I’m a third generation mule trader. Grandpa literally bought mules and cows from the rural outskirts of Bavaria and sold them at the nearby cattle auctions. Dad’s been a food importer since 1949 for a company called Roland where he’s sold to Chinatown wholesalers and store owners for nearly 59 years. As for yours truly? I have auctioned off and horse traded the modern day mule at thousands of dealer sales. I love cars. I love the auction business. Most importantly I love learning. Educating people about cars and auctions, creating the urgency to buy, and learning about managing cars AND people is what I do outside my family life. It’s engaging. It’s a pain in the ass. And it would be completely unnecessary if people looked at a car the same way I do.
My car is a workhorse. For now it’s a 2006 Toyota Sienna that I bought with over 100,000 highway miles. I maintain this one owner vehicle to the T. I prefer to purchase them used with a combination of highway miles and low stress, and run them until the repair costs become more expensive than buying another one just like it. Since the economy has gone down the tubes, thanks to all the liars and spendaholics amongst us, I’ve found these really do make the perfect daily drivers for those looking for a cheap long-term runabout. They have far higher depreciation, are generally better maintained, and tend to go for far lower money at the auctions… and consequently at the retail lots.
Cases in point. I bought a silver 2002 Ford Taurus at a sale this past Thursday for $1425 ($1300 plus auction fee). One owner, zero acidents, 158k highway miles, and a long list of options from a sportier suspension and spoiler. To a sunroof and 201 horsepower Duratec engine that is far better matched to a modern Taurus than the mummified late-80’s Vulcan V6. The combination of modern conveniences, low insurance costs, and un-hipness make it a good fit for folks who want a well-optioned point a to point b vehicle. I’m selling it for $2500 or financing it as a $500 50/50 ($500 down, $50 a week for 50 weeks).
Minivans are usually even cheaper than most midsized cars these days at the auctions. Most folks in suburbia who ‘haul stuff and people’ are better served buying one over a pickup or SUV. But again, un-hipness keeps some away while others, mostly older folks, couldn’t care less. The one I bought was a 2001 Dodge Grand Caravan Sport. Four door, rear air, 3.3L V6, 12 disc CD changer, and an absolute ton of highway miles. However it was garage kept. The records are all there. One owner in rural Georgia. Zero accidents, and everything is in good working order. I’ll be selling it for the same price as the Taurus with the same finance options. More than likely it will be sold to an older fellow for cash… which is really the only way to buy a car ride you intend to keep.
[contact steven.lang@duke.edu for more information about these or other vehicles]
How do you know they’re highway miles?
For as “uncool” as a 2002 Taurus might be, nobody can argue $2500. If I could put 200k miles on a 1990 vintage and sell it in perfect working condition one should easily get at least 50k carefree miles out of yours.
My past couple vehicles have been two or three year old used models that took the initial depreciation but still cost considerably more than $2500. While they have been nicer than your Taurus or Caravan examples (Honda Accords) I’m thinking my next car will be an older high mileage less flashy car. For one, I don’t care about looking cool, and for a mindless commute what’s the difference? Right now I’d rather have that extra cash in a rainy day fund….saving for a “weekend” car.
“Highway miles” is one of the oldest tricks in the book, but I would assume that a 2006 model from rural Georgia would have had to have spent a lot of time on the open road to accumulate so many miles over such a short time.
Now for an NYC taxi, that’s an entirely different matter!
But I’m sure Steven will fill us in.
100K miles in 2 years would be a lot of local driving. I managed to put on a mere 21K miles in 7 months with a 2hr round trip highway commute.
interesting article. I will be looking for such a car soon. How do you find and verify your information about the car? i am terrified of buying at auction – i dont know what to do, afraid to get stuck, etc. Would love to tho – please divulge some tricks of the trade.
I like the Sienna in the picture. Love the vehicle. Also dirt cheap to insure–even though it gets 19MPG, the lower insurance costs just about make up the cost-of-ownership difference between a Sienna and, say, a Corolla (which costs more to insure).
ahhh…a man after my own heart! Buying cars with cash? What a mad man you are…! Now, if more of us did that, perhaps we wouldn’t be in the shape we’re in! Find me a nice five or six year old used pick up for hauling my camping gear around, and we’ll talk!
