Market Madness Hits Used Cars

New-car shoppers, turning away from big SUVs in favor of fuel-efficient models, aren't the only ones affected by the escalating cost of gasoline. Zooming fuel prices in early 2008 also turned the used-car market topsy-turvy. Vehicles that were formerly good values began turning into pariahs. Previously unpopular models, seldom seen on shopping lists, abruptly sounded a lot more appealing.

Value Questions
Which models now make the most sense? Which ones are best shunned? These questions were never easy to answer. Today, with fuel prices remaining uncertain, what the near future holds for used cars is even more mysterious. Big SUVs and pickups have been sagging fast in value, making them comparative bargains. But only if you're prepared to fill their tanks for the next few years, and withstand scornful glares from fuel-efficiency advocates.


However, that's only half of the story. Check any popular guidebook to used car valuations, and you'll find a growing number of year-old models that retail for nearly as much as—or even more than—when they were new. Even two-year-olds sometimes approach their initial new-car price.


Investigate late-model MINI Coopers, for example, and you're likely to find that they're right around the Manufacturers Suggested Retail Price (MSRP) for a brand-new one—and quite possibly higher. That's because the MINI has one of the highest residual values in the industry. Residual values estimate what a vehicle is likely to be worth at the end of a lease term. But they're also valuable indicators of resale value: how much a secondhand version of a given model is likely to cost now.


Interested in an xB from Scion (Toyota's youth division)? Even the first-generation (2004-06) models are commanding lofty prices. Because of its delirious resale value, a 2006 xB can actually cost almost as much as it did when new. Valuations of second-generation xBs also defy logic.


Close-to-new prices may be asked for late-model examples of Honda's subcompact Fit, Subaru's Impreza, and the Toyota Prius hybrid. BMW's 3 Series depreciates slowly, and the recently launched 1 Series coupe and convertible cling even closer to their new-car prices. So do the Infiniti G370 coupe, Volkswagen's R32, and certain Jeep Wranglers.