Used Car Bargains - January 2010

USED CAR BARGAINS

By Brendan Moore

January 2010

Here we go after the question of what is the best price/value ratio achievable when you're buying a used car. That is, the most value you can extract for your hard-earned money in the used-car market. It’s not that hard for us to come up with a fairly large list pretty quick, but we follow cars and the car industry obsessively, so it’s to be expected.

But what about the average buyer? As its been pointed out, their needs are great, and they don’t have the same amount of time to spend on this question, nor the same quality of data available to them. Since I’m obsessive about used-car pricing data, I did a short list from which to pick from, as kind of a quick “cheat sheet” for potential used-car buyers. I go to the auctions, I know the leasing residuals, and so forth. And, so here we go.

There are a few assumptions in these mental calculations that I used to develop this list.

One, you want at least a good car, hopefully a very good car, and possibly a great car as your choice. There will be no bad cars on this list. No matter how low the price, driving a lousy car isn’t worth it. Life is too short.

Two, the ideal candidate for the list is a good car, which for whatever reason, just wasn’t popular with buyers. Maybe it was polarizing styling, maybe it was a little under-powered compared to its competitors, maybe it just never got enough marketing support from the parent company, whatever. Whatever the reason, this made the residual value of the car fall off a cliff immediately. So it’s still a good car, but it’s now worth only, say, 50% of what its segment competitors are worth when its four years old. That’s the one we’re looking for; that’s the one with a great price/value ratio. As an example, very few Japanese cars will make this list, even though they’re great cars, at least in terms of durability; and that’s because their residuals hold up steadily after purchase as a new car so no real “bargain” possibilities there. You typically get what you pay for when you buy a used Japanese car; no more, no less. We’re trying to get you more than what you paid for with the cars on this list.

Three, the cars on the list still have to be in the current NADA book, or, for our readers in the western coastal states, the Kelley Blue Book. Two reasons for this: we want our readers to be able to at least look up the car’s retail book value as a guide while they’re shopping, and two, if they need to finance the used car, that’s a lot easier to get done with your lender if the car is still listed in the book. So, this would knock out tremendous bargains like the BMW 850i Coupe, because it’s not listed in current books anymore – you need to buy a special “older models” book and the values in those are somewhat variable in their ability to track the market accurately.

Now, those of you that are repeat visitors will notice that we took some cars off the list this month. Conversely, we added some vehicles. Why? Because the current deep recession, combined with the ugly drop in new-car sales, has played havoc with used car pricing lately. All (used) cars have climbed in value recently. This is particlulary true with cars. Dealers that couldn't give away a used Ford Focus previously now have waiting lists for them. The Japanese small cars (Honda Civic, Toyota Corolla, Toyota Camry, etc.) have soared to new heights at the auctions. Conversely, used SUVs and pickup trucks have come up from their historically low used values, but they're still not healthy. So, some of those have been added, although you should bear in mind that a "bargain" used vehicle for most people is usually not one that drinks gasoline like a sailor drinking beer on shore leave. Even if gasoline is about the same price as it was a year ago, now many people are worried about their jobs, and therefore want to spend as little as possible everwhere, including fuel costs.

So, that’s it; let’s get started, shall we? These cars are not in any order of preference or greatest “bargain” ranking, and by no means constitute a complete list. These are just some of the cars which are used car bargains. We’ll try to add more as we go along. And if you think you have a worthy vehicle for the list, let us know - maybe it will show up on the list next month.

Pontiac G8 - This was a a tremendous value for the money as a new car, and now the price-to-value ratio just gets better. It's not only a used car - the Pontiac brand is no more after this year, making the G8 an orphan, which always guarantees a drop in value as a used car. Read a review of the G8 as a new car here.

Mitsubishi Galant - Great rankings by J.D. Power, if that is meaningful to you, better, in fact, than the rankings Toyota and Honda owners give to the Camry and the Accord respectively. But Mitsubishi has a poor dealer network, poor brand recognition/image, and so the new ones that do get sold go at at a discount. The used ones suffer further indignity in the used car market, with residuals plummeting far below the other Japanes brands. But all that means is that it is a very good deal as a used car.

Ford Fusion - C'mon, it's a Mazda6. Which is a very nice car. This is not the new Fusion that's out now, but the older one. But the Fusion doesn't hold its value the same way as the Mazda because of the Ford nameplate, even though I personally think the Fusion is a better-looking car. And in case you haven't noticed, Ford has really jumped up like crazy in the quality surveys in the last couple of years, so the only rap on this car is the Ford badge, really. Did I mention it gets good fuel economy?

