Plan on keeping a discounted car long enough to realize its full savings
■ By Richard Perry / Contributed
Greetings from the Hemet Car Guy,
Every year end at new-car franchise dealers there is the out-with-the-old and in-with-the-new sales as the 2018 models arrive and dealers are offering close-out prices on the remaining 2017 models.
I’m always interested in seeing the new body styles and features of what is coming out on the new vehicles—not that I’m going to run out and buy one. It’s because I’m looking forward to buying the car 1–3 years later—when cars depreciate and prices drop. As a used car dealer, we track cars that lose the most value in their first year of ownership and thereafter so as to get the best value for our clients at resale. Many models do lose the most value during the first year of ownership. Especially the model years before a car gets redesigned, or when the manufacturer offers big-discount rebates on a new vehicle, will you see a big dip when the car is on the used market. And actually that’s great news!
Dramatic price drop
For example, three years ago, the Hyundai Genesis lost 38.2 percent of its value in the first year alone! Again, that’s another reason I say the first 1-3 years is a good time to save money. (Loyal readers have heard my views about this in previous Hemet Car Guy articles.)
The big depreciation in the Hyundai was due to the Genesis’s old design, since the sedan was replaced with a dramatically improved version. This is just an example of why most cars take substantial depreciation hits right before they’re replaced with an all-new model. Of course, the all-new version of any given car will likely offer safety and technology improvements over the previous model. Still, if getting a car for the absolute lowest price is your goal, you might want to look at an older version of a new car. The Baby Benz ( I call it )—the Smart Car Fortwo—also loses about 37 percent in the first year offering great savings on a tiny car.
Save $30,000 on some models
If you are interested in saving big money when buying a new vehicle, choosing a 1-3-year-old Mercedes -Benz S-Class, which loses 32.4 percent of its value in the first year, can save shoppers more than $30,000, compared to buying a brand new model.
But also keep this in mind if you’re planning on buying a model with faster-than-usual depreciation: It likely will continue to lose money faster than competitive models, meaning the savings made at purchase will be given back if it’s sold too soon. So plan on keeping the car awhile and enjoy the vehicle—and the savings.
Again this is just my opinion.
The Hemet Car Guy
P.S. Here is the answer to last week’s quiz: German inventor Karl Benz was the largest car company in the world with 572 units produced in 1899.
Richard Perry, owner of VIP Autos, is The Hemet Car Guy. For more information, visit http://www.hemetcarguy.info