How Car Buying Has Changed Over the Past Decade

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Is buying used still the best option?

Recently, we had to buy another car.  The old one died, and finding it’s replacement was a little bit of a nightmare.  The old one was a great foreign car that had given me little to no problems over the years, but I sure had racked up the miles on it over the last decade.  When I bought it, there were negotiations, but mostly it was listed at a great price with only 3k miles on it.  I bought in a different state, but shopped in my home base of Pennsylvania, too.  At the time, prices in PA were ridiculous for cars that were mostly rusted out from winter salt.

When I went to buy this time, I was in shock.  Prices had shot even further through the roof.  We only looked at used, and I had issues finding a car with under 100k miles under 10 grand.  (Though, I really should learn to drive stick.  That makes things a heck of a lot more affordable!)  I even checked in the state I had previously purchased in, but now their prices were comparable to PA’s, and just as inflated.

Eventually I found one with around 40k miles on it for a good bit under 10k with an automatic transmission.  When I went to look at it, it was very, very basic.  No power windows, locks, or any bells and whistles.  But with the market the way it was, all I cared about was that it ran well and would last us longer than the loan would.  That domestic car is my new transport, but I was left asking the question…

Why Has the Market Changed?

I understand inflation plays its role over the course of ten years, but this price difference was unreal.  I bought pre-recession, and pre-cash-for-clunkers.  When Cash for Clunkers encouraged people to sell off their older model vehicles to be destroyed in the name of carbon emissions, they took an enormous percentage of used inventory off the market.  (This is not a loaded statement.  I’m all about reducing carbon emissions.)

Simultaneously, people started what a horrible idea buying new was.  Strapped for cash due to the recession, even those who like making bad money decisions on sparkly things were forced to accept the practicality of purchasing pre-owned vehicles.  The demand for used vehicles went through the roof, and now there was less inventory than ever to supply it.  If you’re familiar with the basics of supply and demand, the spike in prices will seem inevitable.

How Has the Market Changed?

On top of that increase in price, in our Pittsburgh market the entire buying process has changed.  How has car buying changed?  Most major dealerships refuse to haggle anymore, saying that they’re already listing at their lowest prices.  Their salesmen are generally paid on commission not for the amount of money they bring in, but for the quantity of vehicles they sell.  So presumably they have no incentive to sell you a more expensive car.  They just need to get you into something.

Where there may still be wiggle room in this process is the price of the trade-in.  If they’re not willing to budge on the price of the new vehicle, they may be willing to negotiate how much they’ll give you for the old vehicle you’re trading in, lowering how much you’ll pay for the new-to-you car without moving the sticker price.

Is Buying New Really Such a Bad Idea?

I’ve always believed that buying used was the best way to go.  Don’t get a beater that will cost you more in repairs than a loan would, but don’t buy brand new and watch your vehicle depreciate before your very eyes as you drive off the lot.

I’m seriously considering changing my opinion.  As we were going through this process, my radio-listening skills were especially acute every time a dealership commercial came on.  It was still the depths of Pittsburgh winter, and that’s generally a good time to buy a vehicle from the consumer standpoint.

I heard several advertisements for dealerships, including one that sold the foreign make of my last vehicle that I loved more than any other machine ever, offering brand new vehicles right at the $10k mark.  I’m sure these were the most basic models available.  I’m sure they had no bells and whistles.

But neither does my pre-owned domestic.  And for a thousand or two more, I could have had a car from a manufacturer I had more faith in, 40k miles more on its lifespan, and a longer period left on its warranties.  We drive our cars until they die, so the depreciation doesn’t mean a whole lot as you almost always end up upside-down on a car loan, and the difference in monthly payments would be negligible.  For the first time, I’m questioning if buying used is the way to go.  If our next car breaks down in the winter when dealerships that sell new are desperate to clear inventory, I may just do the unthinkable and actually make a trip to their lot.