Adjusted for the value of the dollar and inflation, these current $2,500 cars are the $200-300 cars of the 60s….My Father-in-Law always bought, drove, and used up those cars, junked them and then went out and found another one. One big difference was the hi-mileage cars of the 60s were around 100,000 miles. I am currently driving a 2002 Buick Century, that I bought from the quintessential “little old lady” a year ago with 45,000 miles. Paid $5,500. Great daily driver.
I too am 3rd generation Steve, my Grandfather was a blacksmith in Cleveland, Ohio back around the turn of the 20th century, when cars came in he converted his business to autos. He sent his youngest son, my Dad, to General Motors Institute where he became an engineer. My Dad retired from GM in the mid-60s. Never worked for another company in his life. I started with MIC(originally GEIC) GMs insurance arm in the day. Was an insurance adjuster then left there and worked for four different dealers for about 15 years. Then bought my own business, non auto related.
Please don’t make it sound as if buying a used car at an auction is a piece of cake. Most people drive vehicles to death with little regard to maintenance and repairs. Sure there are good high mileage examples for sale at auctions but you have to be very good and very lucky to find a vehicle you can profit from in a later sale.
That’s all I’ve ever bought was used cars. My best deal was a 1971 Buick Skylark with a 350 V-8 in really good condition with only 57,000 on it, and I paid $750. I used it as my commuter car for college back in the 90’s when gas was cheap. My dad always bought private owner used car for cash to use as cheap transportation, the depreciation on buying a new car isn’t worth it. Some of the worst depreciation I’ve seen is on Dodge minivans, a 5-6 year old model with average miles might only be worth $5000-$6000 in the local private party ads.
Great piece. The wife is (finally) thinking about a Sienna, but given Cleveland’s winters, she really wants AWD. Any thoughts on the reliability of AWD Siennas? I’m hoping the extra equipment doesn’t jack up repair and maintenance costs too much. I’m a huge minivan fan and I still drive (summer’s only) our 1984 Toyota Van LE (5MT) and my sister-in-law drives our 1996 Previa SC Alltrac. We bought both new and kept them in perfect shape. So it’s only logical to go for a Sienna, right :)
My concern with the Sienna is that, at least in Canada, they’re mostly bought on lease (people who buy them outright seem ready to run them into the ground) and the maintenance isn’t always well-done. They’re not always cheap, either, but at least they’re cheaper than the Odyssey. I’ve looked at them and they make me worry because the buyers are asking an awful lot.
Caravans, though, are bought and paid for. Provided the transmission isn’t going to die, they’re probably safer bets. They’re a hell of a lot cheaper, too, and the first owner’s probably eaten the worst of the repair problems.
Any opinion on failed crossovers like the Freestyle or Pacifica?
Your view is different because (a) you pay wholesale, while we pay something closer to retail and (b) you operate in a more liquid market, i.e. you can buy and sell cars more easily, cheaply and quickly than we can. We also probably have to pay more for repairs and service because we have less buying power.
So we should buy differently, given the difference in our situations. In real world terms, that means that we need to make a greater effort to buy cars that we want to keep for the long haul, because it is costlier and more time consuming for us to fix or dump a loser than it is for you.
Buying 6-10 year old cars that you know will last a while is an excellent idea, especially when you are in the car business. If your car needs a little thing fixed or replaced, you have the people and the time to get it done, plus access to others cars.
However, there is a case for paying more for a car that will not need any time in the shop. I am an attorney, my wife is a pharmacist, and we have a little baby. When we both have to be at work/court in the morning, and take the little one to daycare, the cars must start and take us there now, period.
So for us, buying newer cars (not brand new) that require one trip to the shop per year (besides oil changes) is worth a lot to us.
This might not be of any use to you but I have a $1000 rule that I have passed on to my junior folks who have worked for me over the years. Here goes…
I figure it is worth – to me – to drive for $1000 per year. If I buy a car for $2000, fix it up for another $1000 (not including perishables – tires, oil, filters, etc.) I must keep it for 3 years or sell it -$1000 per year owned. That is to say if I keep it for two years, I’d need to get $1000 for it.
