Some New Cars Now Less Expensive Than Used Cars, Edmunds.com Reports

Edmunds.com said that the deals on some new cars are so generous that they actually make the new car less expensive than the one-year-old used version of the same model.

Some of the cars on the list are:

•2009 Audi Q7
•2009 Buick Enclave
•2009 Mazda B-Series Truck
•2009 Volvo C30 T5
•2009 Toyota Highlander Hybrid

The full list of cars and trucks is available at http://www.edmunds.com/industry-car-news/new-vs-used-car-buying.html.

To perform this analysis, Edmunds.com compared the vehicles' True Market Value transaction prices and the interest payments typically made for each vehicle.* Edmunds.com’s analysts determined that this month, a shopper can save as much as $8,460 by purchasing the new car instead of the used car.

Why is this strange phenomenon happening?

“Demand and supply dynamics are causing an increase in used car prices while lowering new car prices across the board, generally speaking,” observed Edmunds.com Analyst Joe Spina. “Used cars are in limited supply for three main reasons: first, there are fewer vehicles coming off lease this year because of the recent decline in leasing’s popularity and availability. Second, ‘Cash for Clunkers’ rendered many thousands of used vehicles inoperable and removed them from the scene at an unnaturally high rate. Third, because of the economy people are holding onto their cars longer. Much of the used car supply typically comes from trade-ins for new car purchases, but that is simply not happening at the same level as in past years. Used car sales are only down about three percent despite the shortage in supply, while new car sales are down nearly 25 percent compared with last year.”

*Edmunds.com assumed a 60-month loan term with a 5.3% "typical" finance rate for new cars and 8.5% finance rate for used cars. Edmunds.com included destination charges and gas guzzler taxes as appropriate. Of all available rebates, only national APR subvention and dealer cash programs were applied; consumers should check the Edmunds.com Incentives and Rebates database to learn if they qualify for additional savings.

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