Off the lot automatic depreciation

[Burt]

Originally Posted By: iahawk
I used to try to explain this to people back when I was in the car business (90's).

Say a new car stickers for $25,000. Dealer invoice may be $23,000 (just using round numbers).deduct rebates, $1500 and dealer holdback (3% of list minus freight, $25K - $600 = $24,400 x 3% = $730).

that gives a true dealer cost of ~$20,770. This doesn't take into account the additional manufacturer to dealer incentives (example, sell 50 new Silverado's and Chevy gives the dealer an additional $1000 per unit in backdoor money).

So now this car that 'lists' at $25,000 can be bought by the dealer for $19700.

How much less does a used car have to sell for than a new one for someone to buy it? say $2000?

Now this $19,700 car has to sell for $17,700 on the lot. The dealer wants to make $2000 on the used car, plus some extra 'lot' and 'recon' fees...so he bids the car for $15,200.

That is how your $25,000 car is worth a little over $15K the week after you drive it off the lot.

Not saying it's right or I agree, just saying that's how it worked when I was in the business. Moral of the story? Don't ever buy new and then try to trade it shortly after.


So a dealer makes $8,000 gross profit selling a $23,000 car at invoice? I know he has lots of expenses (labor, mortgage, utilities) just didn't realize it was that high a margin business.

 

[bullwinkle]

Originally Posted By: Burt
Originally Posted By: bullwinkle
I have the opposite experience-the xB in my sig cost $13,700 new, they're still selling for around $8700 used, & it'll be 10 years old in February! Only $500/year!


Good luck on that. Edmunds values it at $3,500 trade-in. $4,500 private party sale. Still $1,000/year is good.
That's what I had thought, when my wife got rear-ended hard in it this past summer-but the bill was over $5000, & the insurance company didn't try to total it (I thought it was a goner, I was actually searching for another one in the '04-'06 1st generation xBs)-everyone I found was either an abused high mileage ricer, or if it was good with no rust, damage, or original paint it was over $8500!

 

[Mykl]

Originally Posted By: LT4 Vette
Luxury cars yes.

Econobox is better to buy new.



I think it depends on which specific econobox you're talking about. Some of them sink pretty rapidly in value.

Luxury cars.... it's pretty sickening how fast those drop. It makes me wonder why people buy into them.

 

[CKN]

Originally Posted By: Mykl
Originally Posted By: LT4 Vette
Luxury cars yes.

Econobox is better to buy new.



I think it depends on which specific econobox you're talking about. Some of them sink pretty rapidly in value.

Luxury cars.... it's pretty sickening how fast those drop. It makes me wonder why people buy into them.


Sir, if you live in the wide-open spaces of the west (coming from Texas you should know this) - it's a heck of an easier drive in a NAME YOUR LUXURY CAR HERE than a Scion Xb.

I guess that's why more Suburbans are sold in Texas than anywhere else.

And that's the truth.

 

[Donald]

In addition to incentives like a cash rebate, you can almost always get a lower interest rate for a new car.

 

[Mykl]

Originally Posted By: CKN

Sir, if you live in the wide-open spaces of the west (coming from Texas you should know this) - it's a heck of an easier drive in a NAME YOUR LUXURY CAR HERE than a Scion Xb.

I guess that's why more Suburbans are sold in Texas than anywhere else.

And that's the truth.


Well yeah, I totally appreciate the virtues of a solid highway cruiser to cross the great open spaces you might find in the Midwest. But as far as comfort goes, I'm just not seeing a big enough difference between a Toyota Avalon and a 7-Series BMW to justify all the money that gets set on fire the second you sign that dotted line at the Bavarian luxury dealership.

Suburbans are at least extremely useful vehicles, particularly in rural environments. I've never considered them to be "luxury" though.

 

[TomYoung]

Originally Posted By: bullwinkle
Originally Posted By: Burt
Originally Posted By: bullwinkle
I have the opposite experience-the xB in my sig cost $13,700 new, they're still selling for around $8700 used, & it'll be 10 years old in February! Only $500/year!


Good luck on that. Edmunds values it at $3,500 trade-in. $4,500 private party sale. Still $1,000/year is good.
That's what I had thought, when my wife got rear-ended hard in it this past summer-but the bill was over $5000, & the insurance company didn't try to total it (I thought it was a goner, I was actually searching for another one in the '04-'06 1st generation xBs)-everyone I found was either an abused high mileage ricer, or if it was good with no rust, damage, or original paint it was over $8500!


