Swing a Great Deal on Used Luxury Cars

Physician's Money Digest, May 31 2004, Volume 11, Issue 10

Bargain-basement prices on usedluxury cars? Well, not exactly. Butprices on preowned luxury cars,both foreign and domestic, are fallingappreciably. The reason, Sharon Eppersonnotes in a recent report on MSNMoney, includes the finance-rate incentives,cash-back offers, and subsidizedleases that automakers are using to sustainnew car sales in a sluggish economy.

During today's tough economic times,most doctors claim they'll drive their moderatelypriced auto until it falls apart. Still,if a luxury car is a dream and you've hadyour eye on a used Mercedes-Benz orJaguar, there might be no better timethan the present to buy one.

Wheeling and Dealing

New York Times

According to a report, 1999 and 2000 saw a surge in luxurycar leases. Buoyed by unprecedentedearnings in a roaring bull market, luxurycars were much sought after. Today, withthe bull market long gone and thoseleases ending, luxury cars are reenteringthe market in large numbers, and theprices of used luxury cars are fallingfaster than those of other used cars.

For example, according to Edmunds.com, which tracks used car prices, a 2001Saab 9-5 has an average sales price of$23,751, or 23% lower than a year ago.That drop-off in price is much greaterthan the usual annual depreciation rate.How about a 2001 Lexus LS 430 for$40,988, or 23.4% lower than a yearago? Interested in a 2000 Jaguar XKR? Itwould have cost you $61,273 last year,but today you can get one for about$49,467—a 19.3% decline.

Used Vehicle Considerations

Remember that before buying a usedluxury car, there are some costissues to be aware of—namely,service and repairs.

An article on Bankrate.comby Larry Getlen points out that,on average, service and repairson German luxury cars cost significantlymore than on Japanese vehicles.For example, oil changes can run approximately$140 on German luxury modelslike Audi, BMW, and Mercedes-Benz. Anda 60,000-mile service on a Mercedes couldcost double that of a domestic car.

Big-ticket items are just as costly. Forexample, replacing the engine on a 19956-cylinder Mercedes costs about $10,000plus $95 an hour for 15 to 20 hours oflabor. In comparison, a 1995 Chevy V6engine would cost less than $5000, with anaverage labor charge of $65 an hour forabout 10 hours of work.

Smart Wheels,Hot Deals: Buying, Leasing, andInsuring the Best Car for the LeastMoney,

James Walsh, editor of says the market for servicingluxury cars is opportunistic.He points out that there's nomechanical reason why a Mercedesis harder to repair or maintainthan a domestic car.

A similar argument can be madeabout domestic vehicles. The Getlenarticle points out that the master cylinderson a 1995 Chevy Impala and a 1995Cadillac El Dorado are the same, exceptwhen it comes to the price. The CadillacEl Dorado's master cylinder costs about$80 more.

So, while the purchase price of a usedluxury vehicle may not throw you intosticker shock, service and repair costsmight. There are good buys to be had onused luxury vehicles, but don't be blindto the cost of repairs.