That’s not to say I drive $1000 cars. Over the years I have had Porsches, BMW’s, MB’s, trucks and vans etc. but I use the same rule and have yet to not turn a profit, even on the cars I’ve crashed. Again, a profit would be after subtracting the $1000 per year. If I give away my current 5 series, I will have made a $4000 profit!
About 10 years ago, I told my boss who was constantly trading up cars about my $1000 rule. Surprisingly he had the same rule except his was $2000.
For many years I have bought used cars that are inverse to this rule of high mileage late model used cars. I find old (10-12 years) low mileage, one owner cars that are really nice (and my standard for “nice” is pretty high). My target has been around $2500 as well. My theory is that it is hard to tell if a late model car has been maintained or not. But after 10 years you can really tell the difference. I am driving a 93 Crown Vic bought 3 yrs ago for around $2600. It had 63000 one owner (my mother) miles. Prior was an 89 Cadillac rwd Brougham (13 yrs, 76000 miles) from an elderly neighbor for $3000 (hey, it had leather) and an 84 rwd Olds 98 (13 yrs, 54000 mi) from the estate of a friend’s mother. The Cad and Olds were owned 4 yrs apiece.
I usually drive one until I find something appreciably better. My requirements: Looks right and drives right. Actually, they have a way of finding me. Anyway, I generally drive one for 3-4 ys and 40-60k miles, after which time I can sell a well-cared for car for $1500-2000 that still has a lot of life for someone. I demand reliability and the ability to take periodic trips of up to maybe 300 miles. I have never been left by the side of the road.
The only real downside is that condition trumps all, so I can’t be that choosy about what I get. (The other negative is that I spent 8 straight years in GM cars. At least they were the big rear wheel drive ones that were GM’s core competency (sole competency?)
After 3 years with the Vic, I am starting to think about another FoMoCo Panther car. Maybe a nice Park Avenue or Chry LHS, but I have generally tried to avoid FWD. Anyhow, I’ll know it when I see it.
OK Kurt, I’ll take the 5 series and you can enjoy your profit! :^D
I love the minivan vs. SUV point. It is often very profitable to be emotionally secure.
Sammy B.-I don’t think CR has seen any particular problems with the Sienna AWD but the owners do report they are hard on tires.
Bunter
Jonathan hits the nail in the head: When I was young and, thus, carefree I could afford to spend hours and sometimes whole days pursuing nagging car maintenance issues.
Nowadays, not so much. Quality time is of the essence: fixing something (be it a car or a PC or an outboard or my own teeth) means one less hour or day doing something I enjoy better than trying to solve weeps, seeps, leaks and this and that.
Hence, the high-mileage “I think this will be ok” option is awesome IF you can cherry-pick cars and DO have direct, easy access to reliable mechanic sources that will not ask you to drop your trousers on the way to the cashier. In other words: your income, or part of it, is a direct consequence of auto sales: You joined the dark side.
When bomb-proof daily reliability is important (meaning minor quirks just raise your blood pressure and major quirks cause erectile dysfunction), enter scene.. 3 year leases of Hondas and Toyotas of this world.
Now back to reading that test of the SE Camry.
I have bought one car new & 1 bike new.
I don’t know if I’d necessarily by either used. Both are “sports” models.
I would imagine people buy them new, rip the crap out of them until they have problems, and then sell them.
Obviously this doesn’t apply to econoboxes, but I have a huge fear of buying a “sports” vehicle used.
Similar to the gent with the $1,000 rule”, I call mine the .10 cents a mile rule. If I pay $8,000 for a used car, I my expectation is that it should go 80,000 miles of (relatively) trouble free motoring. Thus, the capital cost of ownership is .10 per mile, get it?
My last two rides were: a ’92 Accord EX Wagon, which I paid $7k for and drove for over 130,000 miles before selling it for $1,500. Net capital cost a ridiculous .043 cents per mile. Everything worked, my only repair cost was a distributor, and it never left me on the side of the road. Next (current) is a ’97 Audi A-6, which I picked up in Chicago for $7,900k with 80,000 miles on it. Despite what I have read on this site about the reliability issues with Audi, so far I am 3 years and 30,000 miles into it, and other than a headlight which has burned out twice, zip, nada, no problems. Clean, comfortable, capable (AWD) reasonable mileage. I have a great mech who specializes in German cars, he tells me I should be good to go for another 100k if I do the maintanance. (I admit though, Audi maintenance is a tad pricey. So far, worth it for this better-than-average-luxury marque.)
