Used SUVs & Trucks Costing More Than New Ones

In a counter-intuitive turn of events, the way the market is now, a used SUV can end up costing more than a new one.

Automakers clamped down on SUV and truck production in 2008 and 2009, but now that gas prices are more normal and the economy doesn’t look like it’s getting worse, buyers are snapping up these models.

This isn’t good news if you’re looking through the bargain bin used car deal, but it is good if you’re looking to trade in your old SUV for a new one. Looks like it’s one of the few times where a car has increased in value after it was driven off the dealer’s lot.

For more info on buying a new or used car, check out Consumer Reports car buying advice.

When Used Costs More Than New [WSJ]

Comments

Edit Your Comment

  1. sp00nix says:

    i thought it was because new SUVs are just jacked up sedans

    • obits3 says:

      Saddly this is true. The new Ford Explorer is just a front wheel drive unibody. I think ford wants to phase out the Escape and just sell front wheel drive Explorers.

      • kriswone says:

        Phase out the best selling vehicle they make (over 1,356,915 sold in less than ten years)? Unless you have some inside info on this, i take it that you were joking.

        For hybrid fans:
        The Ford Escape Hybrid was the first American-built hybrid and the first hybrid vehicle from an American automaker. The Escape Hybrid is the top selling hybrid in the U.S. manufactured by an American manufacturer, and reached cumulative sales of 95,285 vehicles by December 2009

        • obits3 says:

          They’re not going to do this now. I’m just thinking that a FWD Explorer & a FWD Escape are redundant. Ford has been changing the shape of thier line of autos (e.g. moving the Focus “up” a little in status/price and putting the Fiesta in its place). It all depends of the market. It was just a thought.

          20 years ago, a guy asked my Dad, what do you think about getting rid of the Mercury division. My Dad was like “We would never do that, we’re making good money…”

          Who knows what’s going to happen?

      • Zowzers says:

        The Contour was the basis for the “new” explorer. Hence the correlation between the year the Contour was canned and when the “new” explorer showed up.

      • Willow16 says:

        We have a 2003 V6 Explorer XLT and, looking at the newer Explorers, realize how much smaller they are now. We use the size all the time – we can fit a 4′ x 8′ piece of plywood in the back, we have towed all sorts of things, we’re always using the third seat, have taken it off road, etc. My plan is to keep it going as long as possible.

        I just don’t understand why Ford would redesign such a popular car. We started with a 1991 Explorer Sport and expected to continue buying them.

    • sufreak says:

      Most people who own SUVs don’t need them. They need jacked up sedans. And probably not even that.

      • obits3 says:

        But being bigger than other people is fun!

      • pecan 3.14159265 says:

        My crossover SUV is really just a large sedan. We only have one car, so it was pretty important to have something that isn’t quite as small as a Civic but is smaller than a midsize SUV. Heck, even the Rav 4, which is supposedly a crossover vehicle, is more of a midsize SUV. We found it to be ridiculously oversized for the category in which it was placed.

    • jefeloco says:

      They aren’t even really jacked up sedans; more like jacked up, cladding toting minivans. I don’t want to disagree with you since minivans are based on sedan platforms (Lambda seems to be quite prolific at GM these days…), I just like the sedans more than the minivans and want to blame the latter :)

      • colorisnteverything says:

        While my Kia Soul is not an SUV technically, it feels like one. Part of the reason I bought it was that I haul a lot of crap- bikes, luggage, people-as a grad student and am always traveling. My car is awesome for packing up for a camping trip and I moved all my stuff across three states with just my car. My trailer hitch doesn’t ever tow anything, but it is great for bikes (I’m a cyclist). Sitting up higher than my mom’s accord or my friend’s nissan is definitely a plus though. And I still get 30MPG. Really, I use to give people crap for buying a bigger car, but now I get why it is great. I really do love my car.

  2. SerenityDan says:

    They’re not used, they are “pre-optimized” so you know they aren’t lemons. Best Buy is taking over the car dealerships.

  3. blogger X says:

    Last year I bought a ’02 Explorer for $7,000. It had 65,000 miles on it. Just for kicks I did a search on the same model last month, prices are around $10,000, all models have nearly 100,000 miles on them!

  4. fortymegafonzies says:

    They seem to be only comparing the monthly payment, not the price of the vehicle. Most new cars have longer financing and lower interest rates so it’s not really that surprising that a one-year-old vehicle could have a payment almost the same as a new one.

    • Loias supports harsher punishments against corporations says:

      “Once you are shopping, don’t be surprised if a late-model used vehicle costs about the same as a comparable new vehicle—at least in terms of the monthly finance or lease payment.”

      You are correct, and this is wildly misleading.

      New car @ $500/month for 10 years = 60000
      Used car @ $600/month for 6 years = 43200

      Used is still cheaper.

      • Platypi {Redacted} says:

        Holy hell, a 10 year loan for a car??? I remember when 5 yrs was long, and 6-7 yrs were outrageous. I wouldn’t pay on a car for more than 3 years, personally (paid off both current vehicles early as well).

