5 Most Overpriced Used Cars of 2011


NEW YORK (TheStreet) -- Shoppers scared away by the rising prices of new cars probably aren't going to like what they'll be seeing on used car lots either.

Supply shortages resulting from the March earthquake and tsunami in Japan not only flattened Toyota's May sales by 33% and dropped Honda's take by 23%, but led to a run on used car lots and auto auctions. With average new-vehicle prices hovering around $30,000 and incentives drying up by 29% since last May, according to TrueCar, used car prices are rising in kind.

According to Manheim Consulting's Used Vehicle Value Index, used car prices are at their highest level since the index was introduced in 1995. Dwindling new car supply and used car lots already depleted of 2- and 3-year-old vehicles by the recession have driven up prices 5.6% from last May while pushing sales down 1.4% from a year ago. The top-down effect of supply shortages is hitting independent used car dealers especially hard, with their sales falling 4.4% from last May as franchised dealers short on new product try to shore up sales with "previously owned" product.

Auto auctions aren't providing consumers much relief, either, as Manheim found that the average selling price for a compact car at these events are 20% more than they were a year ago. That's great news for rental companies and local governments, which are selling their aging fleets for an average of $14,500 per vehicle. They'll need every penny, too, as rental fleets are getting 21% fewer new cars than they were a year ago.

This isn't exactly providing a windfall for every car owner out there. If an owner is looking to sell their old Toyota Camry, Honda Accord or Ford Fusion, Manheim says they'll make 14.4% more on the deal than they would have if they sold a year earlier. For those still saddled with fuel-inefficient SUVs and pickup trucks, however, those vehicles' value has dropped 5.8% and 4%, respectively, year over year as gas-sipping vehicles rule the day.

These supply problems and soaring premiums have pumped up the price on several popular vehicles to the point where there's virtually no discount for buying a used model. With help from the folks at Kelley Blue Book, TheStreet found five examples of vehicles that are way overpriced for the mileage put on them:

2011 Chevrolet Camaro
Trim: Convertible
Mileage: 13,500
Original MSRP: $29,000 to $33,000
Kelley Blue Book trade-in: $33,650
There are many things for a car buyer to love about General Motors' new Camaro. A 3.6-liter V6 engine that gets 300 horsepower and 30 miles per gallon on the highway is one of them. A demand-fueled used-car price $650 to $4,650 above MSRP isn't.

The newness of the vehicle certainly comes into play here, but the fact that Camaro sales are up 5.8% from last May and are bringing in 14.6% more revenue for Chevy than a year ago explains why sellers are getting ticket-broker-type prices for used models. If you think such supply and demand issues aren't an anomaly for a performance car of the Camaro's type, compare the Camaro's resale value with that of its direct rival: A 2011 Ford Mustang convertible. The MSRP on the Ford starts at $27,995, but Kelley Blue Book puts the fair sale value at $26,875. That's about where the Camaro can expect depreciation to be once supply and demand start evening out.

"In its first year of production, the Camaro convertible has done quite well and values are expected to remain strong through summer," says Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book. "After initial demand has been satisfied, expect these values to come down from their current high."

2010 Toyota Prius
Trim: Four-door hatchback
Mileage: 23,500
Original MSRP: $23,500 to $29,000
Kelley Blue Book trade-in: $24,150
Want a Prius? Good luck with that.

New Prius sales dropped 51% last month from May 2009 largely because of supply problems at Toyota's manufacturing facility in Japan. An older Prius isn't the answer, either, as Kelley puts the price of a 2008 Prius at $17,750, which is down from MSRP but $6,000 more than the price of a 3-year-old Prius last year.