Maybe others will disagree, but Chi seems to be a great town to pick up a used luxury marque….lots of new demand for Bimmers, Audis, Benzes, etc. Mandatory inspection. When the cars hit 5-7 years old, owners are ready for something new. If you are careful, inspect fully and know what you are doing, mega-depreciation can be the other guys problem, and your opportunity.
Buying new is for the insecure who want to impress the neighbors with superficial flash. In my circle of friends, nabbing an awesome deal on the used market is a badge of honor, and shows that you know The Truth About Cars….
Mark MacInnis:
I’d agree that Chicago has a glut of near luxury cars available, but I’d stick to buying one that has lived in the suburbs… the city cars get beaten up badly by the roads, “parking by braille”, and routine knocks and dings from city life.
I keep my Porsche here in the city (garaged of course) but store it at my house in WI during the winters so that it stays nice.
My company car gets just TRASHED from the routine city life…
Porsche986:
Yup….you are right. Northern ‘burbs are the ticket. My Audi came from Aurora….carfax is a great tool to know the history of any whip you are considering. Mine was a “sife’s car” registered to the owner of a floral business (amazing what you can learn when you zaba search.) So I called him up. Turns out HE still had the maintenance records (he deducted the car for business purposes….even though his wife used it for soccer mom purposes…..hope no one from the IRS is watching!) My point is….I agree, the Northern ‘burbs of Chicago are primo source for auto bargains, and don’t be afraid to use the modern research tools to find out more about the car and its ownners……
I guess I have been inadvertantly following Kurt’s $1000 per year rule for some time. My benchmark has been a bit different. My first (and till 2 yrs ago my only) new car was an 85 GTI. I owned it all thru the 2 year warranty then sold it privately (to buy a really sweet 66 Plymouth Fury III, but that’s another story). I calculated that between depreciation in that 2 years and the interest on my loan, that car cost me $3000 per year for the privilege of owning it. This is $250/mo. Can’t get much of a car for that nowadays. Anyway, it seems to me that $3000/yr is the ceiling. Anything less ($2000/yr in Kurt’s case) is “profit” to be saved or spent on something else (like kids).
I am also sensitive to Jonathan’s point about the need for reliability. I too am an attorney and need something reliable. We traditionally run a late model “good” car and my old but nice “cheap” car. The good car is currently an 07 Honda Fit. It’s the one that left my wife stranded in December while picking kids up at school. Dead battery. (Replaced by Honda under warranty, thank you.) The last good car was a 94 Ford Club Wagon bought in 95. It left my wife stranded with an electrical short when it was about 3 years old and maybe 45000 miles. My old but well chosen and well maintained cheap cars have never let us down.
In ’96, I bought an 8 yr old 528e for 6k$ with 150k miles on it. I drove it for over 11 yr and put another 200k miles on it. I did all the maintenance in my drive way. It never broke down on me.
Well, after a late night sale, what better way to spend a birthday than responding to a lot of good thoughts and ideas. A few of which actually superseded what I wrote.
Detroit-Iron : Carfax or Autocheck will let you figure out where the car was registered. They can also give you insight as to whether the vehicle was fleet maintained and/or dealer maintained.
200k-min: “I don’t care about looking cool, and for a mindless commute what’s the difference? Right now I’d rather have that extra cash in a rainy day fund….saving for a “weekend” car.”
You bet. I have the same exact attitude.
210delray : That is true. Also, most cars that are officially used as taxis are registered in a city such as New York. You have to legally register a vehicle as a taxi in order to use it in most major cities. Both Carfax and Autocheck will cross-reference the related records for this use.
jerseydevil : I’ll be saving the ‘tricks of the trade’ for later articles. As far as being an expert, even the geniuses in this business by lemons. Buying cars has more to do with probabilities and refining the breadth and depth of your ‘market’. The public is far better off buying from a party that will allow the vehicle to be inspected before it’s purchased. Auctions don’t do that.
threeer : “Find me a nice five or six year old used pick up for hauling my camping gear around, and we’ll talk!”
