Cars depreciate so much after leaving the lot, I just can't fully wrap my head around why people walk into dealerships and buy new cars? With transferrable warranty and swerving huge initial depreciation, it makes no sense to me why so many people buy new and cop the huge initial loss.
Am I missing something, or is this an example of consumer ignorance?
FYI, I bought a new car during covid as it was the same price as used, so I do see some of the value.
some top end cars at the top of the market often appreciate not depreciate after purchase ie ferrari 458 speciale, porsche 911 gt3, mercedes sls, so go figure - no suckers there
Supply and demand, which is held up by market sentiments towards the model when they are no longer the latest and greatest. Special Ferraris usually do well in their later years - the same Lambos not so much and special Aston's meh…. Even manual versus auto makes a huge difference in some models.
Are new clothes, new phones, new mattress etc for suckers?
It's not a meaningful comparison. I could buy a good pair for jeans for $100. A car costs over $50,000.
There's people who can not drop $100 on a pair of jeans, and people who can drop $50k on a new car without needing to check their bank account.
For some people, a car is more than just a piece of metal/plastic to get you from A to B. Same as how your $100 jeans is more than just fabric to cover your body.
A car costs over $50,000.
Some cars cost over $50,000. Plenty available new under that price.
I recently brought a new car having sold my old my 6 year old car that I also purchased brand new. It depends what's important to you. Do you want full warranty? Do you want the assurance of knowing the actual history of the car inside and out? Do you have a passion for cars or are you just after an appliance to get you from A to B?
Normal everyday cars depreciate, full stop. Covid period was an exception. If you buy new then the extra you are paying is for some of the points I've listed above. If you buy second hand then it's still going to loose value…cause it's a car not an appreciating asset…unless its something like a classic mustang
Technically yeah, the biggest cost of car ownership is depreciation.
I felt covid times were the only times you could buy new and sell higher. I ended up buying 6 cars during this period and selling them about a week out before rego was due. Most of the time, back to the dealer lol. I guess dealer won and I won.
I'm very curious about EV ownership and the big depreciation/discount they're having. What is the true saving/loss vs a Toyota Hybrid that costs more to run, but depreciates quite slowly in the present market.
Cars depreciate so much after leaving the lot, I just can't fully wrap my head around why people walk into dealerships and buy new cars?
For some people, it's just not a huge amount of money, and the time they would otherwise spend finding a great deal on a used car is more valuable to them.
My mum bought a new car recently. Despite my insistence that I could probably find her a near-new example if she gave me a few days and we spent some time going to check a few out, she decided to go to the dealership and buy one that afternoon. She didn't want to deal with the hassle and just wanted a car.
Ultimately, people pay for convenience - when I was a university student, I remember slumming out refreshing Gumtree every day waiting for a cheap Xbox 360, and genuinely being excited when the best deal came up, texted the guy straight away and walked out of a lecture to go pick it up. These days, if I want a new Xbox / PlayStation, I'd just go down to JB HiFi and pick one up.
If no one is buying new cars, where are you going to get used ones?
Someone's gotta do it.
That's not an issue, bro.
About 50% of people would always buy new no matter how stupid it may be for their financial situation.
I brought a brand new motorbike (LAMS) a few years ago and sold it 18 months later for $1,000 less than what I purchased it for.
At the time I brought it I looked at secondhand bikes and it was smarter to buy new. The price difference for a 2-4 year old bike and new was $1,000, by the time you pay the rego transfer, done a service in the next 6 months and pay the rego renewal that $1,000 saving was gone and the brand new bike came with 2 year warranty.
I don't know if it's still the case but I know someone who sold RAV4 hybrid that they only owned for a couple of months for several thousands more than what the purchase price was. They decided they wanted a complete different car and could change over with a profit.
You keep writing "brought". The word is bought, not brought. No R.
I like going on long nature walks.
But what's your star sign harshbdmmaster718?
the one where spreading buttcheeks is mandatory.
I'm no starsignologist, so I'm not familiar with that one.
I bought my car just before COVID hit. Since I mostly use it for running errands locally, I've managed to keep the kms pretty low till now. It's been great on the maintenance front too - hardly any issues, except for the regular time-based servicing stuff. Pretty happy with it overall.
My 14 yrs old Mazda 2 car got written off by someone back in 2022.
Second hand car prices were super crazy on that year.
Had to buy new car to replace it. Never regret it.
