.jpg)
OK, YOU want to buy a car and you've got less than 20 grand to spend. You could get a new Honda Jazz for $19,790 and hope nobody sees you in it. Or you could roll like a Russian gas billionaire and buy a 2002 S320 Mercedes-Benz.
Brand new, 10 years ago that Benz cost $168,474. Today it's the price of that Jazz. As a vehicle approaches its 10th birthday, depreciation really starts lopping the price. This means there's a large number of used prestige cars on the market at bargain prices.
Our aim here is to provide you with a guide to buying a used prestige ride that's no more than 10 years old for under $20,000. We'll look at the upside and downside and nominate what's hot now and what will be a good buy in years to come. But beware - high servicing and repair costs may make the new Honda the better choice.
DEPRECIATION
The old saying that "a new car's value drops thousands the moment it leaves the showroom'' is true. Going by vehicle data provided to us from Glass's Information Services, in the first year of its life a car loses between 20 and 40 per cent of its value.
After six years most cars have lost 60 to 80 per cent. "Vehicles that have travelled in excess of 100,000km and are more than three to four years old will be entering this period when they start to depreciate,'' says Glass's sales and marketing manager Nick Adamidis.
"Then once they are over seven or eight years old, the depreciation accelerates,'' he says. "(If) you can find a good quality vehicle with full service history and you have had an RACV inspection to confirm its condition, you are able to buy into a prestige vehicle.''
And the idea that all prestige cars depreciate at a much higher rate than other cars isn't true. "In percentage terms their depreciation is similar to non-prestige models,'' Adamidis says. Take as examples Audi's top of the range prestige car, the A8 4.2FSI, and Holden's base model Commodore, the Omega (the current models for both).
The A8 costs $234,500 and the Commodore $39,990, but both depreciate at the almost the same rate. At the end of the first year the A8 is forecast to be 85 per cent of its original value; the Commodore also will be 85 per cent.
After two years the A8 hits 65 per cent; the Commodore the same. But after six years the A8 is at 44 per cent and will cost an estimated $103,000; the Commodore will be at 44 per cent or $17,600. In six years, you could get a $131,000 discount on the A8.
Talk about value for money - it's an incredible saving on what is one of the planet's best engineered, safest and most technologically advanced cars. The science is in measuring how much comes off the prestige car. And you can enhance your saving even more by picking a model that depreciates fast.
PRESTIGE BARGAINS
The $19,990 Mercedes Benz S320 mentioned earlier is currently on the books of car dealer Brad Coleman. The owner of Carroom, which specialises in used prestige vehicles, he believes the S-Class Benz is today's holy grail of prestige used cars.
"When it comes to bang for buck it's got to be the S-Class. I think it's a ridiculously small amount of money to be paying for this gorgeous, comfortable car.'' The S-Class is the flagship of the German maker's line-up. And the current S350 L Benz will be one of the best prestige bargains you'll find in the coming years.
At the moment it has a price tag of $238,975 but, using historical data to forecast its price, in six years you'll be able to buy it for $105,000.
Coleman also has a 2002 BMW X5 for sale. The big Beemer SUV's natural habitat is the posh suburbs and when new this 3.0-litre six-cylinder X5 had an asking price of $83,500. "It's got leather, sunroof, parking sensors front and rear, satellite navigation. It has 186,000km on the clock, but it's a two-owner car, it runs well and it's for sale for $17,990.''
BMWs tend to hold their value well - particularly the X5 - and most models don't experience the same massive drop in price as the Mercedes Benz S-Class. But there's always an exception. The 7 Series depreciates faster than any other model from the Bavarian brand and that makes it another excellent buy after a few years.
A BMW 740Li today costs $222,300. This time next year its market value is forecast to drop to $187,000. In six years, it could be worth as little as $98,000.
Coleman recently had his eye on a 2002 735Li on an auction website (new cost: $185,000). "There was a 735Li, the current shape, on graysonline and it sold for $19,500,'' he says. "I tried to buy the car. I was bidding on it but went up to 18 and a half.''
