Should You Buy A Used Chevy Volt Later?

While the first Chevy Volt only recently rolled off the production line, I'm contemplating how it will stack up on the used car market in a few years.

Traits of good used car buys include the use of proven technology, parts and service availability, high sales volume which means there is a large market of that particular model to choose from. Great safety and quality ratings are important too. The Volt is too new to know.

Source:  Wikipedia

It represents a paradigm shift in automotive engineering and design, which is impressive. I hope it succeeds. However, like the first microwaves, VCRs, cell phones and computers, they were sold to prove viability in the marketplace but had comparatively low value for buyers when compared with later models due to quick product evolution.

From that point of view the novel control strategies, lithium ion battery pack and a host of unproven technologies will make this a risky used car buy. It's not likely destined for 200k trouble free miles, so resale value will probably be heavily discounted by the used car market in the form of rapid depreciation. Unless it becomes a collector item.  But we're not talking about collector items. This is strictly from a utilitarian standpoint.

Watch for resale value on this $41,000 car, likely affected by Federal and state funny money (tax credits, rebates, incentives, etc.) to vary a lot by region but generally trend downward fairly quickly.

We also need to remember that to get the plug-in benefit of electric power you need to have a place to charge at home (i.e. garage). With 110 volt household power it will take about 10 hours to do a full charge, so you would want to invest in rewiring for a 220 volt set up which would shorten charge time to about 4 hours. Keep that cost in mind should you consider purchasing one.

Cars Aren’t Getting More Expensive Are They?

Fifteen years ago I bought my first car for $4k, exactly what I thought the used car price sweet spot was at the time. It was a good, basic Honda Civic with 87k miles on the odometer. It lasted a good 90k more until it was totaled by an errant tractor-trailer.

Fast forward to today and I still think the sweet spot is right around $4k for basic transportation. But the price of the average new car has risen considerably since then. It’s now somewhere in the region of $28,000.

Interesting. New car prices higher, the price of solid used cars is still the same. What does this tell us?

It tells us that new cars are depreciating more, on a dollar basis, than before and that used car deals continue to improve. And that means new cars are more expensive to own than before, which could be one key reason why used cars are more popular than ever before.

2001 Kia Rio: Your Basic Korean Bargain, En Espanol

When it was new Kia really broke new ground, not with automotive engineering but with a 5 year 60,000 mile warranty and a 10 year 100,000 powertrain warranty on a car with a base price of $8,595. That takes confidence.

The car itself was equipped with a 1.5 liter 4 cylinder engine that made 96 hp, and came with dual front airbags. Adding options such as air conditioning, ABS and an automatic transmission would bring the price up to around $11,000.

You may well find a specimen that is still under the powertrain warranty.

Que es el precio ahora? That’s about all I learned in three years of high school Spanish class. What’s really worrisome is that there are American kids who come out of school (notice I didn’t say graduate) who have about the same command of the English language.

Any way, the Blue Book value is now a mere $1,300 (108k miles) which is only 12% to 15% of its original sticker. This is one of the top candidates for “cheapest used car that still runs”.

5 Year Bargain: 2005 Scion tC Coupe

I see these everywhere which indicates they’ll be easy to find as used cars and parts will be widely available. The general conditions of the ones I’ve seen are very good. This two door hatch took over where the Toyota Celica left off. A solid, kind of sporty and a good all around car, sold by Toyota’s youth-oriented value brand.

Powered by a 2.4 liter 4 cylinder engine (2AZ-FE model, same as from the Camry) turning out 160 horsepower, it is available with either a 4 speed automatic transmission or a 5 speed manual. It comes standard with a full panorama moonroof, 4 wheel anti-lock disc brakes and electronic brakeforce distribution. Front airbags and a driver’s knee airbag are standard. Side and side curtain airbags are optional.

Book value is now $8,860 (at 75k mileage) which means it has depreciated roughly 45% from the original MSRP of about $16k. This car is still in production and has held its value very well. In fact, it was named one of the ten “Best Resale Value” automobiles of 2009 by the Kelley Blue Book.

How to Avoid A Classic Craigslist Scam

Out of curiosity, last week I checked Craigslist to see if there was a Toyota MR2 for sale locally. Sure enough there was a nice one on there with a TGTBT (Too Good To Be True) asking price.

And while the ad didn’t seem like it was posted by a Nigerian gentleman who might split part of a $10m loot with me, it did raise a few flags. Namely the price was too low for the car being offered. But just for fun I emailed the seller to get the scoop. Here was the response:

Hi,

The car is still available and it's located in Gonzales, Louisiana. The price for 1991 Toyota MR2 Turbo is $2,250 and the shipping costs are included in this price. It currently has 47,200 miles, there are no rips, tears, stains or marks of any kind in or on the car. It has a clear title, no liens, never been in an accident. The engine and trans are in perfect condition, no leaks, noises or smoke, no rust, there are NO issues.

A friend of mine is a DAS employee and he can deliver the car anywhere in the US for a really good price. You will also have 5 days to inspect the vehicle. If, by any reason, the car is not as described, or if you find any problems with it, I will pay for the returning fees. I'm sure it won't be the case because it's a state of art vehicle inside and out.

If you have the funds available and want to reserve the car for you, I need your full name and the delivery address.

Best Regards,

James McNeil

PS. The VIN# is JT2SW22N9M0048994, if you want to run a carfax report

Does anything about this strike you as unusual? If you don’t think it’s fishy I would suggest you never buy anything again until you go to Fool School (and I don’t mean that stock investment site).

I could go on and on but here are 3 immediate red flags.

1. This car was advertised in Washington DC. Why would it be located in Louisiana? The answer is that it’s not. There’s no car. It’s pretext for fraud.

2. The poster claims the car is perfect (“There are NO issues”). If this were true why couldn’t he sell it closer to home for such a low price? And he’ll even pay for shipping to me? And take it back if I don’t like it?  By the way, most CL scams seem to be for amounts under $3k, probably due to some sort of legal threshold where fraud involving larger amounts come with more penalties – that’s my hypothesis.

3. Why does he need my full name and delivery address to “reserve” the car? This isn’t Avis rent-a-car. He just needs a zip code to estimate delivery costs. 
Based on this alone I wouldn’t even bother to respond to anything like this. Never provide any personal information, and never ever send any money. The only reason these scams continue is because some people fall for them.
It’s incredible how many sharks there are in used car waters. That’s the reality. So caveat emptor – twice!

The bottom line is if there’s a weird story behind it, the deal is unusual or it seems TGTBT, it probably is. With fine examples like these is it any wonder used cars have a bad rep?