        • obits3 says:

          I hope to pay off my car in one year (I’ve given up a lot this year, but it’s worth it to me to save about $2,000 in the long run).

        • Harmodios says:

          I agree, we are actually saving so we can buy a car cash. I’m putting $3,000 a month away so I can get my new Volvo by next August.

          • wrbwrx says:

            But if you buy with a 0% loan, like I did, you wont have to wait for a year before your buy your new car.

            • huadpe says:

              Depends what his risk appetite is. If you lock in a loan payment, you need to be sure you can pay that every single month. If he falls behind on his savings goal, it’s not nearly as big a deal.

            • nbs2 says:

              If only Subaru would offer a 0% loan. The current 1.9 (for up to 36 months) is the lowest we’ve seen in our on-again-off-again 18 months of watching the market. It has us tempted, but We may just wait until next September and pay cash.

              • Harmodios says:

                I get your point, but I don’t like having a loan on a depreciating asset. Also, this way if, God forbid, my wife and I lose our jobs in between we can use the money for something else. Besides, our ten year old car will probably last till summer anyway.

            • mebaman says:

              Unless you bought GM at 0%, in which the finance wing, rather than the factory, is simply footing the incentive payment back to you that, when netted with the sale price, better reveals the true market price of the vehicle.

        • DeadFlorist says:

          For my part, I’m glad some suckers are out there financing late model cars. They will be tomorrow’s early model cars that I can snap up for a couple of grand cash and use for many more years.

  5. Chmeeee says:

    The smart car buyer moves opposite the used car market. High gas prices, sell the diesel or hybrid and buy a gas sucker. Gas prices drop, flip it back over. Back in the days of $4+ gas, people were selling SUVs for pennies. Meanwhile, I heard stories of people selling 2 year old VW TDIs for more than the new MSRP.

    • daave says:

      2 years ago I bought a 2004 loaded Dodge Dam using this method. i needed a truck, gas was almost $4 a gallon. i got a truck that would normally sell for $15k+ for $10.5k. The dealers couldnt get rid of trucks, and the savings paid for years worth of the gas difference.

      • NeverLetMeDown says:

        “Dodge Dam”

        I know they’re big trucks, but can you really use them to block off an entire river?

    • halfcuban says:

      There’s no logic to “moving” in any direction based on the used car “market”; you buy what you can afford and what you can afford with gas, simple as that. Unless you own a used car dealership or somehow believe you’re going to start flipping cars ala houses (and we saw how well THAT went) worrying about the “used car market” is a waste of your time.

  6. u1itn0w2day says:

    Vehicle shrink ray?

  7. Geekybiker says:

    They’re talking about payments, not actual cost. Not surprising this happens sometimes with sweetheart special financing deals that some new vehicles have. Even without a special deal, the interest rate is higher on a used car than a new car. If the purchase prices aren’t far apart, the payments could very well be lower.

  8. captadam says:

    More normal gas prices? Regular is up to about $3.00 per gallon in Ohio. Do people really just look at the price at the pump on their way to buy a new car to determine what gasoline will cost throughout the life of the car?

    • kiltman says:

      Yes!

    • JiminyChristmas says:

      No joke. Even with the projections of continued slow economic growth and high unemployment oil is now about $88/barrel. If economic growth improves from just ‘weak’ to ‘moderate’ next year, oil could easily cost over $100/barrel again.

      A reasonably prudent person shopping for an SUV should ask themselves if they could afford to drive it if gas cost $3.50/gallon, which could easily happen within the next year.

  9. JohnDeere says:

    well if your the type of person to pay more for something used than new, i think you deserve what you get.

  10. Torgonius wants an edit button says:

    If supply is down and demand is up, price goes up. If this concept confuses you, please don’t vote anymore.

    • TuxthePenguin says:

      Could it possibly be that there is an additional shortage of used vehicles because we destroyed so many about a year ago?

      • rbb says:

        +1 Cash for Clunkers took a lot of fully serviceable vehicles off the road and out of the used car market.

        • obits3 says:

          But it’s good for the environment to get rit of useful vehicles and mine our Earth to make brand new cars before they are needed, right?

        • jamar0303 says:

          Just be glad the Japanese system of MOT (DMV equivalent) tests of increasing rigor as the car ages doesn’t exist in America.

  11. OnePumpChump says:

    The good news is that this still mostly affects douchebags.

  12. A Bay Horse says:

    Could this also be because customers’ credit is damaged? Used financing is probably easier to obtain than new financing.

  13. balthisar says:

    Wow. KBB is telling me my Expedition is worth $5,000 more than when I bought it. Of course I practically stole it when all the stupid people were dumping their SUVs when gasoline was over $4 per gallon (i.e., stupid for taking out new loans on upside down vehicles that actually increased their costs).

    Hmmm… KBB also says that my Continental is now worth a lot more, too. Maybe it’s worth insuring again?