These days I’ll be competing against the entire Latino population in metro-Atlanta for such a vehicle. They are considered ‘finance fodder’ and carry a stiff premium at the auctions.
63 Corvair: Cool! This year I’ve bought a 1994 Buick Century with 29k for $1500. A 1997 Sunfire Convertible with 31k miles for $2950, and a 1997 VW Jetta with a sunroof and 44k for $1950. I also bought a two year old PT Cruiser a few years back that was stuck in an estate dispute for two years and had 199 miles on it. Got it for 7k and sold it for $9200. Old cars with low miles can be fantastic values but sometimes require a lot of pre-emptive maintenance. I enjoy them but I prefer the safety standards of late model vehicles due to the 40,000+ miles I usually put in a year. If I commuted less than 15k in a low risk environment I’d take an older low mileage car any day of the week.
autoemployeefornow: “Sure there are good high mileage examples for sale at auctions but you have to be very good and very lucky to find a vehicle you can profit from in a later sale.”
You are absolutely right when it comes to the majority of the buying public… except for one thing. We have what are called ‘green light’ cars that allow you to ride and drive the vehicles and arbitrate powertrain issues as well as title and/or vehicle history issues. For the general public, when it comes to ‘AS/IS’ vehicles, you are right.
Matthew Danda : I like the utility and efficiency of the Sienna. It routinely gets 25 mpg in mixed driving which is far better than anything except the Honda Odyssey, which I consider to be a less durable vehicle than the Sienna.
Usta Bee: Yep. The biggest scourges in REAL ownership cost are often depreciation, opportunity cost (to invest the money in something else), and gas… at least until recently.
Sammy B: Actually, I don’t like AWD Siennas. They eat through tires, can develop very annoying and expensive powertrain issues, and aren’t even needed in your neck of the woods. A good set of winter tires in a regular Sienna during the snowy season is a far better investment.
Pch101: “we should buy differently, given the difference in our situations. In real world terms, that means that we need to make a greater effort to buy cars that we want to keep for the long haul, because it is costlier and more time consuming for us to fix or dump a loser than it is for you.”
Exactly! It’s the ‘keeper’ who comes out ahead when it comes to cars. The same is true in virtually every other facet of life… and yes, our world would be immeasurably better if we built
our society on goods, services, and ethics that endure for the long-term.
Locker: “However, there is a case for paying more for a car that will not need any time in the shop.”
Yes, which is why you should pay more for a car that has been conservatively driven, well maintained and well built. The 1995 Volvo 940 I purchased yesterday would be a far better representation of that than many other late model vehicles I regularly see at the auctions.
Kurt: I have done the $1000 a year model and the .10 mile rule back before I started horse trading cars. Kept a 1994 Camry for 239k miles and my wife’s first three cars cost all of $2000 combined. Generally the best way to do this is avoid depreciation (buy cheap), have an efficient powertrain (low fuel consumption), and get something safe (which usually results in lower insurance cost). Wait a second. You already know this! Damn!
jp: “The only real downside is that condition trumps all, so I can’t be that choosy about what I get. (The other negative is that I spent 8 straight years in GM cars. At least they were the big rear wheel drive ones that were GM’s core competency (sole competency?)”
Yes, you can get a nasty case of OCS (old car syndrome) by following your ideas. But you could also be driving some crappy Mistubishi with 0% financing and payments that keep you in perpetual debt. Personally I would rather use your car to turn the other cars into tuna cans.
Bunter1: Absolutely true. CR is limited by their audience and their pathetic little dots. I prefer the enthusiast sites and other portals that focus on actual owner’s feedback and reflections. Dots simply don’t work well when it comes to assessing the viability of a car.
Crackhead: “When bomb-proof daily reliability is important (meaning minor quirks just raise your blood pressure and major quirks cause erectile dysfunction), enter scene.. 3 year leases of Hondas and Toyotas of this world.”