If you look at 10-year-old xB's, the fact is that they were cheap cars to begin with and have been used hard by young drivers and are just not all that great. It's a rare car that would be worth this price.

 

[HerrStig]

Originally Posted By: Spazdog
It varies a bit by manufacturer.

My wife's current car and previous cars were bargains because those particular models suffer serious depreciation.

Our PT Cruiser stickered at nearly $25,000. We got it with 4,000 miles for $15,000.

Our 200 stickered at nearly $29,000 We got it with 2,200 miles for $18,000.

The big surprise was Kia.
Kia is all the sudden-out of nowhere holding its value.
In previous years, you drive off the lot in a Kia and it is immediately half its original price.
A $29,000 Optima with very low mileage was nearly $25,000

Toyota Camry and Honda Accord have long been that way. Ford and GM are better than Chrysler but not as good as Toyota and Honda in depreciation.

I remember when the swells bragged they were at the "head of the list" to buy a new Honda because they "knew sumbody". Buy for LIST price, BTW. Looks like Kia is the "gotta have it" now.

 

[HerrStig]

Originally Posted By: expat
Originally Posted By: WobblyElvis
My father in-law bought a new Jeep for $28,500 drive away price. He put 8,000 miles on it and then died. It was 13 months old and I had the original bill of sale and his death certificate. Do you think anyone would bite at $18,000? Not a single offer. Had to take it to a dealer and accept $15,500. That is terrible depreciation.


This is the crux of the issue "What is that 1-3 year old car worth" t's one price if it's on a Dealers lot among New cars that the dealer also wants to sell (along with possible service and Add-ons) Another if the new owner wants to liquidate the car for cash.

We live in a area that a lot of people retire to. The last two cars we have bought (2 years old) were from newly retired people that decided that they now don't really need two cars.

The above post it accurate, we paid about 60% of the 'New' car price on a car that had been (by the nature of the sale) babied and seldom used.

We post 'Want Ads' for the model car we want and offer a cash price about 2k lower than it would typically be on the lot.
You also get to meet (and size up) the previous owner.

South Florida is a good place to look for low miles cars.

 

[CKN]

Originally Posted By: Mykl
Originally Posted By: CKN

Sir, if you live in the wide-open spaces of the west (coming from Texas you should know this) - it's a heck of an easier drive in a NAME YOUR LUXURY CAR HERE than a Scion Xb.

I guess that's why more Suburbans are sold in Texas than anywhere else.

And that's the truth.


Well yeah, I totally appreciate the virtues of a solid highway cruiser to cross the great open spaces you might find in the Midwest. But as far as comfort goes, I'm just not seeing a big enough difference between a Toyota Avalon and a 7-Series BMW to justify all the money that gets set on fire the second you sign that dotted line at the Bavarian luxury dealership.

Suburbans are at least extremely useful vehicles, particularly in rural environments. I've never considered them to be "luxury" though.


Go look and drive a new Suburban and report back.

 

[CT8]

Originally Posted By: Mykl
Originally Posted By: CKN

Sir, if you live in the wide-open spaces of the west (coming from Texas you should know this) - it's a heck of an easier drive in a NAME YOUR LUXURY CAR HERE than a Scion Xb.

I guess that's why more Suburbans are sold in Texas than anywhere else.

And that's the truth.


Well yeah, I totally appreciate the virtues of a solid highway cruiser to cross the great open spaces you might find in the Midwest. But as far as comfort goes, I'm just not seeing a big enough difference between a Toyota Avalon and a 7-Series BMW to justify all the money that gets set on fire the second you sign that dotted line at the Bavarian luxury dealership.

Suburbans are at least extremely useful vehicles, particularly in rural environments. I've never considered them to be "luxury" though.
People are calling Honda Accords Luxury cars these days!

 

[CKN]

Originally Posted By: CT8
Originally Posted By: Mykl
Originally Posted By: CKN

Sir, if you live in the wide-open spaces of the west (coming from Texas you should know this) - it's a heck of an easier drive in a NAME YOUR LUXURY CAR HERE than a Scion Xb.