The BMW 1 Series is a stand-out fast depreciator too. It might be the smallest Beemer you can buy, but the model still has great performance and prestige, and in six years the current 118i (new: $42,800) will cost only $26,500.
BMW has just a few fast depreciating models. Most Jaguars on the other hand suffer from rapid depreciation.
A 2001 S-Type Jaguar Coleman has for sale originally cost $99,900. "It's a 3.0-litre S-Type with 221,000km - it's a one-owner doctor's car... I've got it for sale for $9990,'' he says.
"To buy an S-Type for 10 grand is just incredible!'' A future bargain Jaguar is the current X-Type. Its current price is $59,435 but in six years you'll pay about $22,500. We haven't mentioned Range Rover and there's a reason. You won't find too many under $20,000 that are 10 years old or less. Audi Q7s and Q5s are the same.
All retain their value too well and over the next few years those being sold now will depreciate too slowly to become good used bargains in the future. A used Mercedes Benz ML, though, is great value prices range from $19,000 to $21,000 for a 2002 ML 320.
THE UPSIDES
"There are a lot of pros, and there are an awful lot of cons too, so it's a dangerous game,'' Coleman warns. "In terms of the positives, a lot of people buy these cars because it looks like they are driving a $60,000 car for 20 grand.''
That status appeal is a big drawcard for many buyers. What you drive often has nothing to do with your financial status but arriving in a big fat Mercedes does tend to impress.
Apart from the more superficial reasons, a prestige used car combines great engineering and build quality, sophisticated technology and safety features and superior ride and handling. Then there's the luxury interior.
"You get all the creature comforts,'' Coleman says. "Just three or four years ago, it was really hard to buy a car with full leather interior for under $15,000. The BMWs and Mercs weren't in that price range, but all of this stuff has come down now.''
THE DOWNSIDES
When a car, particularly a prestige model, depreciates quickly, it can be cause for grave concern. "If the brand has had quality concerns during that time, the car may be tarnished with being a risk to purchase, due to potential repair costs,'' says Adamidis.
"Potential buyers want a discount on the purchase price to counter the risk of buying a used prestige car and potentially footing a large repair bill".
"So what you save in the buying price, you could start to lose as things go wrong and repairs need to be made with expensive replacement parts. The drama comes if you buy the S-Type for $9000 and you have a mechanical problem,'' Coleman says. "Every second part could cost you 1700 bucks. So your $9000 Jaguar can easily be a $14,000 monster within minutes.''
DO (SOME OF) IT YOURSELF
You can combat the high price of the parts for a used prestige car by finding and buying them yourself. If your car needs a new water pump, try a wrecker or go online. If this in turn means buying it from Europe or the US over the net, do so, as it will still work out cheaper than having your mechanic buy it.
Coleman's advice is that you don't need to take your car to a dealer to be fixed. You need a good mechanic, to whom you can hand over the part you've sourced and who'll do the job at a reasonable rate.
Long-term, the strategy is simple, says Coleman. "You've got to show a bit of initiative, know what you need, source the parts and do what work on it that you can. You've got to run the car yourself.''
TOP CURRENT BUYS
1. 2002 Mercedes-Benz S320. Price new: $168,474. Price now: $19,900 (approx)
2. 2002 BMW 735Li. Price new: $185,000. Price now: $19,500 (approx)
3. 2002 S-Type Jaguar. Price new: $99,900. Price now: $19,500 (approx)
4. 2002 Audi A6 2.7 biturbo. Price new: $120,400. Price now $19,000 (approx)
TOP FUTURE BUYS
1. Mercedes-Benz S350 L. Current price: $238,975. In six years: $105,000 (est)
2. Audi A6 3.0 TFSI. Current price: $121,500. In six years: $51,000 (est)
3. BMW 118i Current price: $42,800. In six years: $26,500 (est)
4. Jaguar X-Type 2.1 Sport Current. Price: $59,435. In six years: $22,500 (est)nd X6 - and the workforce
has grown from 500 to more than 7000.
Comments