Hopefully we have another decade until that happens, though.  And who knows?  Maybe car buying will have changed just as radically in the next decade as it has in this one.

 

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30 thoughts on “How Car Buying Has Changed Over the Past Decade

  1. Petrish @ Debt Free Martini

    You are right about the car salesman not willing to make a deal. If the car is on their lot they already consider it to be a deal. For me personally since I am a single mother with no car repair skills at all, I really shy away from buying used cars. Its more of a peace of mind thing for me (I know a expensive peace of mind thing), but I’d rather pay for maintenance then buy new transmissions.

    Reply
    1. femmefrugality

      Yeah, I only buy used when the mileage vs the price is right and I have all the Car Fax in front of me. And I have someone smarter than me look everything over. Exactly for that peace of mind. Though with my recent discoveries, the difference in expense may not be as much as you admonish yourself for! Things have certainly changed.

      Reply
  2. Joyce

    We didn’t have a bad experience when we got our mini-van last year. We shopped online and went to the dealership. Price was $11K my car was in terrible condition and we paid $6200 or $6500. When you shop online and use apps it helped us. We walked out when the salesman chased us so I was surprise about that. After he repeatedly told us that was the price. I do agree that the price of vehicles are just insanely expensive.

    Reply
    1. femmefrugality

      Lucky! Maybe it’s because I was buying used, but I did not have anyone chase me down when I left haha. So when I found the one that was good for us, I didn’t even try to play games because I knew they weren’t going to come begging me. I understand it’s different with a new car, though.

      Reply
  3. donebyforty

    I remember hearing a story on NPR a while back about how used cars are increasing in value in some cases. I tried finding it, but only came up with this excellent This American Life episode on car dealerships.

    http://www.thisamericanlife.org/radio-archives/episode/513/129-cars

    For what it’s worth, I think you’ll do better negotiating with a private owner than a dealership. On average, a professional who negotiates for a living (car dealer) will have you outgunned from the get go.

    I think you’re on the right track, by looking at what your best personal option is, rather than using old saws like “always buy used”. I personally buy used from private owners, but that may not be your best option based on how much you drive, how long you want to keep the car, and whether you are fine paying $12K or more to buy a no-frills new car, like a Nissan Versa. I saw a billboard for those just yesterday: $9,999.

    Reply
    1. femmefrugality

      Yeah, they won’t even negotiate on used. Tried on a couple vehicles to zero avail. So there’s no where to go but up with private sellers! We drive ours a lot and to the ground, so they’re pretty integral to our lives. My “dream” car (no extras, but who cares?) was selling for right around $10k new at the same time, so I’m seriously hoping we made the right decision with the one we went with.

      Thanks for the link….love This American Life! Have something to listen to on my commute tomorrow, now. In that car with an audio jack. If I can figure out where the husband “didn’t touch/move” the dang wire that hooks up my phone….

      Reply
  4. kay ~ lifestylevoices.com

    It used to be easy to buy a decent used car for 1 – 2 grand. The last time we went, good luck. We couldn’t get anything nice for under $3500. We really like getting cheap cars that last us about 10 years and have to be towed to the junkyard. I don’t know how kids buy cars these day. Maybe that’s why you see so many on bikes.

    This article was helpful AND thought provoking. Another win for Ms. Femme! 🙂

    Reply
    1. femmefrugality

      I remember those days! When I was in high school I got one that was $500 that was a total beater. The model year was my mother’s junior year in high school. Didn’t last long, but my peers got pretty nice ones for $1-2k. There’s no way at all that’s possible anymore. Thanks for the kind words!

      Reply
  5. Chela @SmashOdyssey

    I´ve always been on the buy-used bandwagon, but I haven´t looked at buying a car in years, and it sounds like you´re on to something. I´m hoping mine lasts me another 7 years at least (or 100 for that matter!) so hopefully I won´t have to think about this anytime soon. Thanks for the very interesting post!

