If the deal’s right, a discontinued car can be a bargain
The offer is pretty tempting: low-rate dealer financing for qualified buyers or cash back on every new 2001 and 2002 Oldsmobile. Plus, to sweeten the deal, GM is offering a five-year, 60,000-mile warranty, which is better than any other GM product.But wait a minute. Aren’t they shutting down Oldsmobile? Yep. That’s why the cars have such big incentives right now. When these are gone, they’re turning off the lights and locking the doors.
This isn’t the first time an auto manufacturer has phased out a line of cars, and over the years, dozens of individual models have bit the dust. Does it make sense to buy a car that’s being discontinued? The answer from the experts is a resounding, “It depends.”
Discontinued, but not forgotten
The major issue when considering a discontinued car is resale value. If you’re the kind of person who drives a car until the wheels fall off, the resale value part of the equation won’t have much of an impact in your decision. But if you’re planning to trade it in or sell it a few years down the road, it’s something to think about because resale value depends entirely on the car.
“You don’t know what will happen three years down the road,” says Bob Kurilko, vice president of product development and marketing at Edmunds.com and a former longtime executive at Nissan.
“The 300 ZX, toward the end of its life, was discontinued because its sales were falling off a cliff, but they have maintained value pretty well because there’s no new supply. You’ve got a Z Club; people love these cars. Can you say that scenario will happen with one of the Oldsmobile products?”
Predicting how much a car will be worth in a few years is kind of like playing darts blindfolded.
“There are any number of things that can change the value that are totally out of your control,” says Jack Gillis, director of public affairs for the Consumer Federation of America and author of The Ultimate Car Book 2001. “A small, fuel-efficient car is worth more now than it was eight months ago.”
Meet the global service market
Federal law now requires manufacturers to stock enough parts after a model is discontinued to cover the entire warranty period, including manufacturers’ extended warranties of up to 10 years and 100,000 miles. Plus, what you can’t get from the manufacturer, you can get on your own.
“Twenty to 30 years ago, we didn’t have a lot of after-market parts manufacturers,” he says. “The older population remembers when the first imports came into the country. I had a Triumph TR7 in 1976. It broke and I was stuck. I couldn’t get parts. The British company folded. Today, if you really have to, you can go on the Net and order (a part) directly from South Africa.”
Service could be another matter. In the case of Oldsmobile, there will be plenty of GM dealership service departments and garages that can handle the work. On other cars, it could be a different story.
“The problem comes when the manufacturer itself drops out of the market, such as Peugeot,” Gillis says. “Those people will have trouble finding parts and getting them repaired.”
Technically speaking, maybe not
When cars are first launched, manufacturers find all kinds of little bugs that need to be fixed and send out bulletins to service departments to fix the problems when they see them, Kurilko says.
“When it’s being discontinued, there’s no incentive to spend money to correct those problems,” he says.
“Recalls are recalls — it’s a safety issue — but there’s this whole other hidden section of service campaigns. Those are voluntary by the manufacturer. You potentially have areas where a manufacturer might not elect to have service campaigns because it’s being discontinued.”
The bottom line in the minds of the experts is that when you’re shopping for a car, the fact that a make or model is being discontinued shouldn’t be the deal breaker. There are several factors that have to be considered. The most important thing is to get something that meets your needs and fits in your budget.
“A car is not an investment. Don’t even think about that,” Gillis says. “It’s always going to depreciate. Get the very best price you can get and keep it for as long as you can stand it. Those are the two features that make a car valuable to you.”
|— Updated: Jan. 24, 2002|