New cars cheaper than used? Surely it flies in the face of popular wisdom that suggests you’ll save money owning a used car compared to a new model. This is because from the moment you start owning a car its value starts tumbling. It’s called depreciation and it beats the cost of fuel, insurance and servicing to be the largest contributor towards the amount we pay to go motoring. Depreciation is at its steepest – and therefore costliest – in year one of the life of most new cars. That’s why it’s generally regarded as being cheaper to own a used car.
New cars cheaper than used: How does it work?
There are some cars that cling to their value so enthusiastically they can actually be cheaper to own if you buy them new. Take the Range Rover Sport. If you buy one new, it’ll cost you £59,465. But it’s so popular that at 12 months old it’ll still be worth £58,250.
“If a car holds its value like this, you’d be better off buying it new,” CAP Automotive consumer specialist Philip Nothard said. Looking at its running costs over three years and the CAP Total Cost of Ownership figures show that you’d actually be £2677 better off buying the Range Rover Sport new. “You’d be daft to buy it used,” Nothard added.
New cars cheaper than used: What makes a used car more expensive?
Assuming we’re talking like for like in terms of mileage, engine size, specification and driver, the cost of fuel will be the same whether a car is brand new or one-year old. Service and maintenance costs won’t be.
In a car’s second year it is likely to need a more extensive – and therefore more expensive – service. If you buy a car at one-year-old and keep it for three years, you’ll have two expensive services (years two and four). Buy it new and you’ll have a single expensive service (year two). Keeping the Range Rover Sport fettled for three years will cost £994 if it’s bought new, £1068 if it’s acquired as a one-year old. Add this to lower depreciation for the new car and you have your reason why the new car is cheaper than its used version.
New cars cheaper than used: Models to look out for
In order for a car to be cheaper new rather than used, a car must hold its value very well, something most are notoriously bad at. However, CAP Automotive says the Range Rover, Range Rover Sport and Evoque five door, Skoda Roomster, Porsche Cayman plus Audis A1 and S3 buck a general trend and hold their value sufficiently well to be cheaper new than used.
New cars cheaper than used: Models to avoid
The more a car depreciates, the more it makes sense to buy it used rather than new. This includes models wearing Bentley and Aston Martin badges, which can depreciate more in three years than the average UK wage earner brings home over five, and executive models such as the Jaguar XJ and Volkswagen Phaeton. The BMW X6 M will lose £61,385 over three years if you buy it new. Buy a one-year old and you’ll ‘only’ take a £31,425 depreciation hit over three years. It makes the difference in the total ownership costs over three years between buying new and used as £28,816 in favour of second hand.
New cars cheaper than used: What about discounts?
There is a handful of cars that, according to CAP Automotive, straddle a blurred line between being cheaper to own new or one-year old. These include the Audi Q5 and A3, Nissan Juke, Skoda Fabia and Mazda CX-5. Where it may pay to buy them new is if you manage to secure a discount, something that is highly likely at a time when car makers are demanding that dealers shift large numbers of new cars.