Reputation- Car Dealers

Every time we’ve bought a car we always looked at used cars first. Almost every time, the used car was cheaper by the IRS milage rate – 50 cents per mile. IOW, it wasn’t a bargain, just discounted by the number of miles on it. Not a bargain, just cheaper.

The IRS mileage rate includes all of the costs for operating a vehicle. Including insurance, fuel, maintenance, and depreciation. So not really a valid way to value a used vehicle, IMO.

Luxury/high end cars typically depreciate like crazy and it is almost always much cheaper to buy used. A humble Toyota on the other hand, holds its value really well and it is kind of a wash if new or used is a better deal.

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I have never owned a new car,

1990 : Purchased 1983 Honda Civic - $2,000
1998 : Purchased 1995 Nissan Pathfinder - $17,000
2009 : Purchased 2003 Nissan Pathfinder - $7,000 (a great deal!)
2017 : Purchased 2011 Jeep Grand Cherokee - $16,000

So my total lifetime capital deployed to vehicles is less than what most people spend on a single vehicle.

BTW: My wife did purchase a new vehicle once - a 2003 Toyota Sienna - that she still drives (350,000 KM on it - and still going strong nearly 20 years later). I think she/we paid around $35,000 for it.

tecmo

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Edit: It is a 2005 Toyota Sienna.

https://www.kbb.com/toyota/sienna/2005/

tecmo

It does not surprise me the members of this board have been wise in their vehicle purchases. I remember a chapter in “the millionaire next door” on “the vehicles they don’t waste money on”. The number one vehicle millionaires owned was a Ford F-100 pick up truck. We had one, twenty years old, why get anything new?

A few years ago I decided I had made it this far without going broke, and I could start doing some stupid things with my money. I plunked down $130,000 on a 4WD Mercedes Sprinter van customized into an off-road four season camper. It would depreciate like a falling stone, but I decided not to care, I wanted it.

Since that purchase my real estate has soared, I came into some windfalls, BRK has gone up nicely, and starting the fifth season with the camper, it is worth more than I paid for it. When it rains it pours.

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The number one vehicle millionaires owned was a Ford F-100 pick up truck. We had one, twenty years old, why get anything new?

I got a topper. My grandpa bought a brand new 1976 Chevy Silverado pickup. When he died my dad inherited it. When he died, I inherited it. I got rid of it about 10-15 years ago. So about 35-ish years use out of the same vehicle. Thing is, it was a great rig. Very comfortable cabin. Plenty of power. Dual fuel tanks so plenty of range. Downsides were 16 mgp and dual fuel tanks on opposite sides of the vehicle which made fueling a challenge.

I was a new car dealer (Chevrolet and Dodge) for about 20 years before I retired, then I “un-retired” and became a used car dealer for about 5 years before retiring again. I’ve never bought a new vehicle, but for a few years my wife and I were able to drive new vehicles as a “demo” pretty much for free before the manufactures got rid of the dollar demo allowance they gave us for putting cars in demo service. After that I just drove random used cars off the used car lot home, and gave my wife a decent used car to drive.

I told my sons when they graduated from college I would buy them a new vehicle to drive (they both currently drive older used cars), if they agreed to drive the new vehicle for at least 10 years to make up for the rapid depreciation that usually happens in the first few years. I say usually, because right now good used cars are very scarce because of the lack of new car inventory, so used car prices in the US are very high. So to me, if you are going to keep a new car for quite awhile, a new car is a relative decent value currently. If you can find one!

I’m experiencing a little Karma right now trying to find new cars for my sons. Going into dealerships I’m experiencing the same techniques we used to try to extract the most money from the customer. I knew it was annoying to customers when we did it, and since we were a small dealership in a small town, we tried not to go overboard with it. But damn, it’s such an annoying process. And even though I know all the tricks, it’s still a PITA having to deal with multiple “managers” to try to get a decent price.

Car dealerships are pretty complex operations with lots of moving parts, and they rely on lots of people to get the sales numbers needed. I cringed a little bit when Berkshire decided to buy dealerships because of all the inherent problems that can pop up when you have aggressive managers who sometimes hire less than honest people at times.

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If you hate buying cars with a white hot passion like me, try Costco.

In a nutshell, you end up paying roughly the price you would pay if you camped out in a dealership the whole day haggling over a price, without all the fake “I’m going to talk to the manager” nonsense.

95% of the details are settled on your computer at home before you set foot in the dealership, and often after the deal you’ll get some sort of perk directly from Costco. Last time we got a voucher from them for $200 or $300 worth of accessories.

Of course, if you actually enjoy the haggling process, you might save an extra couple hundred dollars by not using Costco and then spending a weekend in a car dealership.

Haven’t tried CarMax or any of the other “no haggling” options, but Costco worked well for us.

Wheezy

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Luxury/high end cars typically depreciate like crazy and it is almost always much cheaper to buy used. A humble Toyota on the other hand, holds its value really well and it is kind of a wash if new or used is a better deal.
I’ve known a few people who were considering the purchase of a used Toyota Corolla or Honda Civic but found them to be so expensive as to defeat the purpose of buying used. So they ended up buying new cars instead. (This was years ago, long before today’s used car shortages.)