    Reply
  6. seattlegirluw

    We unexpectedly had to buy this past fall. I was horrified by used car prices. We didn’t want anything too old because we were sick of car repairs. And I wanted something more fuel efficient. Even cars that were 4-6 years old were over $10,000. Especially because we were looking at Toyotas and Hondas. Those suckers hold their value!

    We very nearly bought new because it was literally a difference of less than $4,000. And the other cars had 60,000+ miles on them! But in the end, we found a Honda with low mileage, one owner and it was only 2 years old. For about $7,000 less than new. That decided it.

    The used market is tough because you can’t necessarily walk away like you can with a new car. If that’s definitely the vehicle you want, it actually *might* be gone when you come back. It’s not just a line the salespeople use.

    When it came to buying new, we got the lowest bid through Costco. Problem is, there were still several things we didn’t want. When I went into the dealership, the guy explained the things (paint protection for example) had already been applied. We couldn’t get it without those items.

    So I stood up and said that we just didn’t want to pay for that, and if they all came with it… Mind you, this wasn’t a ploy. I honestly assumed they wouldn’t haggle. But the guy practically jumped out of his seat and explained that they could probably knock a little more off.

    In short (too late), the whole process is ridiculous.

    Reply
  7. Prudence Debtfree

    We’re following Ramsey’s strategy for debt-reduction, and one of his big pieces of advice is to buy “gently used” cars. We have a 16-year-old van, and we know the inevitable will happen at some time, and we’ll need to buy a vehicle. But when we look at prices of gently used cars, like you, we find that the difference is not very significant. We are leaning towards the purchase of a new car that is basic. We’ll keep our eyes open, of course, and if a great deal on a used car comes up when our old van breathes its last, we’ll go for it. We just aren’t seeing these great deals at this time.

    Reply
    1. femmefrugality

      I think the great deals may be dying. Ours was a relative great deal. But extremely relative. It’s a ton more than I would have paid for the same vehicle when Ramsey initially put out that advice, and an incredibly smaller gap between it and a new car price. Which it’s sounding more and more like I could have negotiated down to be equal, with a warranty, and near non-existent mileage compared to our 40k. Face palm.

      I hoe that van hangs in there for you! It’s smart to be looking at those things now with that age on it, but I’ve seen cars last for longer!

      Reply
  8. Tonya@Budget and the Beach

    I’ve never been against new cars like a lot of people are. It just totally depends on so many things. Can you pay cash? If you have a loan, how long will it be and what is the interest? So many questions that only you can answer. My answer was a gently used car with some bells and whistles but was very affordable to me.

    Reply
    1. femmefrugality

      I’m glad you found a good deal on yours! And you’re right; there are so many contributing factors to making that decision that going in with a stubborn mantra without taking them into account is not a really wise decision.

      Reply
  9. Kali @ XY Planning Network

    We recently went around to a few dealerships just to do some research on what our best options would be and were totally surprised to find that buying new was often a better deal than buying used. Used cars just weren’t as cheap as I expected them to be, and the dealers were selling new ones at low prices with rebates and other benefits thrown in. When we compared a used car in good condition with a very basic, no bells and whistles new car, the price was only a few thousand dollars apart. I never thought I’d buy a brand-new car.. but I think you’re right, the whole buying process has really changed and lots of factors have contributed to the fact that used isn’t *always* the best way to go.

    Reply
  10. thesingledollar

    That’s interesting, because it confirms some of what I’ve been thinking about. I currently own an ancient car (17 years) that nevertheless just went over 100K. In short, it could last another ten years or it could die at any time. 🙂 Also, I don’t like it that much — I bought it used last year from a friend, but I want something a little bigger. So I’d like to replace it in the next few years, assuming it doesn’t die first. The thing is, given that I prefer a Honda, by and large, it doesn’t look like the difference between new and relatively gently used is significant at all, financially. Maybe if I bought from another private seller again, but unless it’s a friend I don’t feel comfortable with that because I don’t know enough to be sure it’s not a lemon. I’d want to buy from Carmax or something similar if I did buy used, and at that point it looks like I might just as well buy new. It’s an interesting situation. I guess I’ll see where things are at when I’m ready to buy again.

