My Top 3: New over Used
Buying a vehicle can be a very polarizing experience. Generally the second most expensive transaction financially in your life behind your home, as soon as people around you hear you're looking for a new vehicle, usually a tidal wave of anecdotal advice from friends, family, and colleagues is soon to follow.
You'll talk to "New Buying Ned" who as his name would suggest, will tell you why he only ever buys vehicles brand new. Something about horror stories how when he was 18 he bought a used vehicle, and it broke down on him every 20 feet, so since then, he buys a new vehicle every 3-5 years, and never has a problem now, and wouldn't do it any other way, and you shouldn't either. He also mentions buying pre owned makes you look like a cheapskate, and that's why that guy Peter in your office can't get a date.
On the flip side, "Pre Owned Peter" might overhear your conversation, and after Ned leaves your desk at work, Peter comes over to tell you what a moron Ned is, and that you should never buy a brand new vehicle, and proceeds to launch into a self indulgent conversation about how much smarter buying pre owned is, and how much money you'll save, and that this is the reason Ned is broke and his wife left him.
So, which of these guys is correct?
Frankly, neither of them. A lot of people like to make blanket statements about getting a new vehicle, and everybody is ready to offer their advice, but most often they're projecting their own reasoning and situations on to you. Anybody that makes a blanket statement like "Always buy used", "Always buy new", "Never Lease a Car", etc, is making a statement that pertains to their situation and feelings and can be promptly ignored. This is one of the reasons finding someone independent to help guide you through the process is so useful. They can objectively help you based on your needs and situation find the path that's best for you.
The combination of financial fear generated by the last recession and the rise in people actually taking an interest in their financial health, has led to a large misconception when it comes to buying a new vehicle, perpetrated by the Pre Owned Peter's of the world. That buying a pre-owned vehicle is always better financially. When they look for a car, they'll start researching online, and will only look at vehicles 2-5 years old. These are the same people that you'll hear quoting things like "Vehicles lose 30% of their value as soon as you drive it off the lot".
What both the New Buying Ned's and Pre Owned Peter's of the world fail to recognize is that the best options are vehicle and situation dependent.
Today we're going to look at my top 3 picks for buying new over used.
The Subaru WRX STi
If your journey for a new vehicle leads you to the Subaru WRX STi, I highly suggest looking at new models. The combination of minimal year over year changes, all weather capability, and an overheated secondary market, make buying a used STi often not any better than buying brand new.
The STi has a particularly strong resale value because the market for used ones tend to be under 30 males, who often may not be able to qualify for factory financing supported through Subaru and it's loaners. What happens is used inventory often makes its way to more predatory lots & with lenders who not only charge more for financing, but more for the vehicle itself. Because of the rabid fanbase associated with the car itself, these cars sell anyways. The number of people paying upwards of $900/mth on long term, high interest loans on these cars is crazy. And this isn't a new phenomenon; The STi has been in North America for 15 years with all versions of the STi being similar.
For reference, 1 year old STi's are selling for basically MSRP, and 3 year old models with less than 60,000kms are only 12-17% cheaper than brand new. Combine that with the fact that most people aren't paying cash for a vehicle, so higher financing rates for pre-owned, and it's not uncommon that your out of pocket cost is the same as the brand new vehicle!
The Toyota Tundra
It's not a secret that the domestic brands still dominate the full size pickup truck market. However there is a segment of fiercely loyal Toyota pickup enthusiasts. Ones who wouldn't dream of owning anything from a domestic brand, and one of their personal pride points was when Top Gear placed a Toyota pickup in a building which was subsequently demolished, and then the pickup started on the first try afterwards.
So, you have a brand that's known for reliability, combined with a mythos of indestructibility, and the fact that import offerings for full size trucks are scarce at best. Not to mention the fact that a Tundra that's a few years old is virtually identical to a new one on sale.
All of this combines into a perfect storm for used car buyers, and not a favourable one. The cheapest listed Tundra in Canada (2016, 5.7, Verified available, under 60,000 kms) was only about $7000 cheaper than the brand new truck, with most examples being only $3-4000 cheaper than a brand new truck.
If you see yourself venturing into a Tundra, I recommend also venturing into the new showroom instead of the pre-owned one.
The Jeep Wrangler
As is a trend with vehicles on this top 3 list, vehicles that don't undergo large changes, combined with a faithful enthusiast base, have a tendency to have a secondary market that's hotter than normal. And in no case is that stronger than the Jeep Wrangler. The basic design philosophy of the Wrangler is still largely based off of the iconic Willy's Jeep that was used in WW2.
Post war, the modern version of the Wrangler has become an off road icon. When looking for an off-road capable vehicle out of the box, there's not a single better option available than a Wrangler. It's that off road cred that has lead to minimal design changes over the years, with only a nip and tuck here and there. Even for 2018, when the Wrangler was completely redesigned from the ground up, only the most enthusiastic car nerds can tell the difference at a glance. To everyone else, it's unmistakably a Jeep.
Even though most Wranglers will spend their lives in traffic or carting groceries, the Wranglers unflappable credibility and associated image actually makes it the undisputed king of depreciation. No vehicle on sale today retains value as much as a Wrangler. This is particularly impressive when you consider most domestic vehicles aren't exactly know for this.
Now the Wrangler is an interesting case right now, because as I mentioned above, the Wrangler was just redesigned for last year. So, this makes it a little more complicated as there's a fair amount of difference under the skin between a 2017 and a 2018+ model. If you're looking at a 2018+, look at buying new. For 2017s and older, the 2016-2017s are still stubbornly holding their value, but I suspect a correction will happen soon as the market of pre-owned 2018's start coming into the market.
Now, these vehicles are just a few times where it may be a better option to buy new over used. Depending on your particular wants and needs, the situation may be different, which is why having someone independent to help guide you through finding your next dream vehicle is a worthwhile investment.
If you or someone you know is looking for a new vehicle, contact us at www.ashhabibautoconsulting.com/contact/ to book your FREE initial consultation! You can also subscribe to our weekly articles to keep up to date on the latest in automotive news!