With U.S. car sales back to pre-recession levels and auto makers limiting once bountiful incentives, it is getting harder for new car buyers to find great deals. But when it comes to lightly owned used cars, there are still many substantial bargains to be had, according to a new study from iSeeCars.com, the auto-shopping website.
The firm analyzed 15.7 million cars for sale over the last year to identify the ones with the biggest price differences between new and lightly used cars. And the average difference was substantial—nearly 17 percent.
“Everybody knows that new cars depreciate the most in the first year and that different cars have different depreciation rates, but we wanted to see which used cars experienced the largest price drops compared to their new models,” said iSeeCars.com chief executive Phong Ly.
The top 10 cars with the largest price differences include some sought after luxury models, including the Mercedes-Benz S-class, the top-of-the-line Hyundai Genesis and the Jaguar XK.
For consumers shopping for a Hyundai Genesis, the car with the biggest percentage loss in value, choosing a year-old model over a brand new one can lead to potential savings of $16, 600, the study concluded. People shopping for a Chevrolet Impala, the most popular car on the top 10 list, can save more than $10,000 by going for a lightly-used rather than a brand new car.
And while many people assume that the best cars are the ones whose prices hold up best over time, the report said that is not always the case. In the used car market, just like other markets, the power of demand still goes a long way toward setting prices. Reliability is certainly a price factor in used cars, but other factors can be just as important.
“There are numerous reasons for the wide range of differences, but the most prominent factors that increase the price difference between a car’s new and lightly used models are lower popularity compared to its competitors, a brand with reported dependability issues or expensive repairs, or having just undergone a redesign,” Ly said.
Some of the cars with the biggest price drops were redesigned for the new year, making a year-old model appear dated, which often weakens demand for them. Still, that is mostly a matter of aesthetics, not function. Meanwhile, other ones looked pretty much the same one year to the next.
Not every car loses a lot of value during its first year on the road. The Subaru Impreza lost just 3 percent of its value during its first year on the road. The 10 models that iSeeCars.com said had the lowest depreciation after a year are below:
Of course, price is hardly the the only consideration when it comes to buying a car. Some of us want style. Some of us want the absolute latest features, or the best warranty. That said, many of those goals can be met and a consumer can save a bundle buying a car that is almost-new.
“Understanding the difference in price between a new car and a slightly used model is a powerful tool for consumers in their decision-making process. It’s often possible to buy a car that is one model year old with low miles and get all the features available in the brand new model, so it makes good sense to seriously consider this option,” Ly said.