do not have problem, said Jeff Bartlett, deputy editor, Autos at Consumer Reports. But it’s a little harder to find that three- or four-year-old, great-condition car.
Because of the recession that hit in late 2008, people have been holding onto their rides more than usual, waiting around for better days before trading in their old wheels for brand new ones. As owners rack up tens of thousands of trouble-free miles before finally trading them in, the fact that vehicles in general are more reliable than before has only exacerbated the lack of low-mileage used cars.
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Making matters worse for the used-car shopper, automakers have been leasing fewer vehicles in recent years due to credit issues in the financial markets, Bartlett says. So all of the pre-owned vehicles that accustomed to flow back into dealerships once leases were up simply vanished.
When the recession hit and new car sales dropped to that 10.3 million level, it took lots of used cars out of the marketplace, says Ricky Beggs, senior vice president and editorial director of Black Book, a Gainsville, Ga.-based firm that tracks automotive residual values. And then, when they started coming back into the marketplace, we weren’t seeing two- and three- and four-year-old good quality used cars coming back into the marketplace, as much as we had been seeing some eight- to 10- and 11-year-old used cars being traded in.
It’s no wonder the average age of light vehicles on the road today reached an all-time high of 11.4 years in 2013, according to Polk, an analysis firm that tracks the car industry. (Light vehicles are described as passengers minivans, SUVs, light and cars-duty pickups.) A decade ago, the average ages of a vehicle on the road was 9.8 years.
What does this mean for car buyers?
Well, for one thing, it might be worth looking at several new vehicles when shopping for used ones. Automakers are also feeling the pinch of the economy and have been offering pretty sweet deals on brand-new models, most of which bring prices close to those of late-model used equivalents.
Based on Edmunds.com, a website that tracks car pricing, for instance, when you have a look at monthly payments — as opposed to the total price of the vehicle — and factor in the low financing rates offered on new vehicles compared to used ones, a completely new GMC Acadia and Toyota Camry Hybrid end up costing less than a one-year-old equivalent. This is assuming a 60-month loan with no downpayment and typical financing rates for new and another-year-old used vehicles, the latter in which are priced using Edmunds’ True Market Value transaction pricing. (Start to see the full selection of new versus used vehicles, here.)
The same case can be created for certified pre-owned vehicles, which usually cost more than non-certified used models mainly because they go through rigorous inspections and also a factory-backed warranty. If you’re considering a certified pre-owned Hyundai Elantra Coupe, Nissan Titan SV Crew Cab, or Toyota Prius, then you might also get the new edition, according to Edmunds.com’s calculations.
A fresh Hyundai Elantra Coupe costs about $341 each month, versus $352 for a certified pre-owned equivalent, Edmunds.com calculates. And you’ll save $12 on a monthly basis and $25 monthly, respectively, going with a brand-spanking new Nissan Titan SV Crew Cab and Toyota Prius over a certified pre-owned one.
But don’t get the wrong idea. Remember, this is contingent on the rate of finance. So, the latest-versus-used argument could be less compelling if you have bad credit.
Used cars will more often than not cost less than new ones when looking at the total price. What’s more, used car charges are finally settling back down again, after jumping in previous years for reasons discussed above. The average rate of depreciation, which is a vehicle’s biggest single cost, for used cars went up .4 percent from 2012 to 2013, according to Black Book data. Just a trend that says the depreciation is going to be a little bit greater going forward, Beggs said, though Not a major difference.
That’s partly why Edmunds.com’s selection of vehicles that cost less new versus used has been dwindling. It was very lengthy from the crazy 2009 days, says Jessica Caldwell, director of pricing and industry analysis at Edmunds.com.
If it costs more, because in some instances, the surcharge is almost inconsequential — at least when examining monthly payments, a whole new vehicle still might be worth considering over a used one even. A new Honda CR-V LX with all-wheel drive will only run you an additional $540 over the course of a 60-month loan term compared to a used model, according to Edmunds.com data. Meanwhile, a new Jeep Wrangler Unlimited Sport has a $1,080 premium across a one-year-old used model.
In the event the price was that close, I’d imagine most people would opt for the new vehicle, Caldwell says.
But those holding out for any low-mileage, used-car bargain shouldn’t lose hope. As Perry’s experience proves, you will still find good deals that can be found. Just be prepared to carry out the legwork.
When looking to replace his rundown Honda Civic hatchback, Perry considered both new and used models. He test drove a 2014 Nissan Versa, which is amongst the lowest-priced new vehicles on the market. But he passed on it because it felt too stripped down and feature-less compared to the used Chevrolet Cruze and Hyundai Accent he looked at.
I investigated a couple of Hondas, Perry said. A couple of them were gone by the time I was able to arrive there. Those are hard to keep around from the used lot. The same happened with a Ford Fiesta he wanted to scope out.
Ultimately, Perry managed to find a good deal on a used car. After searching for days across a handful of dealerships, he managed to score a 2012 Hyundai Accent by using a manual six-speed transmission with only 4,500 miles on the odometer. Quite a haul, considering the five-year/60,000-mile factory warranty is still in effect.
It’s very quiet, it’s very responsive and I’m really enjoying it so far, Perry said.