  14. There's room to move as a fry cook says:

    If you expect to pay $x per month for the rest of your life and not drive car into the ground* then you get a better car for the buck buying new.

    *Unless it’s your last typical-old-persons-last-car-I-will-ever-buy-and-when-it-breaks-I’m-car-less.

    • colorisnteverything says:

      This is true, especially if you are financing. I am all for buying used if it is the best deal, but for my money I could have bought a kia that was a year older than mine – different model, but still – and I would not have gotten a warrantee or a 2.9% APR. It being my first car and a car that has to last me until I get my PhD, I thought buying used wasn’t the best idea.

  15. crazydavythe1st says:

    You know Consumerist, I had no idea that I should have been comparing auto loans based on monthly payment instead of overall cost. Thanks for the info!

  16. yzerman says:

    gas prices are more normal? Really, funny, seems like gas went up to 3.10 here recently when it was in the 2.50 range all summer, I suspect before long it will be back up near 4 dollars again.

  17. duncanblackthorne says:

    Lovely. And here I am with a 20 year old pickup truck I want to replace next year, and you’re telling me that the 5-or-less year old pickup I’d be looking for is going to be, essentially, overpriced? I don’t want a new one, damnit.

  18. BurtReynolds says:

    So buy a new one.

    Or negotiate like hell. Someone will come down to 2009 prices to make the sale.

    I really do find it hard to believe that people are being suckered into buying used vehicles for more than the new one. Unless it is some limited edition Porsche, I doubt there is that much demand on a small supply.

  19. physics2010 says:

    This isn’t new. With financing deals and rebates quite often new cars were less expensive, especially for people with mediocre credit. A bank is much more willing to finance a new car, than a used car. 21% interest will jack up the price very quickly. Additionally rebates are typically offered on newer cars. I’ve seen multiple times where a new car on the same lot is less expensive than the one year old “but still brand new” because they still want msrp for a one year old car.

  20. sopmodm14 says:

    gas prices fluctuate, so if you have a gas guzzler, you fair better when prices are low….but a compact still beasts ya

    when gas prices go up, you’re gonna have to hitch a ride with your prius friend

  21. Buckus says:

    With the pending arrival of our third child, our wife and I went shopping for minivans. Our first stop was at a Honda store, looking at a 2008 Odyssey with 30,000 miles. Looked and drove like new, asking $25,000 for it.

    The next week, we looked at a new 2010 Odyssey, 8 miles, same trim level and amenities as the used Odyssey. Negotiated $25,600 for it. Yes, it was a 2010 and the 2011′s were pending, but still…

    $600 difference between new and used? The used was 6,000 miles from being out of warranty, plus whatever wear and tear the tires, brakes, etc took.

    Most people will take new every time at that rate.

    • pecan 3.14159265 says:

      Sometimes you can get a much better deal when the new year models are rolling out – we picked our car based on the features we liked and the next year’s model was basically the same. We negotiated a better price, though, because the dealer wanted to get rid of all the “old” year models to make way for the new ones.

    • pandroid says:

      We had the same experience when we bought a Honda Civic this year. Hondas do hold their value better than any other brand… but it’s still a little ridiculous to have new and used prices that close.

  22. sven.kirk says:

    The cause of this is this Cash For Clunkers. It took out a huge portion of the market supply of used vehicles.

  23. hansolo247 says:

    Are used cars LISTED more than new ones, or is money changing hands to where people PAY more for used cars than new?

    I absolutely do NOT think this is the case. Only an absolute idiot would pay more for used than new (on the same model, options, etc).

    While this is a temporary price *listing* disconnect, this only means Used prices will fall. hard.

  24. tooluser says:

    This also happened in the US after WWII. There had been no commercial car production for 3+ years, and the pent up demand was enormous. When good times finally hit, you could buy a nice new car every year, and sell it the next year for at least what you bought it for. It only lasted a few years though. These days, with production being a bit more nimble, I’d be surprised if the trend lasts beyond the end of the year.

  25. JulesWinnfield says:

    According to Kelly Blue Book, this seems true. But in the real world I just traded in an ’06 Hyundai Tucson for a low-mileage certified ’08 Honda CR-V. The asking price, what I got for my trade-in, and the final negotiated price for the CR-V were WAY below the values stated in Kelly Blue Book. And the asking price for the CR-V was pretty much average for the Northeast.

    Maybe the WSJ story is true for the larger truck-based SUV’s, but it’s just BS for car-based SUV’s like the Tucson and the CR-V.

  26. The Lone Gunman says:

    I’ve been wondering why I’ve gotten 4 letters now over this past year from my local dealer wanting to “buy back” my ’06 Sorrento, claiming each time that there’s some sort of demand for that year and model. Makes me want to hang onto my KIA even longer now every time I get another letter laike that.

    Maybe this is the reason for the interest on their part.

  27. FenrirIII says:

    Just bought a new SUV (2011). The previous year’s models were all sold out and the used ones were running $1-2K less than brand new with 25K+ miles. That’s a problem.