Used car resale value

Water Cooler
#1

I know we have some car gurus here, asking for advice please:

I am probably about to buy a used car and am requesting perspective on how much the resale value will likely change in the next 5 years. I will probably drive the car for the next 5-6 years and then upgrade to something else.

Long story short, I built out an in depth automated screening system to troll the used car market and identified some persistent inefficiencies in particular models in particular geographies (can’t stop a market junky!!). I am cheap and wanted a deal but mostly this was a fun project.

Car is selling for $12K. It is a 2005 and has a rebuilt title which is part of the reason it is selling for such a low price, although the frame is not bent and there is zero mechanical damage (already checked out). Cosmetically, the car is perfect. Blue book is over 2x that much but this one is off the beaten path in a particularly illiquid geography and has a motivated seller for specific reasons unrelated to the car itself. I know the car is a good deal.

The car is something along the lines of a Boxster, Corvette, Mustang, etc. - a desirable car that people would want to drive. It is a convertible.

If I add another 30-40K miles to the car based on my estimated driving over the next several years, what impact will that have on the resale value? If I sell the car in 2019, it will be ~15 years old with maybe 70,000 miles and a rebuilt title.

If it’s a sweet car with relatively low miles but is 15 years old, how negative is that on the resale value?

There are lots of these cars in the Western half of the U.S. (i.e., the market) selling for $10-15K with salvage / rebuilt titles (many of which could have problems) and over 100,000 miles. The best deal I have seen to date other than this one is a direct comp at $9,900 with 82,000 miles on it (also salvage, did not check that one out as it sold immediately).

So really, in 5 years, how far down does the low end of the market shift for the same car?

Thanks

#2

Can I get that screening system?

http://www.analystforum.com/forums/water-cooler/91323235

#3

Kelley Blue Book, or potentially similar companies, have detailed price data for almost every used car. That might be a good place to start, since the question you are asking changes based on car model.

Also, keep in mind that the used car market changes based on supply and demand - just like houses, stocks, or other things. So, it is impossible to accurately predict your future depreciation. In 2012, for instance, people had been holding on to their cars for a long time, so used car prices were high due to constricted inventory. In 2007, used car prices were low, since car turnover was high. With that being said, depreciation will obviously be lower for older cars. That is, a 2005 Boxster will depreciate more over the next 5 years compared to a 2013 Boxster.

Realistically though, if you are looking at cars in the $12k range, I would just focus on getting the car that fits your lifestyle the best and that will give you the fewest problems. For instance, a 2005 Boxster is very different from a 2005 Mustang - in terms of practicality, price, expected reliability, and image (if you care about that). You’re not going to remember that you paid $1500 more in five years. However, you will remember all the times when you get oil leaks, electronic problems, or other kinds of failures.

#4

Insurance companies use NADA to value vehicles. No one uses KBB.

#5

Thanks Ohai. It’s not a Boxster, I would never buy a Porsche. It’s similar in specs (slightly better) than a Boxster, I was just throwing that out as an example. This car has a much better maintenance record and is much cheaper to fix than any Porsche model.

#6

I for one love the salvage/rebuilt market for cars. Have bought a few of them in the past with zero issues and huge price breaks. The key is in the research which you seem to have done.

I also feel that the depreciation on a salvage rebuilt will be lower (in terms of %) than a clean car, especially after 15years. Plus if its a convertible and you keep records of EVERYTHING I don’t think you will have any issues finding a high school teenager trying to score a sweet ride for slightly cheaper price.

If the car in question was a Toyota Camry, then the above scenario doesn’t work because no matter what you say or do a rebuilt will always be perceived as a reliability risk and will never fetch you a good resale value.

#7

That was my sense as well ZeroBonus, thanks. I think it would be hard to envision that this car would sell for less than $8,000 in 5-6 years with that kind of mileage, so really it’s about $1,000 a year worst case to drive this car (might even be better than that depending on the market at the time).

#8

Mad respect. I’ve done this myself with zero issues. I did ensure my rebuild had OEM parts which eased my concerns.

#9

What is the current resale value of a 15yr car of the same model? At 8yrs if a clean one is $30K, I don’t see it going below $15K in another 7 years. Definitely not below $12K. Compared to that, you should have no problem unloading yours for $8K. $1k/yr depreciation sounds about right to me.

#10

They did not make the model 15 years ago. I have seen clean ones go for $25-30K and some higher than that depending on the specifics. I think it’s a good deal and I am looking at this one and another one that is similar. Will decide by the end of the week. Thanks again for the perspective - market will vary but I don’t think the resale value will plummet as long as I keep it in good shape and it has no mechanical problems. The important thing is that the frame checked out and there are no alignment problems, so the rebuilt title is really just a superficial aspect of the deal.

