Used SUVs and Trucks Could Be Getting Cheaper
While used vehicles don’t always offer the same safety features as new ones, buying used can save you a bundle. Whether you’re in the market for a pickup truck or luxury SUV, there’s undoubtedly a reliable, affordable model available. Some are available for less than $30,000. And it appears that used trucks and SUVs might be getting even more affordable in the near future.
Why used SUVs and trucks are getting cheaper
Edmunds.com estimated that by the end of 2019, SUVs will command more than 50% of the market for the first time. In addition, pickup trucks’ market share is expected to rise to 19%, something that hasn’t happened since 2005.
It’s not just from new vehicle sales, either. Edmunds.com also reported that SUVs and trucks will account for 52.6% of vehicles going off-lease in 2019, overtaking passenger cars for the first time. In fact, Automotive News reports that SUV leases, on their own, overtook passenger car leases: 2.26 million SUV and crossover leases vs. 1.26 million car leases.
In short, there’s a lot of fairly-new SUVs and trucks hitting the used market. And according to J.D. Power executive analyst David Price, this high volume is what’s suppressing prices despite strong demand. This is why the Ford F-150 has the worst resale value of any truck: high sales basically flooded the market. Passenger cars are still popular on the used market, but lower inventory levels are causing increased prices.
And it’s not as if the used trucks and SUVs available are stripped-down versions, either.
Luxury and higher-trim used SUVs and trucks are becoming bargains
When it comes to buying used SUVs and trucks, buying luxury or higher-trim models may be the better buy.
Edmunds.com explained that, in the used market, higher-trim versions of the same vehicle command less of a premium than new. Edmunds.com used the example of a 2014 Honda Accord: new, the highest trim cost was roughly $10,000 more expensive than a base model; used, that difference shrinks to about $4,400.
Luxury vehicles also aren’t necessarily the only way to get valuable features anymore. David Price explained that nowadays, the gap in options between mass-market and luxury vehicles is fairly small. As a result, luxury used SUVs and trucks are a bit of a bargain. Their owners, iSeeCars CEO Phong Ly explained, buy or lease the newest model available, then dump it when the next version comes out.
Even the Mercedes G-Class, which depreciates less than the average vehicle, SUV or not, still loses roughly 45% of its value over 5 years.
Will this trend continue?
Overall, the answer appears to be “yes”.
Cox Automotive Chief Economist Jonathan Smoke estimates that adjusting for inflation, used vehicle prices overall will decline by about 1.5% in 2020. Passenger cars and SUVs also depreciate at roughly the same rate: iSeeCars reported average 5-year depreciation rates at 49.6% and 51.6% respectively. With SUVs and trucks seemingly continuing their market dominance, their prices will most likely continue to stay fairly low, if not go even lower.
Some SUVs and trucks may buck the trend. The Toyota 4Runner, for example, retains its value better than almost any other vehicle on the market. Its design may be old-school, but it’s precisely that design—and its reputation for reliability—that keeps values high. Used Toyota trucks and SUVs have high resale values overall because of their reliability.
One word of warning: buying a used luxury truck or SUV could wind up being more expensive than you’d think. Famously, Autotrader’s Doug Demuro bought a used Range Rover from Carmax with an unlimited warranty. Over the warranty’s 6-year lifetime, the repair costs added up to almost the cost of the SUV. The warranty paid for itself within the first year and a half of ownership.
But there are other used luxury SUVs that are more reliable.
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