I guess that's why more Suburbans are sold in Texas than anywhere else.

And that's the truth.


Well yeah, I totally appreciate the virtues of a solid highway cruiser to cross the great open spaces you might find in the Midwest. But as far as comfort goes, I'm just not seeing a big enough difference between a Toyota Avalon and a 7-Series BMW to justify all the money that gets set on fire the second you sign that dotted line at the Bavarian luxury dealership.

Suburbans are at least extremely useful vehicles, particularly in rural environments. I've never considered them to be "luxury" though.
People are calling Honda Accords Luxury cars these days!


I had a top of the line Accord EX-L. It was a nice car and ultra reliable. They can call it a luxury car - but just because it has faux wood and leather doesn't make it so!

 

[hattaresguy]

Originally Posted By: WobblyElvis
My father in-law bought a new Jeep for $28,500 drive away price. He put 8,000 miles on it and then died. It was 13 months old and I had the original bill of sale and his death certificate. Do you think anyone would bite at $18,000? Not a single offer. Had to take it to a dealer and accept $15,500. That is terrible depreciation.


Than the dealer put it on the lot for $24,900.

 

[hattaresguy]

Originally Posted By: CT8
Originally Posted By: Mykl
Originally Posted By: CKN

Sir, if you live in the wide-open spaces of the west (coming from Texas you should know this) - it's a heck of an easier drive in a NAME YOUR LUXURY CAR HERE than a Scion Xb.

I guess that's why more Suburbans are sold in Texas than anywhere else.

And that's the truth.


Well yeah, I totally appreciate the virtues of a solid highway cruiser to cross the great open spaces you might find in the Midwest. But as far as comfort goes, I'm just not seeing a big enough difference between a Toyota Avalon and a 7-Series BMW to justify all the money that gets set on fire the second you sign that dotted line at the Bavarian luxury dealership.

Suburbans are at least extremely useful vehicles, particularly in rural environments. I've never considered them to be "luxury" though.
People are calling Honda Accords Luxury cars these days!


High end cars are like good Scotch and nice watch's, not everyone can appreciate the difference between a Glenfarclas 20 and a Dewers.

As for higher end cars Porsche seems to do well come resale time, as does Lexus. Mercedes and BMW are 50% off after the first 3 years.

The worst are AMG Mercedes, nothing losses value faster than last years AMG.

 

[CKN]

I lived in Southern California -and it's been my personal experience once you get over 10grand (no matter what the make) it's extremely difficult to sell a used vehicle. Most people (does not include most on this board) just do not want the hassle personally dealing with the credit union, bank, etc. The dealer is a "one stop shop". And many lending institutions if their customer is dealing with a private party wants to look at the vehicle before they finalize the loan. Also, most buyers can't understand Bill of Sale verses Title if the private party's vehicle still has an outstanding loan.

 

[camrydriver111]

Originally Posted By: hattaresguy
Originally Posted By: CT8
Originally Posted By: Mykl
Originally Posted By: CKN

Sir, if you live in the wide-open spaces of the west (coming from Texas you should know this) - it's a heck of an easier drive in a NAME YOUR LUXURY CAR HERE than a Scion Xb.

I guess that's why more Suburbans are sold in Texas than anywhere else.

And that's the truth.


Well yeah, I totally appreciate the virtues of a solid highway cruiser to cross the great open spaces you might find in the Midwest. But as far as comfort goes, I'm just not seeing a big enough difference between a Toyota Avalon and a 7-Series BMW to justify all the money that gets set on fire the second you sign that dotted line at the Bavarian luxury dealership.

Suburbans are at least extremely useful vehicles, particularly in rural environments. I've never considered them to be "luxury" though.
People are calling Honda Accords Luxury cars these days!


High end cars are like good Scotch and nice watch's, not everyone can appreciate the difference between a Glenfarclas 20 and a Dewers.

As for higher end cars Porsche seems to do well come resale time, as does Lexus. Mercedes and BMW are 50% off after the first 3 years.

The worst are AMG Mercedes, nothing losses value faster than last years AMG.


I imagine people who buy them usually have enough money that they can just eat the depreciation. Probably not many people live paycheck to paycheck and drive a new BMW or MB.

 

[Spazdog]

Originally Posted By: HerrStig
Originally Posted By: Spazdog
It varies a bit by manufacturer.

