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Car Salesman Confidential: Buying New vs. Buying Used

Motor Trend logo Motor Trend 9/4/2015 Mark McDonald
car-salesman-using-an-ipad© Provided by MotorTrend car-salesman-using-an-ipad

A lot has changed since I first started selling cars in 2004. In those days, I was working at a Nissan dealership, and every Altima S I sold came standard with seat belts for all passengers and two front impact airbags for the driver and passenger. That was it. Dual curtain airbags (or "overhead airbags") and side impact airbags in the seats were not standard. They were part of an optional package that cost about $1000, if I remember correctly. Antilock brakes were also an option, which added $800 to the price of the vehicle. So to get ABS and a full set of airbags, you had to shell out an additional $1,800. Not surprisingly—or maybe it is surprising when you think about it—very few customers opted to pay the additional $1,800 to get those safety features. And if you had two Altimas sitting side by side, which were identical in every way except for the safety package, the average customer would pick the car that didn't have the extra safety features every time because of price.

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In those days, it was always an uphill battle to convince customers of the value of airbags. People didn't trust them. They didn't think they would work, or worse, they thought the airbags themselves were dangerous. I constantly heard statements such as, "I know some lady who nearly got killed by an airbag going off in her face." Even with seat belts you got resistance. "My uncle Phil was in an accident," people would say, "and if he had been wearing his seat belt, he wouldn't be alive today. He ran off the road and hit a tree, but he got thrown clear of the accident and survived. The paramedics said the only thing that saved his life was not wearing his seatbelt." I heard some variation of the "thrown clear" story about a hundred times a year in those days. I don't hear it so much anymore. The attitude of the public is a lot different today. One of the first questions people ask me about a new car is, "How many airbags does it have?" And if you only have six, you're at a disadvantage because some manufacturers have as many as 10 airbags in their cars today.

So what's my point? Technology is changing. Rapidly. And if you want to have the latest, greatest technology, you have to have the latest, greatest car. Which means buying new.

"Whoa, whoa, whoa there," some of you may be saying. "That's all well and good, Mark, but I never buy new. I only buy used."

Why? Because of depreciation.

Ah yes, our old friend depreciation. That thing that sucks all the value from our cars the minute we drive them off the lot. And it's true. Cars are depreciating assets. They're not investments—unless you're talking collector cars. And because of that, there's a school of thought that says let the other guy buy new and "take the hit" on depreciation. I'll buy his car two or three years later, pay a lot less, and still get a good car. Truth be told, there's a lot of wisdom in this.

But there are pluses and minuses to everything. There are a lot of pluses to buying new—more so than ever before, in my opinion. Here's what you get when you buy new:

1. The latest, most advanced technology
2. The latest safety features
3. Improved fuel economy
4. Better for the environment
5. Better styling

Let's start with the latest safety features because this is where I think the case for buying new is clearest. In 2012, the Insurance Institute of Highway Safety came out with a new crash test called the small-overlap frontal crash test. (That's a mouthful!) What this test is designed to do is find out what happens if you hit an object like a tree or a telephone pole between the frame rails and the wheel. Most cars passed the test, but a few did not. Not to pick on Toyota, but the 2012 Camry was one vehicle that did not pass the test, receiving a Poor rating in that particular test. However, Toyota made some modifications to the structure of the Camry, and the 2014 model passed the test with flying colors, earning a Plus at the end of its Top Safety Pick rating.

So if you were in the market for a Camry in late 2013, it was a pretty good reason to buy a new 2014 over a used one. Now, the bean counters among us will say you're just throwing away money when you buy new, but I say everything in life is a tradeoff. Imagine putting your son or daughter in a car. Would you rather save a few bucks on a 2- or 3-year-old model … or buy the new one and maybe save their life? I know what I'd choose.

Let's take fuel economy. In 2013, Volkswagen had 2.5-liter I-5 engine in its best-selling model, the Jetta. The 2.5 was a great engine, very reliable, but a little thirsty. According to the EPA, this engine paired with an automatic transmission got 31 mpg on the highway (even though every time I drove one I got 33). In 2014, VW replaced the aging 2.5 with a newly designed 1.8-liter turbo, which has more torque at lower rpm and is designed to run on regular gas. That engine will give you around 36 mpg on the highway—an improvement of 5 mpg. Now, you may say 5 mpg isn't much, but it all adds up. In 2016, VW will introduce yet another new engine in the Jetta, a 1.4-liter turbo, and this engine is expected to get 39 mpg on the highway. So in the span of just three model years, VW has improved the fuel economy of its most popular model by around 8 mpg. Can you save money by buying a 2013 Jetta? Absolutely. But if fuel economy is a priority for you, go with the 2016.

There are countless examples like this. The technology available in cars today is changing so rapidly it's almost impossible to keep up with it. In the 11 years I've been selling cars, we've gone from cassette players and optional six-disc CD players in the trunk to touchscreen systems with single-disc CD players, SD card readers, USB ports, and streaming audio via Bluetooth. As far as I know, no car made in 2004 came with a backup camera standard. In 2015, practically every car has one. Blind-spot monitors? Lane departure warning systems? Nonexistent in 2004 on medium-priced cars. In a few years, these will be standard on just about everything.

Do these things improve the car? Do they improve your driving experience? Do they make your life any easier or make you and your family safer? I'd say so. So although it's true that you can save money buying a used model, before you buy your next car, take a moment to think about what you're giving up in terms of convenience, technology, fuel economy, and safety. You may just decide that buying new is the smartest way to go.

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