For a low priced car, arbitrarily in the range of below $50k, let's say, there isn't much price difference in absolute dollar terms between a brand new car and a one to three year old car. For that reason, many more people would choose to buy brand new for extra warranty, tax savings, new-car-feel, sense of achievement, etc.
For a very high priced car, let's say, a $300k Maserati, the price difference between a brand new one and a 3 year old one might be huge in absolute dollar terms. So it's a bargain when buying secondhand but still new-ish. Yes, you do take a chance on the warranty and maintenance costs, etc. That's something you have to be comfortable with. It's a different market segment with a different wealth level compared to the $50k car market.
And before anyone says if you can afford a Maserati, you should buy brand new or don't buy it at all - no, that's not how most rich people actually think. Everybody feels "money strapped", even if you are in the luxury segment, you still appreciate a bargain. (But of course if you have $1 billion, then you obviously don't really care about $300k.)
And there is everything in between.
As for the purely mental aspects of buying something new (vs secondhand "cringe"), my opinion is that cars are not "private" items. You buy a brand new car, you sit in it, and a few days later your friends sit in it, then your friend's friend might sit in it… one or all of them would have farted in it at some point. It doesn't actually matter who is the legal owner. In terms of the secondhand "ick" factor, it doesn't (or shouldn't) really exist (like a house - most houses on the market are 6th-hand probably, and you don't give that any thought when buying). A secondhand car isn't like a secondhand pair of undies - which nobody other than the most destitute (and not even then maybe) should buy.
We bought new in '23 after looking around for a used car. After stamp duty and on-roads, 1-3 year old car was getting very close to and in some instances actually more than a new car was. In fact we very well could have "driven off the lot" and sold it for more than we paid based off the market at the time purely because we had it in our hands.
Also, even if I could have saved a few thousand buying used I also didn't want the mystery of how it had been treated. A car that has been regularly serviced <40-50 thousand k's may as well be new but the amount of people that don't even bother to get new cars serviced is insane let alone follow the break-in procedure on the engine and components and I'm totally happy to pay a little more to have the security of knowing the full history (0) of the car.
I should also add it is 80% business use and a massive deduction for me that saved a bomb in tax
I just can't fully wrap my head around why people walk into dealerships and buy new cars?
Some people need that new car smell, and the rest are stuck with old arse smell🤷
Welcome to capitalism where people always want new and why not?
I mean, technically nearly all items that are not seen as rare collectables and such, depreciates in price when purchased.
The western world have selected a few assets that will increase in price such as property, rare items such a movie props, luxury hand bags like Birken(?)…
Personally, all my cars have been near new or used. I wouldn't buy new as I don't think it's worth it pre or post covid prices.
But the perks of buying a new car is that you know it's new, it's fresh, any faults you know it's either caused by you or claimable under warranty, no need to mess around with transfers or private sales, you don't know what the previous owner did to it and so on….
Have you seen the price of high mileage used Toyota on Facebook? Ridiculous, better off using that money as a deposit and get an mg4 with 10 years warranty.
Two opinions missing.
Life of vehicle. If you can afford a new one, the vehicle is expected to last 20 years/200k and one with 10yr or 100k on the clock is close to half, buying the old one means you get the bad half of the life of the vehicle.
Features. Most cars improve with model updates. Most 25k cars today are far nicer than a $25k car 10 years ago. Better NVH, better dynamics, nicer interiors and nicer stero systems. It also means you may get features you may not want, like some of the new active safety band aids.
I buy new car for this reason, depreciation doesn't matter as I don't intend to sell it for long time.
Why do we count depreciation as a thing when buying cars? Isn't taken into account for other expensive things that we replace when they start having issues, like a fridge or a stove. It's just a cost.
Because everyone is expecting to resell their car at some point. They are not expecting to resell their fridge stove at its end of life.
Don’t be fooled
“Demo” = used car so you should pay the equivalent albeit with usually less than 5K km’s
Yes it is especially when you have a perfectly good car already.
https://www.canstar.com.au/car-insurance/car-depreciation-ra…
Losing 15-25% over the first three years is still a decent slug imo, unless you're loaded or have tax reasons to buy brand new. (And that's the cars that depreciate the least too).
I have four cars with the youngest being 20 years old.
They will all outlast the piles being sold today.