European luxury cars are some of the fastest depreciating vehicles because they’re notorious for becoming endless money pits. People who avoid buying American brand vehicles because of reliability concerns have no business buying European brand vehicles. (British makes are especially bad.) The maintenance and repair costs of European brand vehicles are outrageously high and dwarf those of competing Japanese brand and American brand vehicles. It’s said that a cheap used European luxury vehicle is the most expensive kind. It’s also been said that if you can’t afford a new BMW, you can’t afford a used one either.

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<< Haven’t tried CarMax or any of the other “no haggling” options, but Costco worked well for us. >>

I’ve sold a couple of vehicles on CarMax and found it a pretty painless
process. I could possibly have squeezed a few hundred more dollars by
selling them directly, but it wasn’t worth the hassle.

I’ve also purchased my current ride from someone who got a quote from CarMax,
which made it easy for us to come to closure – i.e. better than looking up
Kelly Blue Book prices and haggling with each other wondering who was getting
the better deal.

-Rubic

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I usually buy new. As was earlier suggested, if you plan on owning a car forever like me, then it makes sense, from the point of view of reliability and depreciation, especially if you’re not paying a lot for a new car. If I went high end, like Jim, then yes, I would go used.

My good ol’reliable Toyota Solara turned 18 years old awhile back, with 80k miles. It sat in car lots a lot during New England winters, during my scheduled travels with the airline. Great running machine, excellent, powerful engine, but rust issues began to surface on the undercarriage with brake repairs and emissions systems beginning to break down and it was beginning to test my patience for more regular and costlier repairs. So, it was time for a new car. I had Toyota, so now I wanted to try Honda, again with long term reliability in mind as being a priority.

I was perusing Car and Driver, and noticed that the new Honda Accord was getting rave reviews as a vehicle that had most of bells and whistles of an entry BMW, performance, handling, etc, but at a much cheaper price. Car and Driver named it as one of its top ten vehicles for 2019, and the surrounding company on that list had Porsche and other high end recognizable names. So, I took it for a test drive, loved it, and began my purchase process.

I hate haggling too! But, what I did was a bit different. Although I too refuse to haggle, I didn’t mind putting in a few hours to let the dealers compete for my business. It took a bit of time but not so much as to frustrate me. I just let internet communication from my remote location do the work for me and waited for the offers to come in, without running all over the place. I contacted every Honda dealership within a certain 100 mile radius with a simple canned email letter stating the model I wanted, specs, color, etc, asking for their best price. That included those dealers in both NH and neighboring Mass. My list had about 15 dealers. I also gave them a deadline. I was honest in informing them that I was a serious buyer, would pay in cash, and was canvassing the area to get the best deal possible. I didn’t mention a trade in. I only introduced that last item after I had obtained the best price possible for an all cash deal.

It didn’t take long and my inbox was flooded with their best price offers. I made a few return phone calls/emails, and quickly winnowed the list down to 4 or 5 serious dealerships as the price plummeted from 33k or so down to below 29k, as I remember. Now, this is where it got interesting. The last 4 or 5 dealerships were aggressively competing with each other. I was totally honest and transparent as to the next best offer, and invariably, I would receive a counter offer. The price went lower, to below 28k, and I began to sense I was getting to a rock bottom floor. It was very sticky at this point, and I almost bit on the 28k offer, thinking it couldn’t get much better. I solicited one last counter from the two remaining dealerships, allowing each to compete. I stated that I was ready with checkbook in hand to come on over today to buy. I waited a few more hours, and suddenly, my inbox alerted me to an incoming bid from the last dealer I gave first right of refusal, dropping his offer to $27,100 or so. No one else could come close to that or would counter. I realized I had probably reached the floor. When I showed up to buy the car, I introduced my trade-in. I said to myself that this step is where I get screwed. Sure enough, the guy says, “I really want your car!” Yeah, right. He offered me $800 for it…I began to get up and told him, you’re not even close…I’m outta here. He asked to see my neatly compiled folder that I had researched thoroughly online which had the NADA, Blue Book, and comparable market selling prices, high to low for “good” condition, with low mileage. I said I won’t accept anything less than this figure right here: $2050. He told me to wait just a moment…went to the back to “discuss with the manager.” 15 minutes later, he walked out, and said, “ok…we got a deal.” Fortunately, this dealership was in NH, with no sales tax, so I avoided the tricky hassle and Kabuki dance of trying to deliver and register a Mass purchased vehicle in NH to avoid sales tax.

I walked out the door smiling with a beautiful Honda Accord, with my specs, my color, for only 25k and change. Last I checked, my Honda, with only 10k miles on it is selling today for more than what I paid for it, and those other cars had much higher mileage. :wink: And true to Honda reliability, I haven’t had any problem whatsoever so far…I’m more than pleased. It’s not a Tesla, but, for the price and gas mileage, it can still haul ass!

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I’ve owned a total of 3 Lexus since 1994 (one LS and two LX) and have bought used each occasion. I bought my current 2008 LX in 2010 thru a trusted friend of a friend who bought it for me at an auction and passed it along to me at no extra cost. Think I saved 15% off the New vehicle price. It’s been my best vehicle to date and now has 233K miles. Hope to keep it beyond 300K. Appreciated the no haggle factor!