Buick Park Avenue - Embrace your inner geezer and take a long look at the Park Avenue as a used car buy. They're breathtakingly cheap for what you get, their build quality is very high, and so is their J.D. Power reliability ranking (No 1 as of March 2009), most of them have low miles because they've been owned by older folks, and they also get pretty good fuel mileage. The cars are just about bullet-proof and raely break, but they do have a certain stodgy image, so you'll have to get past that.

Jaguar X-Type - Well, this wasn't much of a Jaguar, and the consumer market figured that out pretty quick. But its a hell of a Ford Mondeo, the car its based on, and the Ford Mondeo is a a pretty good car. You get AWD, an upmarket cabin, a nice 3.0 liter six-cylinder that puts out 227 hp, and good handling and brakes. The new car warranty on these cars was long and comprehensive, which is a good thing if you buy one a couple of years old. Available in a sedan or a wagon, with the wagon going for less comparatively in the secondary market. Both the sedan and the wagon are real bargains as used cars, since their value plummets when they go over the curb as new cars, and did I happen to mention that Jaguar has excellent quality, according to J.D. Power? This is the sort of used car bargain that we live for here at Autosavant.
Saab 9-7X - Like any other Saab in terms of depreciation, except worse. This is the GMC Envoy/Chevy TrailBlazer after it went to a boarding school run by a Swedish headmaster. Better suspension and a better interior than the SUVs from whence it sprang, but still a big 'ol SUV. Saab's core customers turn up their noses at this vehicle, so lots of bargains to be had in the secondary market. And, in fact, if you want a new vehicle warranty with your 2007 or 2006 Saab 9-7X, Saab dealers have a lot of those old/new 9-7X big boys hanging around still, and as you might imagine, they are heavily discounted.

Mitsubishi Diamante - Stupid name, good car. Poor sales made it go away from the Mitsubishi lineup and jeez-louise, are they cheap as used cars. Most Diamantes were sold pretty well-equipped when new, which makes it even more of a bargain as a used car. This V6-powered sedan is as good or better in most respects as the other Japanese sedans sold at the same time, but the Mitsubishi Diamante had one huge liability those cars didn't - it was sold by Mitsubishi and had a Mitsubishi emblem on the car. Your gain.

Pontiac Vibe - Same vehicle as the Toyota Matrix, but with different exterior metal and a Pontiac badge on it, which makes it worth less to most people. Why? Too long an answer to go into here, but it really doesn't matter; what matters is you can buy a used Toyota Matrix for quite a bit less than a used Toyota Matrix. And the Toyota Matrix/Pontiac Vibe is a good little car - great with fuel, park it anywhere, can carry a lot of stuff, and if you live where it snows you can get an AWD version of it. And of course, even if it has the Pontiac nameplate on it, it is still a Toyota, and therefore you be confident of the build quality and vehicle durability.

Saturn Aura - Even cheaper as they were three months ago, because now everyone knows Saturn is going to go away forever, and far less than a Toyota Camry and much better-looking and a much better performer. Comes with a 3.5 liter V6 and a 3.6 liter V6 - the 3.5 has less power but gets better fuel mileage. A very good car that just never found its footing in the market, and now is beset by association with an orphan brand, and you can be the one that takes advantage of that fact.

Saturn Astra - great little hatchback that is the Opel Astra in the rest of the world, and since Saturn is leaving this world as a brand, an incredible bargain as a used car. This car gives the VW Golf fits in the European market (it's that good), but American buyers, of course, turned their noses up at it. See the review of the Astra when it was new here.

Jeep Commander - Its big, its square, it gets terrible gas mileage, it's expensive and it has none of the charm of the Grand Wagoneer it was supposed to evoke. New ones sat around on Jeep lots for a long, long time before they went away, and that was with the help of hefty rebates and it's just getting worse lately. Used ones go across the block at way, way behind left-hand book (wholesale value) on a consistent basis. Lastly, the Jeep Commander, much like the Chysler Aspen, is the answer to the question that fewer and fewer consumers were asking when it came out; that is, where I can I buy a huge, thirsty SUV? But, it is well-built, and if you looking for this sort of vehicle, this is under-priced in the secondary market. All of these things make the used Commanders a good used vehicle buy now and in the future should you desire an SUV. And you won't be fighting off a lot of other potential buyers when you start discussing the transaction.

