02-03-10 - Car Pricing

I've noticed some interesting things looking at all these cars.

One funny thing is that *year* affects price a lot more than mileage. That is, a 2002 with 10,000 miles will generally be a lot cheaper than a 2004 with 30,000 miles. Now in some cases that makes sense because the older car has less features and is thus less desirable. But in many cases that makes no sense at all. The actual "age" of a car in terms of lifetime is its mileage. And car models tend to change discretely, not continuously from year to year. That is, there will be a major revision some year, and then it basically stays the same for many years. The reality of pricing is that people basically price by year and then just make a small adjustment for mileage; that's a big mistake which means you can exploit it by buying an early year car from a certain revision (though you usually don't want the first year of a revision).

For example with 911's there were major revisions in 1999, 2002, 2005, and 2009. Another thing I've noticed is that some year models are specifically known to be bad, but that is not particularly well reflected in the price, so you just have to avoid those years. So for example 2005 is known to be a lemon year. So you get maximum value by buying a low mileage 2002 or 2006. You get the worst value by buying a high mileage 2008 or 2004-05.

Another funny thing I've seen is if you search around a bit, you can often find the same car listed in multiple places with different prices. For example I saw a used car on a dealer's web site listed for $59k, then listed again on autotrader for $56k , then on ebay for $54k. You could probably get it for $52k if you fought hard; if you just saw the $59k on the dealer's site you might think you're getting a deal at $56k but in fact that's just their asking price on autotrader. In another case I saw a car on the Porsche.com dealer-swap network listed for $56k , on the dealer's own web site for $54k, and on autotrader for $52k.

Another useful thing I've found from searching is that you can use the google cache to see how long certain pages have been up, so you can tell how long a car has been advertised on the net. Obviously if it's been sitting for sale for many months you're gonna have a lot more opportunity to bargain.

I looked at one car at one of these luxury car consignment shops; the dealer guy there admitted to me that they don't really care that much about selling consigment cars, and he would try to get the owner to eat a low price to get it sold. Obviously the dealer is still trying to fuck you, but if he's also trying to fuck the owner then at least the fuckage is shared.

One cool thing about buying used cars in the modern age is they all have computer chips that record faults, so if you have them inspected by an independent mechanic who can pull the computer codes. The manufacturer uses these codes to see if you have done anything that would void warranty, so they're pretty good. It will tell you things like over-rev red line events, overheating events, low oil events, etc. Obviously the computer can be tampered with, but if it's been cleared you can see that too.

Something else I looked into a bit are the CPO (Certified Pre-owned) programs. They give you an extended warranty (usually 2-3 years) and perhaps more importantly they mean the car passes some checklist of basic problems, has decent tires & brake pads, etc. If you're buying a local car or a cheap car, this doesn't make any sense, but if you're buying a car that's far away, there's a pretty big bonus value to knowing it at least passes the CPO check before you fly out to see it yourself. Obviously extended warranties are always a bit of a ripoff, but say the CPO adds $3000 to the car price, the actual expected value of the warranty that you get back is maybe $2000, but the value of the inspection is $500 or so when you live far away, and the time savings is worth $500, so you wind out okay on the deal.

Oh, another thing that's useful to know is geographic variation is really severe. Long ago I wrote about the weird fact that used Subarus sell for so much money up here in WA that you can almost buy them in CA and drive them up here and make a career out of it. The same is roughly true of the 4WD Porsche 911 - it's around $10k cheaper in CA or AZ. Even aside from the 4WD / rain car variation, used cars are just way cheaper in the west/south, particularly in LA, Phoenix and Houston. They have way more selection down there, much bigger market, more competition.

1 comment:

David said...

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