San Diego Housing Bubble News and Analysis

Check into buying a car through the Costco program before you decide on used.

Right now, it may be possible that dealers regular prices are lower than their costco prices, but it's always a good idea to check.

Hi Donald,

I want to pass on a positive experiece I had.

To put this in perspective, I sold cars in graduate school -- what a horrible experience -- and since then I have hated car dealers in general.

Recently my wife and I purchased a new Mazda from Hine Mazda of Temecula. We were stunned. There was no pressure, and we got the price we wanted by simply calling our salesman the day after our test drive and he gave us his bottom line, via telephone, a few minutes later. He essentially gave us the "Costco" price, and paid us more for our trade in than we expected.

The whole experience was a 10 out of 10. This dealership apparently has decided to things the way Saturn does and simply not hassle people.

John Seed

I have been assisting 3 friends purchase cars in the last few weeks. So far, we have a brand new Mazda C9 7 passenger fully loaded with the game of Costco played with Carlsbad Mazda Dealer who met that price and had desired vehicle on the lot vs waiting for Costco dealer to order and deliver. Seemed like a great deal and easy.

Drove to Santa Monica on Saturday to assist with purchase of a BMW 328 i, certified used, fully loaded with both sport and performance packages, 16000 miles. They did NOT want to budge from internet price. We wandered off to "think" and they called the second we left the lot dropping a whopping $200. We kept driving, went got lunch, wandered the promenade, they call again with the "fact" that someone else is interested in this car and would hate to see her lose a great deal....my friend got emotionally attached to the vehicle and we went back to dealership with a negotiated $300 dollare price drop on a $28,000 USED car.

Currently shopping for another friend who is undecided (read unemotional in her car choice, just wants a reliable car for a great bargain) as to whether she wants Nissan Altima, Honda Accord, Toyota Camry, and on whether to purchase new vs used. There is a tremendous amount of inventory out there....I am e-mailing dealers and sharing the results I receive with them. Basically playing them against each other to see who will give me the best deal. Pretty easy for us to review the choices and not wasting my time or dealers wandering around their lots and hearing how they are actually going to lose money on this deal.....

Are they willing to cut below the invoice price? I guess my question is do we still have to care about their invoice price? What type of the car has a better price cut, barely used or brand new car?

How does the "Costco" price compare with Invoice price?

I'd say it's pretty close unless you buy used from a private party. The dealers mark those used cars up quite a bit now (the ones with the 100 point inspection, certified and all that.)

When I bought my Accord 2 years ago, there were actually certifed used vehicles with 30K miles on them that had higher asking prices than the new price I paid.

Pre-tax price on the car was about 19,500.

I found a couple used ones from private parties for 15K or 16K with 30K miles on them, and lots of used ones with 30K miles or more from private parties in the 17K - 19K range, and several used ones from dealers in the 17K-21K range.

So, I went new. I had a similar experience recently when I was looking (never bought) for a Mazda3. I'd say buy new or buy used from a private party, but that's me. Buying used from a dealer seems oddly overpriced in my experience.

October is a better time to buy. Wait for 2010 models to come out, then shop for a new 2009.

The costco price varies based on the model. For each model, they have a price relative to invoice.

For less popular cars, it is as much as 1K under. For popular, there is no deal. I remember a Honda minivan was "no deal" at Honda when they were backordered, but an Accord was $100 below invoice.

I shopped for toyota trucks once (didn't buy) last year. Costco prices varied from $500 under to $200 over. They pull out the actual invoice on the car you buy, and that's the price.

Turns out, last year models were even cheaper than the costco price on this year models, so I did that.

The nice thing about Costco, is they usually walk you right back to the fleet sales rep who usually just wants to get you out of there in a hurry. What car do you want? OK - here's the price. Then you decide.

I was greeted at Mazda by 5 smiley sales reps. Their faces went sad when I said I was here to see "Bob" (forgot his real name) on a Costco purchase.

Looks like Mazda has good deal, but what about toyota, honda, or lexus?

In the contest between buying new or used-and-nearly new, I'd suggest new. The deals are terrific, and I've heard of new car prices being less than some used car equivalent.
Besides, the hefty CA sales tax is tacked on to the used car, giving the state an inequitable windfall gain (that hurts the poor who must buy used). A car could theoretically change hands enough times that the sales tax collected by CA would exceed its price when new.
The way to beat this is to buy your car new and drive it into the ground.

"The way to beat this is to buy your car new and drive it into the ground."

I totally agree.

