Should I be afraid of high mileage cars?
Should You Still be Scared of High Mileage Cars?
For as long as I’ve had any interest in buying or selling cars most people have, perhaps understandably, been somewhat wary of models with particularly high mileage on them. When new cars weren’t generally as good as they are today, it was probably a shrewd move that those looking to buy used viewed high mileage models with considerable caution. Today though, could you be missing out on a bargain by overlooking cars with more than average miles on the clock?
Age or mileage: What matters most?
Let me draw a clear distinction here between old cars and high mileage examples that are relatively young. There’s a big, big difference between a car that’s three or four years old with 100k miles on the clock and a 15-year-old car with similar mileage. Both cars will have potential issues with wear and tear, but the older car will give you a lot more to worry about.
If you could find a 15-year-old car with, let’s say, as few as 30,000 genuine miles on the clock, you could still come up against issues caused through the ravages of time. Any rubber components that haven’t been replaced since the car was new will have experienced perishing, and metal components underneath the vehicle could have corroded. Just because a car isn’t being used doesn�t mean it’s not deteriorating.
A three or four-year-old vehicle with high mileage will still have wear and tear to look out for, but in this case it will be general wear and tear items you�d expect to need attention such as the clutch, brakes, exhaust, catalytic converter, etc. Many of these things will have been looked at if the car has a full service history and may well have been replaced already, and this is how you could be getting a bargain.
If you’re looking at buying a relatively recent used vehicle that has high miles on the clock it’s vital to make sure it has a full service history. You must research the model before buying so you know what would need to have been replaced at certain mileages and look for receipts for those components and their fitting in the history. Although something like a timing belt or chain isn�t particularly expensive to buy, they can be incredibly expensive to have fitted in some cars, and not replacing one can lead to catastrophic failure and a huge repair bill.
Choose the right model
There’s almost no such thing as a bad new car these days, but some will inevitably handle high miles better than others for used buyers later on. For a start, a diesel engine with a hundred thousand miles under its belt is just getting started, but a petrol version that’s covered the same miles is a much bigger risk.
High-end luxury vehicles that cost a fortune brand new can be a real steal a few years down the line due to their massive depreciation, especially if they’ve done more than average miles. These can be real bargains, but if something does go wrong, your wallet will certainly know about it. Remember that a BMW 7 Series, Audi A8 or a Range Rover are very expensive to buy new and expensive to run, and the running bit doesn�t get any cheaper as they get older and get more miles on their back.
The real bargains are probably going to be a little more mundane than a Mercedes S Class. Therefore, if you’re looking for a high-mileage used bargain that will continue to serve you well for many years to come and won�t break the bank to maintain, something like a diesel VW Golf is probably a good place to start looking.
Why Dealerships Now Want Older, High-Mileage Used Cars
The pandemic was a boon for few, but car dealers capitalized on there being fewer new vehicles, by spiking prices. It is the old “supply and demand.” People did less, which saves them money for big purchases. And without the ability to purchase new, used car prices swelled. But now it’s 2023 and everything is going backward.
Why aren’t used cars selling now?
Leasing is way down, meaning there aren’t low-mileage cars for a dealership to pluck wholesale. Interest rates are high, and new cars are beginning to reach post-pandemic production for the first time. But they’re much more expensive due to inflation and, well, because automakers can get away with it.
Now we have car buyers with less money to spend. And with fewer cars coming off leases, and new cars viewed as too costly. The result is that car dealers are now looking for clean, older, high-mileage cars as a way to make sales. Obviously, they’re worth less, so they cost less. One dealer told Automotive News, “I normally wouldn’t, but we sold a 2015 Ford F-250 with 80,000 miles on it the other day.”
For 2022, used cars tanked to their lowest in almost a decade. In all, they were 11% down from 2021. Economists are afraid with high inflation, high interest, and buyers waiting for both to lower, can mean trouble this year.
How are dealers reacting to slower used car sales?
Automotive News says dealers can only lower what they charge, accept a lower gross profit on sales, and give less for trade-ins. But most say they will ramp up used sales this year. That could be tricky as franchised dealerships report it now takes 42 days, on average, to move a used car.
Another problem concerning dealers is the trend of lessees keeping their off-lease cars in lieu of a new and much higher lease. Even a $200 or $300 monthly increase for a new lease can be too much to bite off when many more Americans are now living paycheck to paycheck.
Instead, there are fewer low-mileage off-lease cars showing up at wholesale auctions. Dealers are hoping that this will be temporary because new car production is beginning to get back to normal. When they start being turned in two or three years from now there will, once again, be a higher volume of these desirable cars.
Will it get better or worse?
But until then, the retail market will continue being soft because dealers aren’t willing to spend more for cars, and demand is dropping off. That, in turn, triggers overall used car depreciation, which dealers must factor into any car landing on their lots.
The hope is that the inevitable recession, which some think began in October 2022, won’t be severe, and that by the end of the year, new car inventories will be healthy. Combined with potentially lower interest rates to spark up demand, maybe 2023 will end much better than some are predicting.