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ABOVE: Mike Carter checks out the information on a used 2001 Dodge Ram 1500 conversion van at Shirlie G. Slack Inc. Auto Center in Fredericksburg.
Mike Carter (left) talks with his wife, Gina, as she checks out a used 2001 Dodge Ram conversion van at Shirlie G. Slack. New-car incentives mean drivers are trading in used cars with fewer miles. |
ight now might be the best time to get a quality used car.
Manufacturers are lowering prices daily and offering interest-free loans in order to sell more new cars. Because of these incentives making new cars so affordable, people are trading in their used cars.
Many of the trade-ins local dealerships are seeing are used cars that wouldn't have been traded otherwise.
"These cars have good miles and good equipment," said Paul Carroll, used-car sales manager at Purvis Ford in Fredericksburg. "Maybe cars that would have been traded with 89,000 or 90,000 miles on them people traded in with only 40,000 or 50,000 miles on them."
Jonathan Pittman, used-car sales manager at Radley Chevrolet in Fredericksburg, has seen a similar trend.
"There's no doubt that every time the manufacturer announces a new incentive or rebate plan, it creates more trade-ins for us," he said. "Sixty-four percent of my used-car inventory is now local trade-ins."
With record-setting incentives driving down new-car prices, dealers are cutting used-car prices, too.
"Incentives are reaching historic records," said Jesse Toprak, analyst with edmunds .com, a Web site that evaluates vehicles for shoppers.
In September, Toprak said rebates on new cars reached the highest level ever at an average of $3,100 per vehicle.
The impact on used cars can be seen mostly on newer models, Toprak said.
"If a dealer has '03 and '04 models on the lot and wants to price the '05 models competitively, then he will have to price the '03 model low in order to sell it," he said.
Another reason it's a good time to buy a used car is the rapid depreciation in value new vehicles see when they leave the lot.
New cars lose around 20 percent of their value as soon as you drive them away. After a year or two, a car's value can depreciate up to 35 percent, according to Mark Westall, owner of Autobility in Fredericksburg.
Cars that have depreciated in value will have a low price, but not necessarily low quality.
"People can buy a car that has already seen a 20, 30 or 40 percent depreciation and come out ahead," he said.
Experts also say that while incentives are dragging down the prices on new cars, high numbers of used cars continue to sell.
"Over 45 million used cars were sold in 2003," said Toprak. "That is more than twice the number of new cars sold in the same time frame."
At Radley Chevrolet, sales have been consistent throughout the year. Pittman said his lot has continued to sell used cars at a steady pace.
Shirlie Slack Finance Manager Chris Duday attributed his lot's continued used-car sales partly to the demographics of the Fredericksburg area.
"This market tends to do pretty well because we don't have factories and plants where people get laid off," he said.
One benefit of buying used is that it can help consumers move up. Instead of getting a 2005 Honda Accord, a consumer could buy a 2002 BMW for the same amount of money, according to the Kelley Blue Book Web site.
The new Honda Accord LX costs about $20,000, which is the same price as a 2002 BMW 325-i with 22,000 miles on it, the site reports.
If you're planning to buy a used car, Toprak advises considering what kind of car you're going after.
"For mainstream, domestic vehicles, you shouldn't have too much difficulty getting a good price," he said.
However, if you're planning on buying an SUV or 4X4, he recommends doing so before winter comes.
"Prices for 4X4s and SUVs shoot up after the first snow," he said.
Competition in the used-car market has also been affected by the falling prices on new cars.
Depressed values on new and used vehicles are also showing up in the form of low trade-in values.
"If you trade in your used car, you're not going to get nearly the amount you expected," Toprak said.