I bought a new car in 2023 (Hyundai i30N Premium Hatch) to replace my 2007 Mazda 3 Sedan. Reason I did that was the Mazda was getting uneconomical to repair and keep on the road. I also wanted an upgrade in terms of something that had much more modern tech and way more power (and be more fun). People talk about the depreciation thing on new cars as soon as you drive them away but I personally do not care about that. I have no intention of flipping the car in the short term so what does depreciation matter to me. I have the vehicle I want, it does what I need it to do and I can enjoy it.
That's an interesting point - the cost of repairs. Labour costs are so high that simple repairs end up costing a bunch. If owners have some mechanical inclinations, a lot of repairs on common cars can be done very economically. But if you have the money and no desire to get your hands dirty, then you might just have a low threshold to elect to buy a new car instead. For comparison, places like Cuba is not wealthy, and they keep their decades old car going and going with cheap repairs - cheap because labour there is cheap.
Yep. I'm not the kind of person who changes cars every 3 years or whatever. I just bought a new car 3 months ago - my previous car I've had for nearly 12 years. I DGAF about resale value. I generally keep my cars for about 10 years, and I go into that on the assumption that it will be worth $0 by the end anyway, so whatever it actually ends up being worth is a bit of a bonus.
Yeah exactly my mindset. I sold my Mazda (was an SP23 model) for example earlier this year, privately, and I got $7500 for it. Pretty good for a car of it's age. That said, I never cheaped out on the maintenance/repairs of it so was still safe and operational, just not something I wanted to personally own/keep running any longer. 17 years for a vehicle is not a bad stretch.
Depends on the car/Depends on the market
During and post COVID Used cars where selling for great then New in come cases or very close to new car prices
Also different cars
This Landcruiser 2024 (is new pretty much) @ 124k
https://www.carsales.com.au/cars/details/2024-toyota-landcru…
Same car 4 years older 105k
https://www.carsales.com.au/cars/details/2020-toyota-landcru…
thus roughtly a ~19k difference however the new one comes with 5 year warrenty and im assuming capped servicing
A new car is as much for suckers as a used car is for poor people.
What I mean by that is it's all dependant on the buyer and their situation.
At the moment you leave the dealer, you lose 10%+ in value.
Am I missing something, or is this an example of consumer ignorance?
Some people buy cars (which, as you say can be sold for a percentage of the bought value). Some people spend money on travel/ alcohol/ food/ sex/ drugs. To each their own.
People with money that can afford and buy new cars are just …. blatant greedy capitalists
People who can’t is just….. poor
OK Karl.
I always buy new, less worries. Just sign, no need to check this or that.
I guess if you have plenty of time then you should buy used
You seen the Facebook posts on car pages? People who sells cars early on have all been sold lemons and the dealers have offered them peanuts to buy it back. That's why they're selling them..
Unless it's like a rare car and they're flipping them such as a LandCruiser V8 70 series and you got $$$$$$$
salary sacrifice, other tax exemptions
Insurance has to be a consideration too. Still have an old 2006 hyundai - costs $800 a year for rego and insurance. Gets me from A to B. Cheap to maintain too.
Compare that to any new car that is over $3000 per year just for rego and insurance.
But if i was looking for another car in this current market, i think i'd go new still. Used car prices are still stupid
If nobody buys new, how are you tightarses going to get your used cars?
Used car prices are so high right now on absolutely turds with 200k km on the clock but these myths still persist.
We drive it into the ground
Everything is a waste of money relative to what you spend it on.
Some people drink / Smoke
Some people Gamble
Some people buy new cars
Some people buy McMasions
Some people go on overseas holidays every 3-6 mths.
It's not for anyone to say how one should spend or save their money.
Motoring is an expense just like everything else on someone's household budget.
I've bought new and second hand cars. and it's all relative to my situation at the time of purchase. Currently considering new and passively looking at the market, hoping major brand hybrids will adjust prices to normal-Lish levels.
Finally, someone with common sense. What other people do with their money has STA to do with anyone else.
I wonder how many here have a caravan or boat sitting at home that is used less than 15 times a year.
If no one bought new, then there would be no used cars?
depends really. With fancy schemes like novated lease, buying a brand new car can be 'cheaper' overall than buying a second hand car.
by 'cheaper' there's things like fuel (or EV charging) maintenance, insurance, tax 'credits' rolled up into one easy monthly payment.
great for cashflow
Yeh that's why I bought a demo and heap of Carpro cleaning products. :)
it makes no sense to me why so many people buy new and cop the huge initial loss
With a novated lease and the EV FBT relief there are considerable tax incentives. It really is a very good deal.