I had a a few good experiences buying an acura mdx for a few folks who asked. It wasn't even a fair comparison. Dealers in L.A. were much cheaper.

As it stands the best time to have bought an MDX was last year when gas prices were high, the recession just kicked in, and Acura had way too much inventory. For the price one paid in 2008 at the end of the year clearance for one with a Tech package, you can't even buy one currently at the 2009 clearance without the tech package (production was cut, gas prices fell, so demand crept back up)....That said, you can do everything over email and phone calls. Most LA dealers will meet each other's prices, which will be considerably lower than dealers here in SD. The Mission Viejo dealer for instance is 45 mins away. You could go as far as Santa Monica and Torrance.

Given your choices you indicated (Toyota, Honda, Lexus)...I would pick the Mdx,Toyota Highlander, Lexus RX, Honda Pilot in that order.

The thing I don't like about Lexus/Toyota is that both like to nickel and dime you on every single option. MDX and Pilot are sold in only 3-4 trim levels, and most come pretty well equip.

Toyota/Lexus prices small options one at a time, BUT most of the cars already come with preselected options (in some cases things you don't want like heated seats in CA). You end up paying for stuff you don't want, and doing the math, the Lexus may very well end up much more than a MDX.

I'm not a big fan of the Pilot's styling, and folks I know had problems with the Pilot' (hence the bottom of the list). MDXes so far have been troublefree. Plus the MDX/Pilot seats 7, while the Toyota highlander/Lexus RX seat only 5.

Given the choices between the Highlander and the RX, I'd take the Highlander because it's cheaper, and the styling is pretty slick too imho. Essentially the Highlander and RX share platforms so it's almost the same car.

The pluses for the RX is that it's a brand new model year (2010 looks different from 09). The MDX has been in the current model year for about 2 years already (expect another 2-3 more years)..

Preowned SUV's have taken a hit pretty hard, so if you don't mind a preowned one from private sales, you could save a bundle. (Buying certified used from a dealer, you won't save that much). The prior year Lexus RX in particular takes a huge depreciation hit due to the new 2010 model.

Unfortunately none of the SUV's mentioned above have a gross weight over which you could write it off as a truck used for a business expense (gross weight must be over 6350lbs)...All fall under the category of a passenger vehicle, which you can still deduct but not quite as generous deductions compared to vehciles classified as "trucks".
The only SUV that meets that category in your brand selection is the LX 570 and possibly the GX470, neither of which you would be happy with the price nor the driving dynamics if you are looking for a crossover style CUV. For additional info on this loophole, read about Section 179 depreciation...
http://en.wikipedia.org/wiki/Section_179...
(Personally, you're doing the rest of us an environmental favor by not purchasing one of these behemoth unless you really need to...:))

If you are willing to explore outside of the aforementioned brands, I have heard good things about the Mazda CX7 and CX9 and the Ford Edge.

BMW X5 and Audi Q7 aren't reliable, and the Audi Q5 just came out (reliability unknown, but I have my inclinations one what it would be :) )...

Unless of course, driving it into the ground only takes you 100 miles or so. Not ever changing the oil, can also lead to early grounding.

Josh

i prefer buying a 2-5 year old car then drive it until the wheels come off.

I am surprised no one mentioned edmunds.com with their TMV (True Market Value). Go to their main page and click on TMV near the top left click on True Market Value - under certified cars and used cars. I just picked the MDX for illustrative purposes and picked 2008 year. A pop up window lets you pick year, make and model.

Brings you to this page: http://www.edmunds.com/acura/mdx/2008/in...

Then select the trim package

Brings you to, which gives dealer trade-in, private party sale, and retail sale
http://www.edmunds.com/used/2008/acura/m...

you can also click on customize appraisal for specifics for each individual car and go by zipcode too.

I agree. I think edmunds.com is fantastic. I have used other sites but I think edmunds.com offers the most and best info.

I purchased 3 cars since late January and traded one older car in. I utilized edmunds.com to help with the pricing and values. They also have some good info on purchase strategies and dealer selling strategies.

It's great time to buy. Buyer's leverage has never been better as far as I can tell.

That's for you to find out and report back !
Good luck out there.

Volvo XC90:

Early XC90s with T-6 engines are a mess but the V8 and the 2006 T5 have relatively no history of issues. I own a T5 and its underpowered in my opinion so i would recommend the V8 but otherwise its a nice ride and I have had no issues other than replacing the tires and brakes.

xc90s have tanked in value and you can probably pick one up rather cheap. The gas mileage is on par with some of the other models mentioned, room for 7 and built like a tank. The redesign was cancelled but a facelift is scheduled for 2012. 2007 yr and later have ipod integration. The stereo system is Fiber optic so if you decide to buy one, make sure it has all the options you need bc its hard to upgrade.