Volvo S80 – First of all, imagine a Buick designed, engineered, and screwed together by Swedish people. That’s an S80, basically. High build quality, extremely safe, luxurious, lots of room and an inline six cylinder, either turbocharged or regularly aspirated. But, it wasn’t a winning formula for Volvo, and it’s a used car bargain because it was very expensive when new, and as a used car, it has certainly found its price plateau in the secondary market. And, of course, since it’s a Volvo, it will likely do a LOT of miles after you buy it as a used car.

Audi A3 - Great car, but Americans in most parts of the country still are NOT digging the the whole hatchback vibe. Unlike the rest of the world, Americans (except in a few metro pockets) didain the hatch bodystyle. So you get a bargain on this model as a used car. However, please note that I typed "most parts of the country" feel negative towards the hatchback; there are some metro pockets where the used Audi A3 is desired, places like Seattle, San Francisco, NYC, etc. I think you probably get the idea. But in most geographic areas, you can get a very good deal on the A3.

Lincoln LS – Both the V6 and the V8 model are bargains, and the LS is a very good car that just never resonated very well with the typical Lincoln customer. The car seems more German than anything when you drive it, and they made it all the way up to the 2006 model year, so plenty of time to get any quality bugs out. Not stunning to look at, but attractive in an understated way.

Chrysler Crossfire – OK, first of all, you’ve got to like the Art Deco fastback looks. I’m a fan, but a lot of people are not. So, let’s run through it: polarizing design, major mechanical bits and platform from the last generation Mercedes-Benz SLK, 3.2 liter 215 hp Mercedes V6, body built by Karmann, original MSRP approximately $32,400 - $42,000. As a used car, the Crossfire must be sought-after, right? Wrong. This small fastback coupe has never found the audience that Chrysler thought it would, and that ripples out into the used car market as well. Add to this the fact that Chrysler LLC just announced that the Crossfire will be dropped from the car company's lineup shortly, and the deals will probably just keep getting better. This is a nice little car, not a sports car, but certainly a sporty car, and lots of fun to drive around. It’s almost all Mercedes-Benz, so it should be much more durable than the typical Chrysler product. It is worth mentioning, however, that this coupe is very cozy inside and really is made for drivers that are under 6 foot tall and do not possess an overabundance of avoirdupois. The space limitations extend to the trunk – the space back there is laughably small. The word at the wholesale auctions is that these cars usually go over the block at behind left-hand book (that’s wholesale to you civilians) and almost always have low miles, so there should be a pretty good deal waiting for you somewhere in the United States on a Crossfire.

Saab 9-5 – great car that always just plummets in residual every year. The looks are not for everyone, although I personally find it attractive. The interiors are very nice with a high level of amenities. The 9-5 wagon is even more of a bargain than the sedan. A 3-year old 9-5 is a tremendous bargain.

Saab 9-3 – Saab just can’t catch a break in the market, can they? The 9-3 does not have as dizzy a fall in resale value as its big brother, the 9-5, but since it starts at a much lower price, many more people can afford it. Great price/value ratio here. The 9-3 Combi, in particular, is compelling, if you need a wagon.

Mercedes-Benz C-Class Coupe – these are the hatchback models of the Mercedes-Benz C-Class sold in the U.S. until 2005. Same platform as the C-Class sedan, but in a 3-dr hatchback. Mercedes couldn’t make them go away fast enough as new cars and so decided to stop importing them. The American public’s aversion to a luxury hatchback is pervasive in the used car market as well, so that makes these cars bargains. Almost always in four-cylinder guise, which gets very good fuel mileage, but the C-Class Coupe was offered with the six-cylinder engine in the last three years of importation, although hardly any were ordered by dealers, and therefore not many were sold. As a bonus, since these cars don’t have all the electronic stuff on them that made M-B’s quality reputation go into a swoon since the late 90’s, this is probably the most reliable car sold by Mercedes during this period.

Mazda RX-8 – Hey, another Japanese car already! I love this car, and so does almost everyone who has one, but Mazda has not been able to find enough takers for the car since its debut a few years ago. The combination of very tight quarters inside, the rotary engine, love/hate styling, no-excuses sport suspension, and the fact that it’s a coupe to start with have limited the potential owner’s pool somewhat. It's a bit thirsty for gasoline as well. Wow, what a car, though. And you also get Mazda’s superb build quality in the deal.

Buick Lucerne – This is a good car, and Buick has long had very good build quality, and it drops like a rock after it goes over the curb at the local Buick dealership.

Buick LaCrosse - See Buick Lucerne above.

