New Car Lost Value as Soon as I Drove It Off the Lot ... Really
OfflineI thought this was an urban myth but it is very true! I bought a brand new Honda Accord for around $22,000 and kept it for a week! I put less than 1,000 miles on it and decided to take it back to get a hybrid or something smaller and easier on gas. The Accord was nice but filling up was going to be a burden I didn't want to deal with.
Well, they were only going to give me about 75-80% of the value of the car back when I went to trade it in! WTF? How in the hell did the car lose so much value? Where did the value go? Who has that other 20-25% of the value of my new car?
I remember economists used to give us numbers for GDP ... do they take into account how quickly these new cars lose value? I kept the freaking car 1 week and the value of the car is only 80% of what it was brand new sitting on the lot? At this rate, the GDP can not be a good number! Either cars are priced too high or the GDP formula has to be redone! I'm pissed and now I am stuck with this car for at least 2 years until I am not upside down in the car.
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Interesting how cars lose value so quickly! I too thought this was a myth but your case appears to kill this myth.
What would be nice to see is the formulas these economic guys use for GDP. Actually, what ever happened to GNP? When I was in school, GNP was the number used to show how much money a country had. I have heard GDP a few times but I never found out what all it entailed.
My car lost $3000 when I drove it off the lot and the dealer said he was really being nice. After the dealer told me this, I tried to put in the numbers on kbb and edmunds web sites. They showed similar numbers for the low number of miles I had on my car. I had an American car so I would expect the loss to be a little higher for me than for buyers with the Honda's and Toyota's that hold their value a little better. I was totally ticked just like you newcar. I said I would never buy a brand new car again. Seems as if a 2-3 year old car is the way to go now.
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Fitty
Luckily this is something that I was aware of when I first bought a car, and so I bought a two year old car. The initial period of depreciation is the most severe-after the first two years it starts to stabilise.
I heard about this myth and actually believed it so when I go car hunting in another year or so, I definitely won't be picking up a brand new car. It's really not worth it.
I learned this the hard way too. Stay away from brand new if retaining value means anything to you. I would follow ScrewedUp on this one and go for 2 or 3 year old vehicles. I bought a 3 year old Toyota truck a few years back and it has been nothing but a pleasure. Best vehicle purchase I ever made in my life. And I laugh every year when I get the tax bill for it and see how much my local government still thinks the truck is worth.
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ForceField
A few comments on this: First, yes a car used does lose some value off the lot, it has now been owned. Second, if the car you bought lost 20% there are likely two factors in this. First, you probably didn't get a great deal on the car in the first place (check out fightingchance.com, $40 is worth it if you want a new car) and second, you will ALWAYS get a bad deal for a TRADE IN, they have to make money too. When you trade in, they have to inspect the car, store it until it sells, and then make a profit on top of that. The 20% (~$4000) would be pretty standard in business practices. The dealership probably would have to pay $500-$1000 to fully inspect the vehicle and store it before it sells, and then factor in that they will try to sell it for 5-10% profit. They will try to sell the used vehicle for very close (but not quite, because it is now used) to what you originally bought it for.
If you want to "lose" less, sell it yourself, that will cut out the $500-$1000 and the 5-10%.
I would put GOOD money that a similar "loss in value" would be assumed if you tried to do the same thing with a 2-3 year old vehicle. Try to buy one and sell it back to them immediately. I would be very suprised if you didn't "lose" 15-20% on the transaction.
I was watching Top Gear today and they were talking about how in a couple of years, some of the top cars had dropped in value from £88,000 for instance, to £16,000. One of the presenters owned one of the cars, he was most upset.
The value left down is right now a great deal due to the USD falling so they are hitting harder when they need to take back yet another auto that someone does not want.
Angel, you never hear about GNP because counttries don't have any money any more. They all are in debt. By definition, the GNP (or gross national product) is a measure of a countries economic performance or the goods and services produced in oou country.
Which means that you are not correct-they still have a GNP, what they don't have is a net positive effect after taking into consideration the national debt. Which of course for America is now beyond the comprehension of just about anyone...
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