#11

double post

#12

One important piece you might want to check out is all the wiring. Bought an '03 I35 about 5 years ago for $6k that had some wiring issue that resulted in the front driver seat motor getting fried. Didn’t realize it until after I bought it and ever since then I have made sure to test every single electronic equipment in a car before purchasing. Too bad I wrecked it before I could enjoy it haha

What was this car salvaged for? I prefer collision (assuming to frame damage) over flooding since cosmetic damages aren’t expensive to fix if you know the right people. Wiring is a PITA in the newer cars these days. Obviously within flooding fresh water can be okay but salt water is a dealbreaker in my book.

#13

What kind of car is it anwyay? 2005 convertible sports car with KBB of $25k and “slightly better” spec than a Boxster sounds like a Corvette. But then… he says this car was not made 15 years ago. So, a bit confused…

Can’t be S2000 or RX-8 at those prices. Can’t be Z4 M, which only came in 2006. Can’t be Jaguar XK or SLK AMG, since there is nothing “cheaper to fix” about those. Probably not Acura NSX either, given that that is more than “slightly better” than a Boxster…

#14

I actually rebuilt my S2000 after it was totalled by some lady. I am now about $7500 in to it and it looks better than before. If you go the salvage title route, just make sure the damage did not extend to the frame rails and the repair and paint workmanship is good. You must look at the car in the sun, and look for sanding marks and orange peel in the paint to get an idea of the repair quality. Also check for non-oem parts and fasteners, that is a sign of low quality repairs. Some cars are literally just as good as a non-wrecked car, others are a rats nest of problems. The nice thing is that the car will wear a poor rebuild job on its sleeve.

Sounds like an M3 vert? E36 M3’s have held their value unreasonably well. Same with RX7’s, Supras, and a few other purist cars. A good condition 15-20 year old RX7 R1 TT or Supra Turbo with some miles can go for $25k all day, but a non-enthusiast car in 2019, probably not much.

#15

Dude a 15 year old car with a rebuilt title…I wouldn’t expect much. Maybe 2k?

#16

Bromion, I mean this with all due respect, but are you fucking kidding me?

Given who you are and the field you work in you should be making atleast 250-500k per annum yet you have invested so much time and thought into a purchase that is invariably going to a money losing proposition. Life is too short to worry about this, cars are a waste no matter the decision making process leading up to their acquisition. If you want to buy a used car for pleasure then do it, you deserve it, its time to celebrate your success. And if its a lotus elise that your looking at then buy two!

#17

It took me about 3 hours to build the model using an API scraper and some basic excel work. I did spend some time messing around and researching individual models but that’s mostly because I didn’t know what I wanted to buy. It was pretty fun though and I learned a lot about cars.

Re: the cost, I don’t see how this is a money losing proposition relative to a newer car that will depreciate more rapidly

There’s no chance this car will sell for $2K. Better chance of seeing DOW 1,000 or 30,000 in the next 5 years than this car for $2K. It would (and does) sell for more than that on Copart smashed to bits.

I think you’re underestimating how inefficient the used car market is and how much money you can save. I have a friend that just bought an insane low miles 2008 Corvette off Craigslist for $8,000 with a clean title and no problems. It took him over a year to find the deal and a motivated seller (divorce), but it was worth it for him. I don’t have that much time but I still wanted to get a good deal. I built the model and spent about an hour a week checking for outliers, <15 hours all in. Is 15 hours worth thousands of dollars to you?

#18

$8k for an 08 Vette? How is that even possible?

He could’ve sold it to the dealer for 3x as much.

I agree with you and disagree with the others. If you do your research, there isn’t a better money SAVING proposition then a salvage rebuilt car. Used car market is inefficient as is but the rebuilt market is even better. However; this isn’t ideal for people who don’t know anything about cars and/or people who make impulse buys

PS: If the car is indeed a Lotus Elise that you are thinking about offloading for $8k in 4years and it is an automatic then I will buy it from you no questions asked haha.

#19

Not sure, I didn’t get the full story but I’ve seen the car (and driven it ) – drives like a dream. His family owns a mechanic shop and he flipped cars to pay for school so I’m sure he has some amazing tricks (he runs a fund now flipping stocks which is not entirely dissimilar). I think the Vette had something to do with the guy burning his ex-wife somehow in the divorce.

The are even more ridiculous examples in the stock market. I doubt I could get that kind of deal in the car market because I don’t know enough about cars. In stocks it is easier. I bought some CCIX at ~$10 before they reported in March and the stock has already doubled since then. How is that possible in a market that is supposed to be efficient??? Company had zero solvency risk, no overhangs and is in a mature industry. There was a trick in the math that didn’t show up on the screens.

#20

I get you. I tend to do some deeper-than-what-people-normally-do research for cars, vacations and even hotels. It’s a little like uncovering a completely different market and it’s pretty addicting.