In a new study, automotive research firm iSeeCars.com found that while just 1.5% of buyers resell their new cars within the first year of ownership, popular luxury models from BMW and Mercedes-Benz are given up at a much higher rate.
iSeeCars.com analyzed more than 24 million individual new car sales and counted how many of those new cars were reselling as used within the first year. Eleven models in particular saw at least twice the rate of resale of the average car.
New Cars Resold As Used Within the First Year of Ownership
|Rank||Model||% Resold As Used Within the First Year|
|1||BMW 3 Series||8.0%|
|2||BMW 5 Series||7.1%|
|4||Nissan Versa Note||4.0%|
|7||BMW 4 Series||3.9%|
|Average for all cars||1.5%|
Six of the 11 models are from luxury German automakers BMW and Mercedes-Benz, with BMW claiming the top two spots, as well as sixth and seventh place. The top three models--BMW 3 Series, BMW 5 Series, and Mercedes-Benz C-Class--are all re-sold at rates that are quadruple the average of all models.
"While some might be surprised that these luxury brands top the list, these auto manufacturers offer their dealers incentives to buy new cars to use as loaner vehicles, which are then sold as used when they are still under a year old," explained Phong Ly, CEO of iSeeCars.com. "This is a marketing strategy with a two-fold purpose. It puts brand-new models in the hands of current owners when they bring their cars in for service, increasing the likelihood that they will buy another car from that brand. In addition, it essentially increases the brand's new car sales, which help to give them the ability to claim the title of 'top luxury brand', something that BMW and Mercedes-Benz compete for every year."
Still, the manufacturer push to sell new cars to dealers may not be the only reason for the exceptionally high rates. For example, most of the BMW 3 Series resold as used were the lower-priced trims. Ly explained, "Some consumers who buy these luxury models, especially the top three, are doing so as their first foray into the brand, only to discover that although they own the status symbol they were seeking, these particular models, especially the entry level trims, don't provide the level of luxury they expect. Disappointed, they trade-in these cars exceptionally early."
Another factor that is likely to be playing into these cars being resold within the first year of ownership is linked to quality or perceived quality of the cars. Outside the BMW and Mercedes-Benz cars, of the remaining five models on the list, all were ranked average (3 stars) or worse in the J.D. Power 2016 U.S. Initial Quality Study, which surveys consumers after 90 days of ownership. Quality issues were also notably the case for the Mercedes-Benz C-Class and E-Class, while quality ratings for the BMWs on the list were mixed depending on model and model year in the study.
"It's not surprising that consumers would make a change after a short amount of time if they felt the quality was lacking," said Ly. "After all, a new car is a very expensive purchase and one that consumers spend a significant amount of time with multiple times a day."
It's important to note that a car with an average or even lower quality ranking doesn't mean it is a "lemon," but instead is a reflection that it is not meeting consumers' expectations. "Frequently, these aren't really 'problems' at all, but are consumers who are having trouble with technology, such as Bluetooth pairing, voice recognition or the navigation or audio systems," explained Ly. "In reality, these systems are often just not operating as expected or as intuitively as they could be."
The fact that these barely-used cars are being resold less than a year after their purchase represents a terrific opportunity for a bargain for car shoppers. Nine out of the eleven cars see a discount that’s higher than the average car of 12.7%.
Average Discounts For Cars Resold As Used Within the First Year of Ownership
|Chrysler 200||$ 25,132||$ 17,624||-29.9%|
|Dodge Dart||$ 20,649||$ 14,988||-27.4%|
|Nissan Versa Note||$ 16,606||$ 13,256||-20.2%|
|Mercedes C-Class||$ 49,042||$ 39,406||-19.6%|
|Mercedes E-Class||$ 64,742||$ 52,267||-19.3%|
|BMW 5 Series||$ 61,317||$ 50,133||-18.2%|
|BMW 3 Series||$ 44,833||$ 36,743||-18.0%|
|BMW 4 Series||$ 54,610||$ 45,152||-17.3%|
|Nissan Versa||$ 14,894||$ 12,800||-14.1%|
|BMW X3||$ 50,115||$ 43,731||-12.7%|
|Subaru WRX||$ 32,634||$ 30,625||-6.2%|
|Average for all cars||-12.7%|
Among the models on the list, the Fiat Chrysler products, the Dodge Dart and Chrysler 200, offered the biggest savings. "This is likely due to several factors, including that the Dart went out of production for the 2016 model year and production on the 200 ended this past December," said Ly. "Both models have also been slow sellers and not strong competitors compared to other models within their segments," he continued.
In addition to the luxury models with big savings, the poplar Subaru WRX also makes the list, though with the lowest percentage discount. "We know that the sporty WRX has been a popular model, which is why we suspect that the discounts aren't very large on cars that are being resold shortly after they were purchased new, but our research indicates that owners have consistently tagged the WRX as being noisy, with its share of rattles. That's par for the course with its road rally heritage, though it stands to reason that it might be a bit too much for some buyers," said Ly.
Finally, American consumers looking for inexpensive commuter cars under $15,000 will find two solid options for big savings with the Nissan Versa and Versa Note.
Ly noted, "Whatever the reason behind the trend, each of these cars represents a tremendous savings opportunity for consumers who are happy to get a near-new car. Those interested in one of these models would be wise to look around for a barely-used version that could even be the same model year as the current new model."
Methodology of the Study:
iSeeCars.com analyzed over 24 million individual new car sales of model years 2015-2017 in calendar years 2015 and 2016. It identified, using each car's Vehicle Identification Number (VIN), whether the car was then re-listed between four months and a year of its sell date on the used car market and then sold. New cars with more than 500 miles and used cars with fewer than 4000 miles were excluded from further analysis. Models with fewer than 50,000 new car sales were also excluded from the analysis. The number of cars relisted as used was then expressed as a percentage of the number of new car sales.
iSeeCars.com is an automotive data and research company that helps consumers find the best car deals by providing key insights and guidance. It has saved users over $100 million by applying big data analytics powered by over 25 billion (and growing) data points and using proprietary algorithms to objectively analyze, score and rank millions of cars and thousands of dealers. Based in the Boston area, iSeeCars.com was founded by former TripAdvisor and SAP developers and executives determined to improve the car shopping experience for consumers.