Hoping For A Deal On A 'New Used' Car? Don't Hold Your Breath

August 9, 2012

If you're looking to buy a car, and you're hoping to save money by grabbing one from the "used" lot, you may be in for a bit of a shock. According to Alec Gutierrez, a market analyst at Kelley Blue Book, new vehicles now sell for just 11.5% more than their one-year-old equivalents -- and in some cases the gap is far slimmer.

This is big news that could upset some of the conventional wisdom we've heard about smart auto shopping. Many financial advisers have encouraged buyers to go with "new used" vehicles, which are about a year old. Those cars don't have a lot of wear and tear, but they've traditionally been much cheaper than their brand-new siblings. That's because cars depreciate dramatically the minute they're driven off the lot.

Or at least, that's the way things used to be. However, the data from KBB would seem to indicate things are changing. The question is: why?

The biggest reason is the increased value of used cars rather than shrinking new-car prices. Even though they've come off the record-highs seen earlier this year, used cars are still worth more than they once were. That's because of a shortage of used cars, thanks to:

1. The fact that people are holding onto their cars for much, much longer nowadays.

2. The Great Recession, during which automakers built fewer cars.

But not all used cars carry the same value. Due to high gas prices, fuel-efficient models are worth significantly more.

In fact, "new used" subcompacts and compacts are only about 5% - 7% cheaper than their brand-new equivalents. With hybrids the savings are even slimmer -- just 3% or 4%. And that's before considering incentives like rebates and low APR loans.

KBB offers a couple of instructive examples: the Blue Book value of a new Honda Fit is $17,234. The used value? $17,000. The Blue Book lists the new Subaru Impreza at $17,450, while a modestly used one is worth $17,300.

Even in the case of less fuel-efficient vehicles, the prices are often neck-and-neck. For example, the new Jeep Wrangler has a Blue Book value of $22,281. The used version is just a couple of hundred bucks cheaper, at $22,000.

Of course, this is great news for new-car dealers. Not surprisingly, Kelley has tracked an uptick in traffic on the new-car section of its website. Also, new car sales are up across the board, while year-over-year used car sales have declined around 4% or 5% in recent months.

Shoppers: does this sound like good news to you? Does it affect your buying plans in the near future? Let us know in the comments below.

The Car Connection
See the winners »
The Car Connection
Commenting is closed for this article
Ratings and Reviews
Rate and review your car for The Car Connection
Review your car
The Car Connection Daily Headlines
I agree to receive emails from The Car Connection. I understand that I can unsubscribe at any time. Privacy Policy.
Thank you! Please check your email for confirmation.