Some New Cars Cost Less than Used Due to Supply and Demand, Edmunds.com Reports
December 21, 2009
Great deals on new cars and the simple economic principle of supply and demand is at work 
with a number of new cars costing less than their equivalent of its one-year-old used version, according to an analysis by Edmunds.com.
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 vehicles on Edmunds.com's list of new costing less than used this month include the 2009 Audi Q7, 2009 Buick Enclave, 2009 Mazda B-Series Truck, 2009 Volvo C30 T5, and 2009 Toyota Highlander Hybrid.
In addition to great deals on new models, used car prices generally are climbing due to low supply, said Edmunds.com Analyst Joe Spina.
"Demand and supply dynamics are causing an increase in used car prices while lowering new car prices across the board, generally speaking," Spina said.
UUsed cars are in limited supply for three main reasons, he explained:
-- there are fewer vehicles coming off lease this year because of the recent decline in leasing's popularity and availability;
-- Cash for Clunkers rendered many thousands of used vehicles inoperable and removed them from the scene at an unnaturally high rate;
-- In this 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
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.
Edmunds.com assumes 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; local incentives and rebates could be available in addition to national ones.
Photo by GM
The Buick Enclave is an example of a vehicle that is less expensive to buy new than as a one-year-old used vehicle.
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