Has the strange math of cash-back discounts, tax breaks and unemployment benefits made buying a new automobile actually cheaper than picking up a used one?
Conventional wisdom has it that new cars lose a significant portion of their value as soon as you drive them off the lot, so it’s a far better deal to pick one up in its second to fifth year of life. But does that hold true today?
In February, new-vehicle sales dropped an astounding 41 percent from the previous year. Automakers are hemorrhaging cash and begging the taxpayers of multiple nations for bailouts. Dealerships have become virtual ghost towns. If the car industry is to remain solvent, automakers must find a way to get people to buy cars.
“The consumer psychology is, don’t spend money unless you have to,” says David Lucas, vice president of Motor Intelligence, a consulting firm specializing in incentives and sales data. “Even some people with the means to purchase a car have a wait-and-see attitude.”
Auto manufacturers have kept sales volumes up for years now with creative discounts, but times are desperate, so companies are throwing unheard-of incentives at consumers. The discounts are steep enough that the economics of the automotive world are going topsy-turvy. And it’s a sign of the bizarro world that America has found itself in that we can legitimately ask the question: Is a new car actually cheaper than a used car?
By Sam Foley of MSN Autos
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