Ford Five Hundred – This is a very, very good car, but the Five Hundred has two problems, one large and one small. The small one is its looks – they’re not bad, they’re just kind of Euro-bland, although personally, I like the Five Hundred’s looks much, much better than some of its segment competition. And this certainly looks better than the re-style (and re-name to Taurus) subsequently shown to the public and produced for a short time until the new Taurus debuts in the very near future. Of course, if bland mattered, then Toyota and Honda wouldn’t sell very many cars at all, would they? The large problem is horsepower, specifically, not enough of it. The Five Hundred has only 203 horsepower, which would have been great 10 years ago, but is now decidedly sub-par when the competition is all around 250+. However, it’s got a lot of great features, its attractive inside; it does superbly (5 star rating!) in the crash tests, handles well, gets great fuel mileage, etc.

Ford Taurus - see Five Hundred above, but with different styling, and a better powertrain. Not the new Taurus that came out in the last couple months, but, rather, the interim Taurus that is really the Five Hundred with some freshened sheet metal. Residuals are awaful, so that makes it a good used car buy.

BMW 7-Series – The most expensive BMW and always used as their technology flagship, the 7-Series has always suffered from very poor residuals compared to the 3-Series cars. I’ll give you a mind-boggling example:

2001 BMW 330i new – approx. $37,000 MSRP (typically equipped)
2001 BMW 745i new – approx. $73,300 MSRP (typically equipped)

2002 BMW 330i wholesale (avg. miles) value now – approx. $10,325
2002 BMW 745i wholesale (avg. miles) value now – approx. $12,900

The 740i is much larger, has many more luxury features, more safety equipment, and has a powerful V8 engine, but not a lot of difference in the price now as a used car, is there? I know guys that buy used 7-Series one after the other – everyone thinks they have money, but they don’t. They just know the used 7-Series BMWs are an incredible bargain.

BMW 5-Series – See above, but not to the same extent, although still a pretty good bargain for the segment and price range.

Oldsmobile Aurora 4.0 - The flagship of the defunct Oldsmobile line, the Aurora was intended upon introduction in 1996 to lead Oldsmobile out of its sales slump. Unfortunately, as we all know, that didn’t happen. However, that doesn’t erase the fact that the Aurora is still a fine car, even if it is forgotten already. Built to a high quality standard on a stand-alone production line, and using some of the best parts of the massive GM inventory (i.e., a 250 HP version of the Northstar V8 from the Cadillac division), the Aurora is screwed together pretty darn well. Add in what many consider to be attractive looks and above average performance and you have a winning combination. And even if you pay full retail, which you won’t, you can buy this car for far, far less than the price of a new Toyota Corolla. FYI – the V6 Aurora is quite a deal, as it looks identical, gets much better fuel economy, even if the engine just isn’t anywhere near the beauty that is the Northstar.

Jeep Cherokee Limited – Tough and makes no apologies for what it is, this is the square, old-style Jeep Cherokee that Chrysler continued to produce for several years after it was supplanted in the Jeep lineup by the Grand Cherokee. This a rugged off-road SUV that’s extremely capable in bad terrain and merely OK to drive on the highway as opposed to the current cushy poseur SUV vehicles and their equally ridiculous “lifestyle aspirational” owners you see in every shopping mall and office park. Chrysler made minor improvements to the Jeep Cherokee every year, which made this vehicle quite dependable, since nothing big changed, as well as somewhat of a bargain in the sport utility market segment. Chrysler had planned to keep doing the above until at least 2005 model year, but those plans were cut short by DaimlerChrysler’s cash crunch in 2001, and the Jeep Cherokee ceased production in this, its last year. As a used vehicle, the Cherokee is even more of a bargain and prospective buyers should be able to pick one up for way under wholesale on any dealer lot.

Saturn L Series – Saturn’s large car, with both a 4-cylinder and a six-cylinder engine available. The four-banger, although dependable, sounds like a tractor engine and is pretty low on power, but it does get very good fuel economy. No matter which engine, these cars plummeted in value quickly, and thus are on this list. They’re good cars, not great cars, but the build quality is very good. The driving experience is what is lacking. It’s all just kind of a snooze – think early 90’s Camry or Accord. But they are quite durable, if bland, and you can buy one used pretty cheap, and so here we are.

The SUV fad appears to be dead and buried

Full-Size SUV - Doesn't matter which one as every one of them has fallen off a cliff in terms of resale value. Do the math on your expected fuel costs, though, and if you're going to keep it for more than a couple of years, you might want to do that math using $6 as the average cost per gallon a few years from now.

Full-Size Pickup - See "Full-Size SUV" above.

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