My wife's current car and previous cars were bargains because those particular models suffer serious depreciation.

Our PT Cruiser stickered at nearly $25,000. We got it with 4,000 miles for $15,000.

Our 200 stickered at nearly $29,000 We got it with 2,200 miles for $18,000.

The big surprise was Kia.
Kia is all the sudden-out of nowhere holding its value.
In previous years, you drive off the lot in a Kia and it is immediately half its original price.
A $29,000 Optima with very low mileage was nearly $25,000

Toyota Camry and Honda Accord have long been that way. Ford and GM are better than Chrysler but not as good as Toyota and Honda in depreciation.

I remember when the swells bragged they were at the "head of the list" to buy a new Honda because they "knew sumbody". Buy for LIST price, BTW. Looks like Kia is the "gotta have it" now.


Ed Wallace wrote about that awhile back.

He was selling new '79 Accords for $7950 and you had to be on a waitlist.

That's less than the sticker price was on an LD5 V6 Cutlass Supreme.

And we're talking about a 1979 Accord. It wasn't a world beater in....well, anything.
It wasn't even an attractive car. The '79 gas crisis probably didn't hurt sales any but more expensive than a Cutlass?

Resale values built slowly for Honda and Toyota. Kia seems to have gotten its extra value overnight.

 

[CKN]

Originally Posted By: Spazdog
Originally Posted By: HerrStig
Originally Posted By: Spazdog
It varies a bit by manufacturer.

My wife's current car and previous cars were bargains because those particular models suffer serious depreciation.

Our PT Cruiser stickered at nearly $25,000. We got it with 4,000 miles for $15,000.

Our 200 stickered at nearly $29,000 We got it with 2,200 miles for $18,000.

The big surprise was Kia.
Kia is all the sudden-out of nowhere holding its value.
In previous years, you drive off the lot in a Kia and it is immediately half its original price.
A $29,000 Optima with very low mileage was nearly $25,000

Toyota Camry and Honda Accord have long been that way. Ford and GM are better than Chrysler but not as good as Toyota and Honda in depreciation.

I remember when the swells bragged they were at the "head of the list" to buy a new Honda because they "knew sumbody". Buy for LIST price, BTW. Looks like Kia is the "gotta have it" now.


Ed Wallace wrote about that awhile back.

He was selling new '79 Accords for $7950 and you had to be on a waitlist.

That's less than the sticker price was on an LD5 V6 Cutlass Supreme.

And we're talking about a 1979 Accord. It wasn't a world beater in....well, anything.
It wasn't even an attractive car. The '79 gas crisis probably didn't hurt sales any but more expensive than a Cutlass?

Resale values built slowly for Honda and Toyota. Kia seems to have gotten its extra value overnight.


The 2015 Kia Mini-Van is one nice ride. It might be the second coming of the mini van!

 

[SteveSRT8]

Depreciation is the used car buyer's friend.

My fav was an 05 Silverado I bought in mid 05 with TWO window stickers totaling 41k. The truck had 200 miles on it. Purchased for 26k out the door!

But fast forward to a month or two ago when it was sold for 11k.

Depreciation is a wildly varied thing, it is NOT linear and affects different vehicles differently.

My fleet vans cost about 40-50k depending how they are fitted out. But they have a distinct 'bottom' where they simply don't go much lower if they are in working condition. Sold an 04 this year for 17k that cost me 40k new that had half a million miles on it!

YMMV, you simply must familiarize yourself with whatever vehicle you are interested in. Do your legwork and there is always a bargain somewhere...

 

[exranger06]

Originally Posted By: camrydriver111
Originally Posted By: hattaresguy

High end cars are like good Scotch and nice watch's, not everyone can appreciate the difference between a Glenfarclas 20 and a Dewers.

As for higher end cars Porsche seems to do well come resale time, as does Lexus. Mercedes and BMW are 50% off after the first 3 years.

The worst are AMG Mercedes, nothing losses value faster than last years AMG.


I imagine people who buy them usually have enough money that they can just eat the depreciation. Probably not many people live paycheck to paycheck and drive a new BMW or MB.

LOL, tons of people are driving a MB or BMW to give the impression that they're rich, while struggling to pay their bills. Apparently it works; after all, they had you fooled.