Archive for the ‘Uncategorized’ Category

The best time of year to sell a used car

Most people don’t think much about this, but selling used cars is definitely affected by the seasons.  If you know you will be selling your car in the next year, try to time it to minimize your sale time and maximize your profit.

First, some obvious examples:

Convertibles – These sell best right around the first sunny warm days of the year (April and May for most of North America).  Obviously no one wants a convertible in the winter, and by late summer it’s too hot for most people to picture themselves in this largely symbolic type of car

SUVS – Like convertibles, people usually start looking for these when they have already seen one snow.  January-March are great times to sell any sort of four wheel drive vehicle

Luxury cars – These sell best when people are feeling well off.  At the end of fiscal quarters and especially around bonus season these cars are more likely to sell

Economy cars – The best time to sell a bottom of the market, economical clunker is around August-September.  Why?  Students going away to college, and especially those just arriving to a college town often find themselves needing something to just get by.

Minivans – This one is purely speculation, but if you assume most people buy Minivans when they are adding children to their family, we can look at the months where most children are born in the USA, which is August and September.  Try to sell your Mini van in the summer or fall and I’ll bet you’ll have good luck

Everything else – We’ve found consistently the best time of all to sell a car in the USA is March/April.  I believe this is because American’s do not have a lot of savings, and tax return time is one of the few times people have a large lump sum of money to spend.  Right before Christmas is one of the worst times to sell a car, as people are thinking about spending on other things, are out of town etc…  But right after New Years there is usually a peak, perhaps because of end of the year bonuses.

Of course you can find all of the above types of used cars for sale by owner or dealer at AUsedCar.com

China is the new largest market for cars

Motor Trend had an interesting op-ed piece talking about how China is the new largest market for cars, and how their rules will dictate what cars look like in America (in the same way that America, as the largest dictated how many cars worldwide were created in the past).

Most people probably see this as a sign that the US empire is waning.  That may be true, but I also see a great new opportunity.  China’s more rigorous specifications for cars will bring a new type of vehicle to the states.  As Motor Trend points out, China taxes by cubic liters, which means we could start to see some super efficient 2.0 liter Buicks instead of the 4.0L gas guzzlers of the past.

Of course for Used Cars On-Line, the main interest is the used car market in China.  I have not heard a whole lot about reliability of Chinese market cars, but supposedly Chinese customers are very demanding (they must wonder why we spec out such shoddy crap for them to produce for us).

Things are looking up for US car manufacturers

All three major car manufacturers in the US posted profits last quarter.  Chrysler,  posted a profit of $143 million for the first quarter of 2010, GM posted a profit of $865 million, and Ford posted a profit of $2.1 billion.  This is the best sign I’ve seen that the economy as a whole is recovering.  While those numbers seem like Ford is blowing the other two out of the water, one difference is that they did not seek Chapter 11 protection, and so are still basically operating as they did several years ago with billions in debt.

In my opinion Ford is showing the most promise with upcoming models though, and I expect them to remain on top.  Chrysler/Fiat I think will be the surprise next year.  The Fiat 500 is the new Mini.  I’ve seen them all over the place in Europe, and they scream fashion…. now if only you can keep it running.

This seems like a bad idea

A car you can steer with your eyes

Alfa returns to the states

Automotive news details the return of Alfa Romeo to the United States.  I for one am very excited about this car coming stateside.  I’ve always admired them in Europe as some of the best looking cars on the road.  Unfortunately it looks like Chrysler may be manufacturing some state-side specific ones rather then importing the ones that already exist in Europe, but hopefully they will keep the same designers that currently work on the European ones.

The end of haggling

Everyone loves getting a new (or used) car.  That smell, a change of pace, an upgrade from their old car.  But one thing I think very few people enjoy about the process is the process of haggling for a price.  When we started Used Cars On-Line, one of the founding principals was that it was used cars for sale by owner.  The reason for that was because buying from a dealer was traditionally a lot different then buying from a private seller.  Dealers always felt like sharks, charging more and selling us lemons, while in a private party transaction it’s never as clear who has the advantage.  However, as Automotive News points out in a recent article, more dealerships are moving away from the game of haggling.

Since the advent of the Internet, consumers have had more and more ways to research vehicles pricing, trim etc… We no longer take the dealer on his word that “power locks” were an option on this model.  We can look up a VIN and tell you everything that shipped with the car, what country it was made in, and if it’s ever been in an accident.  It’s very easy to use Edmunds or KBB to determine exactly what a car should sell for.  Therefore, the game of haggling is largely disappearing.  I think for a while everyone has known that the buyer would plan on “talking down” a dealer, and so if the dealer wanted to sell for $10,000, they would price it at $11,500 so the person felt like they got a deal.  However, in the world of Internet search, someone charging $11,500 and planning on being talked down doesn’t look as appealing as someone offering a flat “no haggle” $10,500.  One can only hope this means that cars will be sold like all other appliances in our life, but I’m sure the people that love haggling will miss this piece of car buying tradition.

Geolocation recommendation

We launched a new feature yesterday at Used Cars On-Line. Now, when you visit the site, you will be presented with random cars in your area.  We accomplish this using your IP address to find cars that are pretty close to you.  It’s not an exact science, but we hope you’ll find some good recommendations to help you on your car search.  Stay tuned, we’re working on a new search that hopefully will revolutionize the way you think about searching for used cars.  As always please contact us if you have any ideas.

