Used-Car Sweet Spots

published 15 December 2009

For the first time in a long time, used-car values aren’t being buffeted by skyrocketing gas prices, economic fallout or the side effects of a government stimulus plan, such as “cash for clunkers." Auction prices (for dealers) and retail prices (for consumers) are stabilizing, and cars are actually being sold for what they’re worth. “There are no smokin’ deals out there right now,” says James Bell, executive market analyst for Kelley Blue Book, “but the prices are fair.” This should be true for the next few months, as the new-car market -- the breeding ground for used-car trade-ins -- recovers.

Good deals. Worried owners of vehicles from struggling brands who would rather dump their vehicles than deal with the unknown are putting good cars on dealer lots. Fiat’s takeover of Chrysler operations has hurt the resale values of Chrysler and Dodge cars, says Bell. (Jeep is insulated a bit by a stronger brand and loyal customers.) Saturn and Pontiac, fresh off the GM chopping block, are bruised as well. We found plenty of 2008 Saturn Auras priced below the Edmunds.com dealer retail value, which is based on average transaction prices. For example, on AutoTrader.com, we found an Aura XR with 24,650 miles for $14,777 ($3,212 under Edmunds’s price).

Fair deals. With the cost of gas less of a concern these days, prices on fuel-efficient compact cars have retreated. And with more hybrid models than ever on the market -- including some popular 2010 models, such as the next-generation Toyota Prius and the new Honda Insight and Lexus HS250h -- a lot of owners are trading in to trade up. So you have more choices among used hybrids, which are selling for less than they were a year ago. Plus, lower prices on the 2010 models are helping to push used prices down; the new Prius starts $1,000 lower than last year’s model, and Honda’s Insight stickers for another $1,200 below that.

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Used hybrids don’t come cheap. But you’re more likely to find a reasonable deal than you would have a year ago, when used models commanded new-car prices. The selection was sparse for a 2007 Honda Civic hybrid, but we found a certified one with 48,500 miles for $16,250 ($1,150 under Edmunds’s price). Jesse Toprak, of TrueCar, an automotive-data company, warns that hybrids usually stay on the lot less than two weeks, compared with 60 days for the typical used car.

Prices for large SUVs and pickup trucks have rebounded since plummeting in the face of spiking gasoline costs in 2008, but they should edge lower again as more vehicles come back onto the market. A search for a 2007 Ford Explorer yielded plenty of results priced near the Edmunds dealer retail value. For example, a certified XLT with 26,700 miles on the odometer listed for $16,893 ($576 under Edmunds’s price).

No deal. Prices on family sedans have been stable, but they don’t fluctuate much anyway. “There are always plenty of them and plenty of people who want them,” says Mark Scott, of AutoTrader.com. Also in high demand: late-model, low-mileage certified pre-owned vehicles, which have passed the manufacturer’s rigorous inspection and come with an extended warranty. With fewer vehicles coming off-lease, expect supply to be tight and prices to rise.

The availability and price of used cars depend on the season. For example, four-wheel-drive vehicles are popular in the snow states starting in December, so you’re better off shopping when the spring thaw hits. Or you may be able to find a better deal by searching long distance. Convertibles are few and far between in the northern states, but you’re likely to find plenty of ragtops in the Sunbelt year-round. If the price of a plane ticket to pick up your new ride or the cost to transport it ($800 to $1,200) won’t erase your savings, you may score big.

Anderson has been with Kiplinger since January 2004, when she joined the staff as a reporter. Since then, she's covered the gamut of personal finance issues—from mortgages and credit to spending wisely—and she heads up Kiplinger's annual automotive rankings. She holds a BA in journalism and mass communication from the University of North Carolina at Chapel Hill. She was the 2012 president of the Washington Automotive Press Association and serves on its board of directors. In 2014, she was selected for the North American Car and Truck Of the Year jury. The awards, presented at the Detroit Auto Show, have come to be regarded as the most prestigious of their kind in the U.S. because they involve no commercial tie-ins. The jury is composed of nationally recognized journalists from across the U.S. and Canada, who are selected on the basis of audience reach, experience, expertise, product knowledge, and reputation in the automotive community.