    Reply
    1. femmefrugality

      That’s another thing I’m not so confident about with private sellers. I feel like they have to be at least a friend of a friend or I’m not taking that thing without a full inspection by mechanic. And even then….
      I love Carmax. I’ve bought through them before, and even before all this “nobody negotiates on used anymore” attitude they still had the best prices. I recently looked up the one I shopped at previously, though, and their prices were comparable, and they were far enough away to not be worth it. I was majorly disappointed.
      I hope the one you has holds out for you a bit longer! But it’s good to be thinking this far ahead so you’re prepared.

      Reply
  11. Kristin

    I’m dreading the thought of purchasing another car when mine bites the dust. I’m actually ok with buying new. Mine was purchased new 11 years ago (with the intention of driving her into the ground) and has been paid off for years. I’m hoping my car will make it a couple more years, as the mileage is at 175k and she’s starting to get a little fussy. I need to start puting money away now to be prepared for a future purchase!

    Reply
  12. our next life

    Confession time: We bought our last car new, for the exact reasons you cite here. We wanted a specific brand because of unique features that suit our geography especially well, and were shocked that cars with as much as 60K miles on them were selling for only $2-3K less than a brand new car. That decision became surprisingly easy…

    We also found that you can avoid dealing with the car dealerships’ main salespeople, and go directly to their very reasonable fleet sales departments by email. We’d email several dealers’ fleet person, tell them the specs we wanted, and then let them give us their best offers. THEN, we took the best of those offers, and shopped it back around to the same group. In the end, we paid the SAME as for a used car that was a few years old with 40-60K miles on it, for a brand new, fully warranted vehicle.

    We now think it’s worth questioning the conventional wisdom on these things!

    Reply
    1. femmefrugality

      I’m feeling like such an idiot now that I didn’t do that! I’m not unhappy with my purchase, but, heck, to buy new for the same or very similar price? That’s an awesome tip on emailing the fleet sales department. Puts everyone at your fingertips, and in writing!

      Reply
      1. our next life

        I think it applied particularly to the make of car that we wanted, which especially holds its value. Hope you don’t have to worry about doing this again for a long time!

        Reply
  13. Nichole

    We definitely experienced the benefits of this when we sold our American cars to move to the UK. I bought my car for $20K, had it for 6 years and sold it for $16,5000… that’s not bad depreciation. LOL. Car prices are definitely one thing I love about the UK, one of the few things that is actually more affordable than in the U.S. LOL.
    I am definitely not looking forward to purchasing 2 vehicles when we move back to the U.S. next year. Thanks for the thought provoking article. We wouldn’t even imagine considering buying new, but we may have to change our way of thinking.

    Reply
  14. Mel

    I started saving for a new car this year, although I’m hoping to get another 7 years out of my current car. I’ll try to buy in the range of whatever I manage to save up, but I wouldn’t mind buying new. My current car was new and now it’s got like 120,000 miles on it and, knock on wood, still going strong. I think the argument against buying new does make more sense if you’re likely to trade in as opposed to driving it into the ground.

    Reply
  15. vickie morgan

    We have three used cars with one ready to go at any time. We don’t need three so we will probably just keep with the two until the next one goes. I didn’t know that they were not even haggling at the car dealerships. I wonder if it’s cheaper to go with a private owner then. Of course though you would then have to sell your car yourself. I like the idea of the fleet cars in the comment before too.

    Reply
  16. NZ Muse

    We recently bought a new to us car and yeah, prices are insane in NZ. Had to go with higher mileage than we wanted, but it is fairly new, ex lease with full history. Would love it to go for 10 years! But would be happy with just a few trouble free/cheap years.

    Reply
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