It's not that there aren't other options for fuel-efficient vehicles. The 2010 Honda Civic Hybrid has a $20,400 trade-in value $4,000 below its MSRP and the 2010 Honda Insight starts out with a $20,000 MSRP -- less than the Prius' trade-in -- and fluctuates between $15,775 and $18,825 depending on condition. Non-hybrids with low mileage including the 2010 Ford Focus (42 miles per gallon highway) and 2010 Hyundai Elantra (35 mpg highway) are also significantly less expensive, but folks who want 50 miles per gallon in the city and 60 on the highway are at the market's mercy.

"Values are currently well above starting MSRP, making this vehicle one of the more expensive in its segment," Gutierrez says. "Despite high fuel costs and supply issues, there are many other fuel-efficient vehicles available on the market that can be obtained for significantly less."

2010 Honda Fit
Trim: Four-door hatchback
Mileage: 23,500
Original MSRP: $15,000 to $17,000
Kelley Blue Book trade-in: $14,550
While nearly every other new Honda on the lot in May saw double-digit percentage declines, the Fit got a 46.3% bump behind a combined 33 miles per gallon, a roomy and modular interior with 57.3 cubic feet of cargo space and 10 cup holders. That's a nice bright point in Honda's otherwise gloomy new car sales, especially considering Fit sales have climbed 52% year to date.

It's terrible news for used car buyers, however, as dwindling stockpiles of new vehicles send buyers scavenging for lightly used models. Considering that a new Fit starts at $15,100, demand's fairly impressive to keep a car with that many miles on its tires within $550 of that mark.

The entire compact car segment's faring well on the used car lots, as Manheim says the average selling price of a used compact is up 20.1% from May of last year. Few are faring as well as the Fit, however, as similarly used Toyota Yaris and Nissan Versa compacts can be had for $3,000 to $5,000 less depending on the model year.

"The value for the Fit is highest among the subcompact-car segment," Gutierrez says. "The trade-in value is hovering close to MSRP and just does not seem to depreciate similar to others in the segment."

2010 Toyota 4Runner
Trim:SR 5 Sport Utility four-door
Mileage: 23,500
Original MSRP: $30,000 to $40,000
Kelley Blue Book trade-in: $29,200
In a used car market that doesn't look kindly on SUVs and crossovers, the 4Runner is doing just fine. The average SUV or crossover is pulling in roughly 6% less as a used car than those classes did last year, according to Manheim, but few are dealing with the 4Runner's supply woes.

Toyota's 4Runner sales are down 17% from what they were last year, mostly because it's having a hard time building more. On the year, however, 4Runner sales are up 3.7% from the same period in 2010 as consumers bought into its lower mileage, anti-roll technology and off-road cruise control. Those hoping for a discount in the secondary market are out of luck, which could be bad for Toyota; Honda's similar Pilot SUV is already doubling the 4Runner's sales, matching its annual growth and costing used car buyers $3,000 to $4,000 less.

"Among midsize truck-based SUVs, there are none better than the Toyota 4Runner," Gutierrez says. "While consistently among the best in the segment, the SUV currently has a value well above the competition."

2010 Mercedes Benz CLS Class
Trim:CLS63 AMG
Mileage: 23,500
Original MSRP: $90,000 to $100,000
Kelley Blue Book trade-in: $74,500
OK, so the 518-horsepower V8 is impressive and all the AMG features look pretty cool, but as the car ages, neat touches such as the spoilers, grill and engine badge; LED headlights; high-performance braking and electromechanical steering; and sport exhaust lose a lot of their value as upgrades over the more benign 382-horsepower CLS 550.

A 2010 CLS 63 AMG, for example, has a used price $20,000 higher than the base CLS 550. Age that car a few years to a 2007 AMG, however, and the premium over the 550 dwindles to $10,000. In a market where dropping $25,000 from MSRP within a year is considered amazing resale value, that $10,000 isn't a whole lot of room between a base car and its big-deal performance package.

"Although the CLS-Class is one of the better looking Mercedes-Benz cars on the road today, the premium for the AMG variant does not hold its value as well as the base 550," Gutierrez says. "If you're in the market for one of these vehicles, buy the 2007."


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