Recently by Eric Peters: Services Rendered (But Not At Gunpoint)
Sometimes, being second in line is the best place to be.
For example, letting someone else buy you a discount on a great new car. He gets it first – but he also gets to pay full mark-up – as well as absorbs the depreciation in value that occurs during the first few months of a new car’s life.
If you check into it, you’ll discover that some models are particularly exceptional buys the second time around – largely because of the 20-30 percent (or more) difference in their retail value from showroom new to just a year or two old.
For the most part, there is nothing wrong with these cars in terms of function or reliability. Some simply had inflated prices when new due to being “the latest thing” – a case in point being the Chrysler PT Cruiser. When it first appeared, some dealers were getting $25k or more for cars with an MSRP of $17,000 simply because it was “hot” and “new.” In recent years, the PT – now very much passe – sold for less than sticker new and slightly used ones could be had for fire-sale prices.
Or, let’s say a manufacturer launches a car with high expectations – and a high MSRP – but it doesn’t do as well as hoped for one reason or another. An excellent example is the Volkswagen Phaeton – an uber luxury sedan with a base price of $66,950 that could go as high as $100,000 when equipped with every available option. The Phaeton was VW’s first foray into the very high-end luxury segment – but as nice a car as the Phaeton was, people weren’t lining up to pay Mercedes or BMW money for a Volkswagen. VW just doesn’t have the name recognition as a premium brand on par with the established luxury brands. As a result, one could buy a two-year-old Phaeton for half or less the original sticker.
Here are some other cars that are steals the second time around:
* 2007-2011 Toyota Yaris
A new, much-updated version of Toyota’s entry-level subcompact sedan/hatchback just came out this year (2012) which means the previous version – which was a little homely and more obviously an economy car – is now a much better deal. It’s also a great A to B commuter that is simple, known to be reliable and capable of 40 MPG on the highway. The ’12 Yaris starts at $14,115 but you should be able to nab 2-3 year old Yaris for around $9k or so. The car was the same from 2007 to 2011, so the older the better, as far as price goes. Current retail prices on the 2007s are in the $6-$7k range – half the cost of the base price of the 2012 model.
* 2009-2011 Nissan Versa 1.6
For whatever reason, Nissan decided to stop making the “tall roof” version of the Versa 1.6 sedan this year. Now, the low-cost version of the Versa is only sold as a conventional compact sedan. To get the much more roomy (especially back seat) version of the Versa, you’ve got to buy the Versa 1.8 – which starts at $14,480 vs. $10,990 for the Versa 1.6 sedan. But if you go back just a year or two, you can get the “tall roof” bodystyle and the more economical 1.6 liter engine in the same package – for a lot less money. How much less? According to current used car retail value guides, 2010 model Versa 1.6s are selling for around $7,800. That’s barely two years old – and about half the price of a new Versa 1.8 “tall box.”
* 2007-2009 VW Eos convertible
Like the Phaeton ultra-luxury sedan of the early 2000s, the Eos over-reached a bit. It is very expensive – new. The 2012 version of this retractable hardtop 2-plus-2 is $34,350 – well into BMW/Audi/Lexus territory. But as nice a car as the Eos is, it’s still a VW. Not that there’s anything wrong with that. It just means they’re not selling very well – and when they do, they depreciate rapidly. Current used car guides have the first-year ’07s pulling in only about $14k – and barely three-year-old 2009s going for about $20k – a $14k discount over the base price of a new (and basically the same) 2012 Eos.
* 2011 Saab 9-3
This one’s a little dicey but could be a great deal. Saab is now out of business but just before the curtain fell, it launched an all-new version of the 9-3. It is arguably the best 9-3 Saab ever made, too. Unfortunately for Saab it was too little, too late. But this might be fortunate for you. The 9-3?s turbocharged 2.0 liter engine is a GM-sourced engine (GM owned Saab until just before The End) identical to the 2.0 turbo engine used in a number of current GM cars, such as the Buick Regal GS. So, it should not be difficult finding basic service parts for the engine. But be aware that other parts might be harder to find – especially trim pieces. The key factor here is that the market value of Saabs is plummeting to the ocean floor just like the Titanic did 100 years ago. A new 9-3 that stickered for almost $40k last year can probably be acquired today for $30k or even less.