The comeback of the SUV

Buyers and sellers on the secondhand used car market are finding a surprise this spring.  SUVs and other 4wd vehicles are suddenly gaining in value and demand rather then continuing the downward trend.  Now is a great time to sell your SUV.  Why?

The 1980s had seen a dearth of blizzards in the United States, but in 1993 the so called Storm of the Century marked the beginning of a series of blizzards in the 1990s, (others being in 1996 and 1997).  There is a certain type of American that refuses to let a problem get them stuck, no matter how seldom it occurs.  These are the people on your block who own a snow blower, chain saw, and probably a generator.  These Americans, being fond of tools to solve their problems, realized that an SUV or 4wd vehicle may come in handy.   Soon, Jeep Cherokees and Ford Explorers were not just seen in the northern climes or in rural areas, but instead picking Johnny up from soccer.  The SUV became the manly replacement for the SUV.

However, by the mid 2000s, we once again were seeing a lull in blizzards.  And summers were getting warmer and warmer.  With gas prices rising, SUVs suddenly didn’t seem to have much utility at all.  The new gadget people were getting into was hybirds.  And then the blizzard(s) of 2010 struck.  People got stuck again.  Now we’ve noticed that the prices of 4WD vehicles have started to rise again, significantly.

One difference between this rise of SUVs and the last one is that gas economical 4WD/AWD cars seem to be leading the second hand used car market now.  Subaru’s and Audi’s especially.  I can’t tell you how many people we’ve heard shopping around for a Subaru, and a quick check of Used Cars On-Line‘s inventory shows that Subaru’s are selling for above blue book value.

So now is the perfect time to unload that SUV you’ve been trying to get rid of.  While it was almost impossible to sell an SUV in the fall, it now looks like a sellers market.  It’s unclear if this is a long term trend, I suspect next winter’s weather will tell us for sure.

Cash for Clunkers and the impact on the used car market

As part of the government’s attempts to stimulate the economy, a new program called “Cash for Clunkers” by some has been started.  The idea, originally used in Europe is that older gas inefficient cars will be taken off the road (forever!) and car makers will have the purchase of their new cars increased.   Although the impact for used car makers and people in the market for new cars is clear, I think it’s interesting to think about what it means for the used car market as a whole.

First, let’s look at some of the finer print.

1) The car you are buying cannot be over $45,000.  Based on the motivation of the program I’m not sure why this limit is here, but it’s presumably so the rich do not benefit from this program.

2) Your car cannot be over 25 years old.  Presumably this is so people don’t pull their old fixer upper out of the lawn to take advantage.

3) Your car must get less then 18 mpg combined.  This means the trade-in program will primarily take in trucks and SUVs.

Looking at this list, I think the current impact on the used car market is that SUVs between 1990-2002 will increase in value near and long term.  First, because their value is artificially increased by the government voucher program currently (and speculation on low long such a program might continue).  Further, these cars, when traded in have to be scrapped, meaning they will disappear from the earth forever.  It’s entirely possible at some point in the future, the late 90s Explorers that were so ubiquitous will indeed be rare, as no such program has been introduced previously.  This quite common cars could become collectors items.

The other major impact is that the value of “new” used cars should fall.  Many people don’t want to buy brand new cars, but instead but Certified Pre-Owners cars that are only a year or two old.  Usually the difference between these and brand new cars is about $3-4k.  Given the voucher program does not apply to these, presumably most people in the market for such a car would instead buy new.  Dealers often make more money from these used cars, but also often sell new cars, where the inventory is costly, so it’s unclear what impact this will have for your local dealer economy.

It should be interesting to see how long this government subsidy lasts, but I suggest you pick up an older SUV now while you can… Used Cars On-Line of course has tens of thousands of them…

Dealer or For Sale By Owner?

When it comes time to buy a used car, there are essentially two types of shoppers; those who buy exclusively from dealers, and those who only want a car for sale by owner.  Each person thinks the other type of shopper is crazy.   Who is right?  Can either option be valuable in your search for a used car?

Private Party/For Sale By Owner

Pros: The biggest pro with private party sales is the price.  Not only are private owner’s price ranges more negotiable (they often have no bottom line and are anxious to get rid of a car), they also know they have to sell it for less as they are presumably providing less “value”.

The next biggest pro is that you get to meet the person who has been driving and caring for the car most recently.  This may not seem like that big of a deal initially, but surely a 17 year old with a lead foot and a 58 year old who changed the oil every 2500 miles are completely different types of drivers.  You can question them about why they are selling the car, etc.. which can often bring up problems before you buy.

Cons: There is no guarantee behind a private party sale.  In most states private party sales are “as-is” and the previous owner does not have to give full disclosure about the car.  So even if they know the transmission is about to go, they are often not legally required to tell you this and caveat emptor applies.

Dealers
Pros: The biggest pro behind a dealer sale is that there is usually some time of warranty available.   Dealers also often run Carfax reports for you and have their own mechanics to fix cars.  Dealers are experienced car buyers who get most of their inventory either from trade-ins or auction.  Having years of car buying experience, they are able to find cars in prime condition that they know are in good condition and will sell well.

Cons: The two biggest cons are tied, the price you will pay for a car from a dealer is almost always higher then that of a private owner.  You also have less room for negotiation and it’s often uncomfortable for people to negotiate with dealers who do this for a living.

So which path do you choose?  At Used Cars On-Line we used to only list cars for sale by owner, but recently we have started showing ads from dealers as well.  Why this change?  We believe that the best bet for car buyers is to shop both private party and dealer vehicles.   First, find a car you want, a price range you can afford, and from there worry about the pros or cons of a particular deal.