If you’re this fearful about cars, you should really consider walking. Then again with the maladies you mention it may be better for you to take the train.
Robstar: How about a ‘Sport’ minivan? C’mon! Your cool enough now to own one. All the young at heart lasses in that Desperate Housewives show would dig a man secure enough to drive a minivan, and risque enough to make it a bright red sport model.
Rob, read the comments from Mark below…
Mark MacInnis: “Maybe others will disagree, but Chi seems to be a great town to pick up a used luxury marque….lots of new demand for Bimmers, Audis, Benzes, etc. Mandatory inspection. When the cars hit 5-7 years old, owners are ready for something new. If you are careful, inspect fully and know what you are doing, mega-depreciation can be the other guys problem, and your opportunity. ”
Yep, buying at around 80k to 100k and selling at 250k to 300k is a great area of the market to buy and sell. Quality is also important for the long-run… but most prestige marques don’t actually give you that bang for the buck.
Andy D: Not surprised. A car you can maintain yourself is a godsend for a person with a ‘keeper’ mentality. The more you know about your car, the better you can head off small issues before they become big ones.
Happy Birthday Steven you practical, disciplined, prudent, self-reliant, serious, persistent, hard-working Capricorn.
Mr. Lang:
In today’s troubled financial times your advice is amazing. Have you thought of doing a Q and A column? Sort of like the Dave Ramsay or Suze Ormond of cars?
Thanks Shermin and capdeblu, I’ve thought about it. I just don’t know where to start and whether ‘keep the damn car’ would be an entertaining answer if I had to do it sixty times over.
There sure are alot of time-honored used car salesman gimmick phrases in this article.
Highway miles = please overlook that odometer; it means nothing; look at the shiny stuff
Garage kept = we had it detailed yesterday
I’m not sure I’d lay the blame for the current problems at the feet of “spendaholics and liars amongst us”, unless we’re talking about the Wall Street oil speculators (it’s only because of Supply and demand…really it is) and Merrill Lynch executives decorating an office with a thrifty $50,000 toilet.
Reasons for the economic downturn are as varied as the economists that opine about it.
What can be stated is starting in the 1980’s, there was an ongoing Republican led; free trade, de-industrialization of this country, resulting in the median income for the middle class falling in the last 10 years.
A Republican appointed Chairman of the Federal Reserve who, with the aid of absurdly low interest rates, knowingly encouraged average folks to tap into their home equity to keep the economy and their consumption expanding, in spite of declining income levels and the country’s best interest.
A “NEW” manufacturing base, but this time on Wall Street where our so called best and brightest from Havard and beyond manufactured Alternative mortgages, CDO’s other derivative based financial securities and gave them names any ad guy would be proud of. They promised those mortgages could easily be refinanced (forgot about the prepayment penalties) and the CDO’s would return 10 and 12% to any Pension fund that would listen to the pitch. “Liars”? Yes, that classifies as a lie in my book.
This was followed by a further spectacular bubble perpetrated by speculators in the oil futures market, that sapped any remaining purchasing power the average American had left. But the rise in oiland gasoline prices was attributed to simply the result of supply and demand. Does anyone really beleive this was not a lie?
Do not forget the unforgettable words of then President George W. Bush, who after 9/11, told Americans to “go to the mall and shop”.
If people shopped, they had plenty of encoragement from the President of the United State.
People’s behavior has been driven and manipulated by the very people that profit from it. Driving a $50,000 Escalade when you live in a aprtment may not be sane, let alone smart, but that’s how the banks and the Mad Men on Madison Avenue want it. No money to be made on small cars. Hank the Deuce summed it up..”small car – small profit”. Tell me the last time you saw a TV commercial for a reasonably priced economy car. No, the ads and TV spots are 20 to 1, luxury premium brands over rational, economical models.
If you live in or around Atlanta you know all too well that the growth industry of much of the area was …growth. There was no real sustainable and productive industries in many of the areas. The new industries were construction of strip malls (houses), leasing/selling of strip malls (houses), stocking of strip malls (houses), working at strip malls (houses) etc. Without that conspicous “shopaholicism”, there would have been little to no economic growth in many of these faux boom towns.
So, it’s a little more complicated than just blaming “those people”.