When it makes more sense to buy lightly used

BOSTON - 

If you’ve got customers who are interested in a new Nissan Maxima or maybe a Volvo S60, take note: It may make more sense for them to buy a lightly used model.

A study from iSeeCars.com has identified models that cost significantly less at as a 1-year-old model versus new — to the tune of up to $20,000.

“Most people know new cars depreciate the most in the first year and that different cars have different depreciation rates, but we wanted to determine which used cars experienced the largest price drops compared to their new models,” said Phong Ly, chief executive officer of iSeeCars, a Boston-based automotive data and research company.

In its analysis of 14 million new and used cars, iSeeCars found 12 models that had price drops between 31.2 percent and 34.6 percent — at least 1.5 times greater than the overall average — and therefore would be better values when purchased lightly used as opposed to new.  

Cars to buy lightly used

Topping the list is the FIAT 500L, whose price is 34.6 percent — or $8,096 — lower at the one-year mark.

The cars that demonstrated the greatest changes in price tended to be those that are less popular, especially luxury brands; luxury models often lose value initially faster than non-luxury cars.

While these cars may be less popular overall, most have high safety ratings.

“For example, the 2015 Cadillac ATS and Volvo S60. Both received 5-star ratings across the board, so consumers who are genuinely interested in these cars and highly value safety features can get a great bargain,” said Ly.

“Eight of the cars on the list are models that are significantly less popular than their competitors, plus they are in segments that have seen a decline in new car sales lately,” said Ly. “For example, the compact luxury segment has seen an overall decline, but the Volvo S60, which was not a strong seller to begin with, has been hit harder than competitors such as the BMW 3 Series or the Audi A4. In addition, Fiat and Chrysler have been faced with dependability issues, further lessening their appeal.”

One surprise on the list is the Maxima, which has typically been popular with buyers.

“The 2014 Maxima was the last model of its generation, and the redesign had been delayed a full model year,” Ly explained. “As a result, the 2014 model lagged beyond the competition in terms of technology and styling, decreasing consumer interest.”

Here are the vehicles iSeeCars recommends buying as a 1-year-old cars versus new (percent change over 12 months, amount of depreciation):

  1. FIAT 500L (-34.6 percent, -$8,096)
  2. Lincoln MKS (-34.5 percent, -$16,039)
  3. Volvo S60: (-34.4 percent, -$14,204)
  4. Kia Cadenza (-34.3 percent, -$12,940)
  5. Mercedes C250 (-34.3 percent, -$15,247)
  6. Nissan Maxima (-34 percent, -$12,469)
  7. Lincoln MKZ/MKZ Hybrid (-33.8 percent, -$14,177)
  8. Jaguar XF (-32.3 percent, -$19,966)
  9. FIAT 500 (-31.9 percent, -$11,106)
  10. Cadillac ATS (-31.8 percent, -$6,099)
  11. Chrysler 300 (-31.7 percent, -$13,351)
  12. Buick Regal (-31.2 percent, -$11,525)

Cars to buy new

For shoppers who prefer a new set of wheels, iSeeCars.com also analyzed vehicles with the smallest drop in price after one model year. These models had price differences of just 7 percent to less than 11 percent, compared to the overall average of 21.2 percent.

“So for a few thousand dollars more, one can buy a new version of these models and get the peace of mind associated with a new car,” said Ly.

The 10 cars that saw the smallest changes in price are models that are in high demand; the list is dominated by pickup trucks and SUVs.

Topping this list is the Chevrolet Colorado, which depreciated 7 percent, or $2,311, after 12 months.

Three Subarus and the Honda Fit compact car also make the list.

“Subaru as a brand, as well as the Honda Fit model specifically, are also currently in high demand with buyers,” Ly said.

In August, Honda Fit sales were up 85.1 percent compared to the prior year, while Subaru logged its 57th consecutive month of month-over-month growth and also marked its best-ever sales month in its history, he noted.

Buy these new:

  1. Chevrolet Colorado (-7 percent, -$2,311)
  2. Jeep Wrangler Unlimited (-8 percent, -$3,076)
  3. GMC Canyon (-8.1 percent, -$2,860)
  4. Honda Fit (-8.1 percent, -$1,495)
  5. Nissan Frontier (-8.8 percent, -$2,415)
  6. Subaru XV Crosstrek (-9.2 percent, -$2,393)
  7. Subaru WRX (-9.2 percent, -$3,048)
  8. Subaru Impreza (-10.3 percent, -$2,321)
  9. Toyota Highlander (-10.4 percent, -$4,131)
  10. Land Rover Range Rover (-10.6 percent, -$11,817)

Downside to buying used?

Ly noted that while buying a lightly used car can save a lot of money and often gets the buyer a near-identical car as the brand-new model, the disadvantage is that they will often end up with a lesser warranty or the previous year’s styling and technology.

For example, because the Maxima underwent a full redesign for 2016, consumers buying it used would not get the latest features and technology.

“One exception is the Volvo S60 — it has one of the best certified pre-owned warranties in the business that, in some ways, is better than the new car warranty, so there is very little trade-off in buying this model lightly used versus new,” Ly noted.

For the cars with the smallest price differences across the first year, buyers also gain the peace of mind in knowing they are getting a brand new car with no concerns about its history.

“Still, consumers should keep in mind that they are still paying more for these cars new and they are literally dropping in value by thousands of dollars the moment they are driven off the lot,” Ly cautioned.

Notes on methodology

iSeeCars.com analyzed over 14 million cars from model years 2015 and 2016 sold between Aug. 1, 2015, and July 31. Lightly used or 1-year-old used cars were defined as vehicles from the 2014-2015 model years with mileage within 20 percent of 13,476, the average annual miles traveled in the U.S., according to the Department of Transportation.

Models with fewer than 250 new and 250 used cars sold were excluded from the analysis.  The average asking prices of the 1-year-old used cars were compared to those of new cars from the same model. The difference in price for each car was expressed as a percentage of the new model average price. This percentage was then compared to the overall percentage difference across all models.

The models with price differences of at least 1.5 times the overall average difference were included on the list of models to buy used. The models with the smallest change in price were included in the list of cars to buy new.

 

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