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Tuesday, April 26, 2005

Want A Good Cheap Car? Try a Taurus.

I recently had a conversation with a family friend, a middle aged woman, who was in the market for a car. She wanted to know what I thought about buying a new Kia Spectra (~$12,000), for the low cost and warranty.

I told her to check out a late model used Taurus or Chevy Malibu instead.

For the money, a 1 or 2 year old off-lease Taurus is probably the best deal going in the midsize car market. They depreciate so badly that you can get a nicely equipped, low mileage car for a veary reasonable price, $11,000-ish. Especially in the Metro Detroit area, where Tauruses are commonly used by rental fleets and Ford employee leases.

Probably the best source for a used car are the rental car companies, because they maintain their cars regularly, which is not always the case with private owners.

A quick comparison chart:


Model

2005 Kia Spectra EX,

new

2003 Chevy Malibu,

30,000 miles

2003 Ford Taurus,

30,000 miles

Powertrain
  • 2.0L DOHC I-4, 138HP
  • 4spd Auto
  • 3.1L OHV V6, 170HP
  • 4spd Auto
  • 3.0L DOHC V6, 200HP
  • 4spd Auto
Safety
  • 4 star front (NHTSA)
  • 4,3 star side (NHTSA)
  • Front Offset Acceptible (IIHS)
  • ABS
  • 4 star front (NHTSA)
  • 3,4 star side (NHTSA)
  • Front Offset Acceptible (IIHS)
  • ABS
  • 5 star front (NHTSA)
  • 3 star side (NHTSA)
  • Front Offset Good (IIHS)
  • ABS
Comfort
  • Single Cd
  • Cloth seats
  • Moonroof
  • Single CD
  • Leather Seats
  • Moonroof
  • CD changer
  • Leather seats
  • Moonroof

Warranty
5 year (60,000mi)
10 year powertrain
1 year (12000mi)
1 year (12000mi)
Price (Invoice or Private Party KBB)
$15,800
$10,000
$11,200


The Taurus is safer than the Spectra, is larger,can be had with a more powerful engine (though the Taurus is heavier), and is availible with more "high end" options such as leather seats and in-dash CD changer. The Spectra definitely has a better warranty, but for about $1,500 you can buy an extended warranty for the Taurus. (These are not usually worth it). The Malibu does not have safety specs that are as good, but is also a very good deal. Another good option in this same vein is the Buick Century.

The lady who asked me for my advice wound up buying a used Mercury Sable, with leather, fake wood, shiny wheels, the works, and is quite happy with it.

6 comments:

The Angry Engineer said...

After shopping for used tractors last summer, I quickly found out that used cars are an awesome value. If I buy a tractor that has approximately 50% of its life remaining, I can expect to pay 50% of the price of a new one.

On the other hand, as your chart demonstrates, one can pick up a used car that has perhaps 85% of its life remaining (assuming a 200K life, which is quite reasonable nowadays with only basic maintenance) for maybe 60% of the price of a comparible new car. That's a value if there ever was one, and only because people either are too vain, or place much too large of a value on a warranty that's unlikely to get used.

Good post!

William F said...

All the rental Tauruses I've seen have the lower power OHV engine. I'm a Sable owner with the DOHC engine. I bought it used and loaded with 20K miles for a substantial discount over new. It was not a rental car, but definitely a great value.

Anonymous said...

The Taurus/Sable's apocalyptically horrific depreciation will bite your friend in the ass if she ever tries to resell that car. You made the classic error of only looking at one side of the equation. Yes, she got the car for a low price, but that car is still depreciating like a rock and will be worth only a few thousand dollars in a few years. Unless she plans on keeping it forever, she will ultimately lose money as a result of taking your advice.

The Auto Prophet said...

Depreciation is not linear. The worst of hit happens early, and then it slows down.

What about the Kia, how do you think that car will depreciate?

In 3 years the Kia will be worth (probably) about 50% if its new cost, or ~$6,000. In 3 more years, the Taurus will be worth about $7,000, according to KBB, or only about a 40% hit.

You are almost always better off buying a good quality used car than buying new.

Anonymous said...

Agreed! But you have to compare apples to apples. Kias presumably depreciate quickly too, but the Taurus is the single fastest depreciating car in the United States. Which means it depreciates faster than any Kia. However, either one would be bad resale news.

Unless she plans to hold the car for a very long time, her best bet would have been a used Toyota or Honda. Of course, if she likes the Taurus more and is willing to pay more for it, then it was the right decision for her.

David W (uk) said...

Hello all you Americans!

One thing not pointed out in this article is the Kia's far superior fuel economy.. much more important now with rising fuel costs.

Try coming over to the UK, and see how you like the £1 litre! ($7 dollars per US gallon!)

Yo really should comapre like with like.. similar engines and similar spec, to see the real benifits of buying second hand.