My 2 cents

1) Figure out the car you want to buy. Go test drive vehicles at the dealerships
2) Figure out what the 'market value' of the vehicle is--Edmunds, NADA, KBB, Manheim pricing
3) Buy private party. You get service records and you get to suss out the owner.
4) Get a vehicle pre-purchase inspection before you actually buy
5) Cash is king so bargain hard enough you feel you got a fair deal in a recession economy.

Dealerships are a waste of time unless you absolutely need a new vehicle or a lease

Ever consider the Ford Escape Hybrid? Gets better mileage than the Toyota, Honda, and Lexus crossovers. And is cheaper than their hybrid counterparts. You also get a $1500k tax credit if you buy one now. Plus, Obama has one. :D

I used Edmund's when buying my last car. Worked out pretty good. Got $700 below invoice. Figured that was ok.

Costco is typically an average deal. If you are looking to get a drop dead deal on a new car you need to wait until October wen the 2010 start hitting te ground. Additionally you need to find a high volume dealership that is willing to give a few cars away so that they hit their volume incentives. I would agree that prices in LA are going to be anywhere from 500 to 2500 cheaper depending upon the car so it might be worth the drive.

If you think about financing check out costco which uses capital one and penfed federal credit union.

Costco is typically an average deal. If you are looking to get a drop dead deal on a new car you need to wait until October wen the 2010 start hitting te ground. Additionally you need to find a high volume dealership that is willing to give a few cars away so that they hit their volume incentives. I would agree that prices in LA are going to be anywhere from 500 to 2500 cheaper depending upon the car so it might be worth the drive.

If you think about financing check out costco which uses capital one and penfed federal credit union.

Edmunds has their 2009 Best Resale Value Awards at

http://www.kbb.com/kbb/NewsAndReviews/Be...

No Surprise that Honda wins.

Cars.com has their prediction of

Best resale value after 3 years:

Rank Make and Model Style* Residual Value
1. Mini Cooper Hatchback (two-door) 68%
2. Honda Civic EX sedan 64%
3. BMW 1 Series Coupe 128i 63%
4. Subaru Impreza 2.5 i sedan 61%
5. Scion xB Base 61%
6. Honda Civic Hybrid Base 61%
7. Jeep Wrangler Sahara (two-door) 61%
8. Toyota Prius Standard 61%
9. Honda Fit Base 60%
10. Nissan GT-R Base 60%

http://www.cars.com/go/advice/Story.jsp?...

edmunds gives you an idea of what the car may be worth, but what I have discovered is people get waaaay to emotional over cars and salesmen feed on that. I bought my Honda almost 4 years ago from Rock Honda in Fontana, it was a cash deal. I had received internet quotes from multiple dealers and I played them against each other to see how low they would go. Rock Honda won. I even printed out their quote and took it with me to look at used cars priced higher. People held firm that their 2 year old car with upwards of 20,000 miles was worth more than I could pay new. I went new, although I have it firmly burned into my brain that a car is NOT an investment and loses value the instant you drive it off the lot.

I even stopped at 2 Honda dealers on the way to Fontana to see if they would meet the price. Not even close and then tried to convince me the low price was a scam and I would be sorry.....it was a long boring drive, but I saved thousands.

Damn Piggs. I always learn something. I have never checked the LA dealers, which is funny, because when I was a kid - in 1973, my dad drove all the way to LA from Tucson to purchase a truck. He saw a bait-and-switch ad in the LA paper and went out there. They tried to convince him they didn't have that truck anymore. He went and found it on the lot and wouldn't leave until they sold it to him at the advertised price. It took a day of being a pest, but he got it.

So - I'll do that next time I'm looking, for sure.

All you need to know:
Costco
October
LA

Well, I tend to buy private party Japanese cars with 100k miles for 1/4 their original price, and drive them for the second half of their life. We're at 209k and 163k right now with no significant breakdowns in a looong time. Last car made it to 222k.

But it depends on what your car is for. In my case, just to get me reliably from A to B with my crap. I'll put the money we've saved into the downpayment late next year :)

Edmunds is one source to check but lately I've been cross referencing them with http://truecar.com/release/index.html.

Just one more reference point.

All I need to know:
Costco
October
LA

One last question-TT or Z4?