A Great Time to Buy Used… But Not Because They’re Cheap
Eric Peters
May 24, 2017, 12:04 am
New technologies and growing government interference are going to increase costs all around.
You might want to buy a used car while they’re cheap — but not just because they’re cheap.
And cheap they are.
Because of unprecedented desperation tactics to sell new cars — including under-bid incentives, cash back offers, and “free money” loans at zero or nearly zero interest, which the car companies have had to resort to during the past year in order to fluff up wilting sales (and sales are wilting regardless).
When you make new cars so attractive — so cheap — to buy, used cars become even cheaper to buy.
It is hard to sell, for instance, a $17,000 3-year-old Camry, when you can buy a brand new one for around $22,000 out the door — especially when the payments on the new car are lower because the interest on the loan is less and because the payment on the new car can be stretched out over six or seven years, while the loan on a used car is shorter in duration — because of the lesser value and faster depreciation of the used car.
So…
But it’s not just it’s a great time to buy a used car as far as the deal you’ll get.
It’s a smart move, because of the hassle you’ll avoid.
Maybe not right away but down the road — probably just after the warranty coverage expires.
What’s happened is we’ve crossed a kind of engineering Rubicon. It has happened over the past two or three years — and there is probably no turning back, not unless regulatory reasonableness returns — and that doesn’t look likely. If anything, it is likely to become less and less reasonable.
The car companies have had to resort to design and engineering measures just as desperate and extreme as the financial measures to which they are resorting to fluff up sales. But in the case of the design and engineering measures, it is to placate federal regulatory ayatollahs, who continue to demand, among other things, that new vehicles achieve ever-higher fuel economy — and lower “greenhouse emissions” — irrespective of the cost involved.
It is why, next year, BMW will append a four-cylinder/hybrid drivetrain to all 5 Series sedans — and eliminate the six-cylinder/non-hybrid versions.
It is why every new-design car has a direct injected (DXI or GDI) engine rather than a port fuel injected engine. Automatic Stop/Start systems are pretty much standard equipment, which you can’t cross off the options list.
The latest automatic transmissions have eight — or even ten — speeds. Turbochargers, sometimes two of them, are the new In Thing.
Bodies are being made from aluminum rather than steel.
And, of course, there is “autonomous” driving technology — cars that semi-steer and park themselves, accelerate and brake on their own.
None of these things materially improves the performance — or even the economy — of the vehicle in a way that’s meaningful to the owner.
A car with DI and an eight-speed transmission might give you a 3-4 MPG uptick on paper vs. the same basic vehicle without these technologies.
That’s not nothing, of course.
But it doesn’t cost nothing, either.
Not much is said about the fact that the car costs more to buy because it has these technologies. You “save on gas” — by spending more on the car. The same logic used to peddle hybrids.
It’s interesting that this other side of the equation is almost never discussed and that the ayatollahs who smite us with their regulatory fatwas — so seemingly concerned about how much we’re spending on gas — never seem much concerned about how much we’re spending to cover the cost of their fatwas.
Up front — and down the road.
These turbocharged, direct-injected, stop-starting cars — with their eight and nine and ten speed transmissions and aluminum bodies — deliver the goods (MPGs) when new. Enough so that the car companies achieve “compliance” with whatever the latest federal fatwas are, at any rate.
But what happens as they get old?
I’ve written before about what’s already happening. About relatively young cars — less than ten years old, sometimes — becoming economically unfixable (that is, not worth fixing) when, for instance, the uber-elaborate transmission fails.
You have an otherwise sound car: an engine that will probably run reliably for another 100,000 miles, an un-rusty body and paint that still looks great. The overall car’s not a junker — but the transmission is junk. So you have it towed to the shop, expecting to get the tranny (not Caitlyn) rebuilt. And the guy tells you they don’t do that anymore. Rebuild — or repair.
They replace.
You must buy a new (or “remanufactured”) transmission, because they’ve become too complicated and time-consuming to deal with on a work bench. You are faced with spending $5,000 on a replacement transmission for a car that’s worth $8,000.
Gotcha.
Older cars made with economically sane five and six-speed transmissions remain economically repairable. But they do not make them new anymore. Not many, anyhow.
And not for much longer.
It is not just that, either.
Last week, I reviewed the last of the Mohicans — as far as full-size trucks. The 2017 Toyota Tundra. It is the only current-year, full-size truck you can still buy that does not have a direct-injected engine. This means it will never have a carbon-fouling problem — as Ford and others who have added DI to their engines, to squeeze out an MPG or three more, to please Uncle, have regularly been having.
Actually, it’s you — if you own one of these DI’d rigs — who will have the problem.
And be paying to un-crud your direct-injected engine, which may involve partial disassembly of the engine. This is not like changing the oil. Nor will it cost you $19.99, either.
Ford’s solution to the DI blues? It will be adding a separate port fuel injection circuit to its direct-injected engines next year. So, the vehicles will have two fuel injection systems. You’ve just double your odds of having a fuel system problem at some point.
The point here is it’s not just one thing; it is a synergistic multiplicity of things that are bringing into actuality the Planned Obsolescence people used to grumble about — but which was mostly not the case. Until just the past several years, most cars were usually economically repairable well into their senior years. It made sense to put, say, $2,000 for a rebuilt (four or five-speed) automatic into a car worth $8,000.
But with all the complex, fragile, non-serviceable, and hugely expensive-to-replace-when-it-fails stuff they are grafting onto cars to make them Uncle friendly, they become not worth fixing long before the cars themselves have reached their liver-spotted years.
The truth is that probably every car made since about 2015 is a Latter Day Throw-Away. It will run beautifully for about ten years. Just a bit longer than those $500/month payments we were making.
Then, some very expensive thing will fail, and you will be faced with a bill that’s not worth paying — or which you can’t pay.
How many of you have $5,000 available for a car repair? Keeping in mind this is cash due when services are rendered, not financed at low interest, either.
Meanwhile, the just-a-few-years-older cars without all that stuff can be kept going almost indefinitely — because almost anything that breaks or wears out can be fixed for a within-reason price.
These are the “sweet spot” vehicles made from — roughly speaking — the early-mid 1990s through the early 2000s.
All of the above, plus you will save the embedded energy of manufacturing a new car.
This is a direct cut & paste of this: https://spectator.org/a-great-time-to-buy-used-but-not-because-theyre-cheap/
