I have always heard so: "As soon as the Car leaves the dealer, the value drops dramatically." Moreover, it is true. A car is as same as any other product and even worst. If you buy a new smartphone, you keep it in your pocket for months; the condition will remain likely the same as in the store. However, with Cars, you leave the store driving these out, hitting potholes, exposing these to weather and hitting the road. Although no physical damage is done at all, miles on the odometer are just enough for making this difference.
Just ask yourself, would you buy a brand new car for the same price from the store or from someone who just bought it a week ago and drove it to his house once? For sure you will go to the store.
More than "Zero" Owner
When a vehicle had one owner (whom you have not any idea who was or even you do) the value is not the same, even if it was just for just 1,000 Km. Only imagine the difference in the driving habits between:
- My grandfather, who does not take the highway, drives under 60 Km/h every day and spent 3 minutes doing the parallel parking.
- Me, who respects speed limits, but demand way more of the vehicle and regularly drive at these and do more than 500 Km per week, mostly highway.
For sure his car will be way less "consumed" than mine. So, if I would acquire a vehicle that was driven by my grandfather for years, I would feel more confident with the price than it would have been me driving it.
However, still, it would apply to used cars, because if we move this scenario to the one I mentioned before, the "just 1,000 Km", it would be kind of the same. You would go to the dealer as the vehicle, already had one owner. The only way you would consider this car, is if you are offered a considerable saving.
Fewer Warranties, Except Manufacturer One
It is normal that you feel safer buying a brand new vehicle than buying a used one. The fact that you acquire a car in the dealer under a "standard sales process" offers a more solid environment and reduces the risk of having something going wrong, and that also is a fact that creates a difference.
- Dealers are regularly certified, but still, we are talking about a brand new vehicle. New vehicles are reviewed more exhaustively after getting out of the production line so, when acquired, they do mostly a checklist to guarantee the product was not affected by the transportation from the factory. A vehicle that was used
- Paperwork. The required amount of signatures, credit check, and negotiations on top of it. Although independent of the physical vehicle status, the paperwork is part of the process and requires time, costs and many people involved.
- Customizations: Brand new cars are easy to customize than used ones. Just the short path, used cars are usually as these are and if you have specific needs, sometimes you may need to un-customize.
All of these details need to be done every time a vehicle is delivered to the dealer, no matter if it is used or new.
When you get it new, you get all of these "benefits/warranties" by default. The fact that you drive your car for a while and then decide to sell it, creates an overhead value that can only be balanced reducing the actual vehicle price. The dealer needs to check the car, do the paperwork again and now for a vehicle that is tagged as "used." This is why the price drops as soon as you drive it out brand new.
Moreover, going back to Manufacturer Warranties, these make not a big difference as warranties extend for long terms, usually three years. It is a factor that doesn't make much difference regarding Price so that I will not list these as that important here.
It is Weird Someone Wants to Sell a New Vehicle
Although there are many reasons someone may suddenly decide to get rid of a "just purchased vehicle," it is totally legal and OK but, of course, it will be really hard to find someone willing to pay the same or almost the same as the dealership. Moreover, this is one of the reasons I always suggest to lease cars instead of purchasing.
Doing a Lease transfer does not imply any depreciation on the vehicle as the residual vehicle value is defined since the very beginning between the dealer and the client.
If you want to learn more about New Car Leasing, the benefits related to Car Leasing and more, feel free to read my Car Leasing Guide.