There's also the matter of choice. Buy a new car on a factory order and you can spec it exactly how you want it. Colour, wheels, interior trim and upholstery, and all the other options etc. Buying used you have to settle for whatever you can find.
It makes no sense if you intend to sell it the next day after taking delivery. Luckily, the percentage of new car buyers in the category are almost none.
The advantage of buying a new car, personally, is the buying experience. There is a clear path for getting what you want. At least that's the assumption.
We’ve always bought new cars in our family because we wanted a car no one else has owned before. The new car feeling is pretty cool.
However, over the many years I’ve seen friends buy used, even for performance cars like AMGs, I am tempted.
Please buy my car so I can upgrade :)
I mean, if no one buys new cars, where are you going to buy secondhand ones?
Obzers can buy new cars cheap so why buy used? Also, if no new cars are sold, there will no more used cars later on. Dealers spend a lot of money on ads to get people to spend just like phones.
New cars aren't for suckers, at least you know how its been cared for, plus who buys cars as a financial investment? Not everything in life is an investment and should not been seen that way.
Yep, you're losing money no matter what.
I buy cars for the pleasure of driving them - I guess that's kind of an investment, the payoff just isn't financial. Kind of like spending money on a holiday - you'll lose a lot of money, but if you have a good time then it's worth it.
Owned a second hand lancer 2008 for a decade from 2014-2024. Suspension was gonna need replacing soon, under tray was warped/snapped so held up with zip ties so really needed replacing, had to fork out almost 1.2k start of 2024 to repair a power steering line etc blah blah that was leaking. Year before was major service. Was also due for a transmission fluid change (CVT).
Decided it got a decent run and was time to move on (185kk on the clock). Bought a new civic hybrid. I don't plan to change for a decade+. I get 4-5L/100 depending on where I'm driving, so despite a 20% smaller tank, I get like 30-40% more range per tank at least, and ultimately pay less for fuel as it is a smaller tank.
Swapping to yearly services (capped price etc) and 8 year warranty as long as I stick with Honda servicing (5 years default), vs the 6 months on the Lancer (mostly as preventative) will 'save' in ongoing costs, though initial outlay of the new car obviously way more.
It's not a money saving solution, not for a long time but its certainly more peace of mind!
Are New Cars for Suckers?
Suckers and those who can afford it.
It depends on the circumstances. We were trying to find a used run around hatch back, and found it just made more sense to pay a bit more and get a new car with 7 yr warranty, and the exact features and colour we wanted (we're talking a few thousand difference in some cases). If you're buying a giant or fancy car for > $50k with all the bells and whistles just to get from A to B, then that blows my mind a little (esp. when it's financed). Each to their own though.
as an old retired guy who drove cars for nearly 60 years before selling his last old 30yo car for cheap (shoulda got antique price so the collector got a bargain)
I marvel today at cars like Toyota Corolla with indicative driveway price $33-71K - https://www.carsales.com.au/research/toyota/corolla/
my sister got a new one around 1969 that cost maybe $1.4K - https://www.carsguide.com.au/toyota/corolla/price/1969
so excuse me while I kiss this guy !
and the reality that a moment's inattention on the road can lead to huge damage - now that cars are designed to crush rather than injure the occupants - great if your life is saved by those crushed zones and airbags - not so great if that's just written off many thousands from your car value, and/or bumped up your insurance premium to wot $6Kpa ?
So most lovely shiny new cars are one parking scrape away from turning into a damaged used car - resale value down the tube methinks.
If you were lucky in selling for more than you paid as a result of the COVID worldwide supply shortage, then I expect you are the exception rather than the rule for resale value.
Nice one OP. Absolutely every single thing is a 'waste' of money. Why are you buying that expensive grocery item when 'this much cheaper and shittier quality version' of it is X% cheaper?!?
In fact, it would be cheaper for me to just go into a medically induced coma and never have to spend a wasted cent again. Why get anything to enjoy this life at all, am I literally this stupid??!
The biggest thing people miss when posing these questions is that without the people that buy new, there wouldn't be a used car market. You'd also see the manufacturers stop providing product to Australia as it would become unprofitable to do so.
There's also people (like myself) who don't like owning cars out of warranty and would rather buy a new car every few years.
User cars always carry the risk of hidden issues….