A classic bit of outdated car-buying advice that stubbornly prevails is that you should always buy used cars because new ones depreciate the moment you drive off the lot. While this is probably true for most cars, there are certain models that offer minimal savings in the pre-owned market. A study from iSeeCars highlights the models that are better bought new.
A while back I warned people about “overpaying” for lightly used cars, and anyone who has ever dabbled in the pre-owned Tacoma or 4Runner market knows exactly what I am talking about. But this phenomenon doesn’t just apply to Toyota 4x4s: A lot of “high value” brands like Honda, Subaru and others don’t have a steep depreciation in the used market. This often means that the difference between the used price and the new one is fairly narrow.
A recent study by iSeeCars.com examined the price differences between new models using the following methodology:
iSeeCars.com analyzed over 2.6 million cars sold between August 2020 and mid-March 2021. New cars included in the analysis were from model years 2020 and 2021, while lightly-used cars were defined as used vehicles from model years 2019 and 2020. Low-volume models were excluded from the analysis, as were cars with outlier mileages and models discontinued as of the 2020 model year. The average asking prices of the lightly-used cars were compared to those of new cars from the same model. The difference in price for each car was expressed as a percentage of the new average prices and ranked by this difference.
The Tesla Model 3 takes the No. 1 spot primarily because the 2020 model got a price reduction and used-car inventory for Model 3s is incredibly limited. No one is surprised to see the Tacoma, 4Runner and Wrangler on this list as those models are historically “expensive” for used cars. The Palisade and Telluride have managed to buffer the usual Korean car depreciation curves because demand for new models is so high. These three-row SUVs are often commanding markups over MSRP at the dealer.
Popular models like the Highlander, Pilot and Outback didn’t make the list. From my experience of shopping for hundreds of cars every year, I would say that buyers are usually better off buying new versions, especially once you factor in larger discounts and better financing rates.
The big takeaway for consumers: Don’t assume you are going to save a lot of money by focusing on the used market over a new car. It pays to shop both ways. Check out the full iSeeCars report, including which cars have the widest gap between new and used.