If you are in the market for a used car, a new survey says you are living in the right place.
CarGurus, a Massachusetts-based car shopping website, ranked Buffalo the seventh-most-affordable city in which to buy a used car. Miami was listed as the cheapest, and our neighbor to the east, Rochester, was ranked No. 3.
CarGurus compiled its list by comparing the prices of used cars for sale in different metro markets with nationwide prices. Buffalo was 4.4 percent cheaper than the national market average, and Rochester was 5.4 percent less than the national market average.
CarGurus said it evaluated more than 3 million used cars listed for sale in the largest metro areas in the contiguous United States to compare prices from one market to another. Used cars from model years prior to 2000 were excluded.
Prices can vary substantially from one area to the next, so it can pay to search for used cars farther from where you live, said Langley Steinert, founder and chief executive officer of CarGurus.
The most-expensive used-car market, according to the survey, was Jackson, Miss., which was 9 percent higher than the national market average. Steinert said that more densely populated areas tended to have lower prices. “More dealerships have more competition, which drives prices down.”
Buffalo’s status as an inexpensive place to buy a used car makes sense to Tony Daily, general manager of Towne Automotive Group. He believes a few factors contribute to the ranking.
For starters, many items here sell for less than in some larger metro areas, he said, and there is “a lot of car turnover in Buffalo.” Some of that trend, he said, is due to the large number of people who have a family connection to one of the region’s automotive manufacturing plants who take advantage of a discount.
Another factor is the popularity of leasing: It is common to find cars with a single owner coming off lease after three years, he said. “They’re very easy to sell, and they’re very affordable.”
And in a region known for its harsh winters, many customers want to trade in to get something new to ensure they will have a reliable vehicle for those conditions, he said.
Based on the price variations the CarGurus report found, shoppers might want to look beyond their “home turf” to buy a used car, Steinert said. Even if that means driving two or three hours to make a purchase, he argues it can be worthwhile if you end up saving $2,000 or $3,000 on the car.
If you do decide to travel that far, he offers three tips: Call ahead to make sure the dealer still has the advertised car available, run a Carfax report on the vehicle and arrange to pay for a mechanic in that city to check out the vehicle before you make the trip.
While new cars tend to grab the glory in the auto industry, used cars are big business, including for new-car dealers. For example, Duane Paddock opened a dealership for used cars just down the street from his Paddock Chevrolet location in Kenmore. The Basil family group of dealers has invested heavily in used-car dealerships in the region, including a location it opened at the former site of Tunmore Oldsmobile in North Buffalo.
West Herr Automotive Group – one of the largest dealer groups in the nation – sold a combined 34,431 new and used vehicles last year, 43 percent of which were used.
Scott Bieler, West Herr’s president, said the dealer group has more than 1,000 used vehicles in its inventory, 48 percent of which are cars and 34 percent of which are SUVs. Pickup trucks accounted for 11 percent; vans, 7 percent.
West Herr has recorded a 34 percent increase in growth of its used-vehicle sales since 2009, Bieler said. He believes more customers are buying used cars from franchised new-car dealers because of more-extensive reconditioning of the vehicles, a wider choice of brands, models and prices, the detailed history of the vehicles available and West Herr’s own program for used vehicles.
The National Automobile Dealers Association reported that in 2011, used-car sales contributed one-quarter of franchised new-car dealers’ operating profit. Used cars’ average retail selling price in 2011 was $17,267, compared with $30,659 for new retail cars sold, but dealerships’ net profit on used cars was significantly higher, according to NADA.
TrueCar.com estimated 3.4 million used cars were sold in the United States in February, up from 3.25 million the year before. (Its data includes sales from franchised dealerships, independent dealerships and private-party sales.) It estimated used-car sales would outpace new car sales at a 3-to-1 rate during the month, at a time when new-car sales are picking up steam.
Joe Spina, senior analyst with Edmunds.com, said the U.S. used-car market is “going strong,” although for consumers that means paying a higher price for those vehicles.
Spina said used-car prices have come down a bit from their peak in 2011. A few factors have limited their supply, which naturally influences prices. A dropoff in leasing a few years ago took more cars out of the mix, he said. Consumers have been holding on to their cars longer and maintaining them, instead of trading them in. And rental car companies – a key source of used cars put up for sale – are keeping vehicles in their fleets longer.
Daily said it is common to see a customer consider buying either a new or used car, instead of focusing exclusively on one of those categories. “It used to be a used-car buyer was a used-car buyer, but that’s not really the case anymore,” he said. Nowadays, he said, the amount of the payment is what often guides their decision.
And some customers who are focused on a specific vehicle – such as an SUV to carry a family – might be drawn to a new one selling for $45,000 but will opt for the same vehicle that is two or three years old and selling for about $32,000, he said.