Luxury used car? Consider cost of repairs
When Robert Guzman, a school counselor in Long Beach, Calif., couldn’t remove the ignition key from his 1995 BMW 530i, he didn’t think it would be a problem. After all, it’s just an ignition key.
“I called a locksmith,” recalls Guzman, “and they said, ‘Oh, it’s a BMW? That could be $500, $600 easy.’ They would have to remove the whole lock mechanism.”
But first Guzman, who bought the car in 1998 with 42,000 miles on it, needed to have the car towed. Again, a simple function — except that BMWs need to be towed on a flatbed, and his garage had a height limit. So BMW had to spend days locating a special smaller-than-average tow truck.
All in all, the simple locked ignition key took almost two weeks, a part flown in from Germany and $400 to repair. Despite this and similar setbacks, such as a $400 repair for an auxiliary water pump, $600 tune-ups and $50 to replace basic items such as windshield wipers, Guzman wouldn’t trade his BMW back for the Nissan he was driving beforehand for one simple reason.
“I love the ride, and I love the way it looks.”
A little luxury costs a long way
Many car buyers buy used luxury cars because of the relative bargain they provide compared to a new luxury vehicle only to find substantial repair and maintenance costs. So, how does one buy affordable luxury while avoiding the perils of the money pit?
Well, in a sense, you can’t. It’s called “luxury” for a reason, and in many cases your choice will be pay now or pay later. But by buying intelligently and being aware of exactly what you’re taking on, you can lessen the sticker shock that comes with repairs or perhaps decide that a few thousand dollars spent now may save money down the line.
You can lessen the chances of incurring shockingly high costs with some basic knowledge of the luxury market. For example, Jay Gubala, e-commerce general manager for the Herb Chambers Companies, a dealership chain in the Northeast, says that German luxury often costs significantly more than Japanese.
“Lexus and Infinity will run you only about 25- to 30-percent more than Toyota or Honda,” says Gubala. “But German is probably prohibitively expensive for some people. Oil changes can run $130 to $140 for a German make like Audi, BMW or Mercedes Benz. And a 60,000-mile service on a Benz could be double that of a domestic.”
Vince Ciulla, About.com’s auto repair guide and an ASE certified master technician for more than 35 years, provides this example.
“Let’s use Mercedes and Chevy,” says Ciulla. “If you replaced the engine on a 1995, six-cylinder Mercedes, it would be $9,000 or $10,000 just for the engine. Then $95 an hour for labor, and you’re talking 15 to 20 hours. On a 1995 Chevy V6, the engine would be $4,000 or $5,000, with average labor of $65 an hour, and take 10 to 12 hours to replace.”
In certain instances, these cost differences are more marketing than actual value.
“I worked at a Mercedes dealer,” says Ciulla, “and we used to say you got the car free, you just paid $125,000 for the hood star.”
Big names, bigger markups
Ciulla says parts for luxury and nonluxury vehicles are sometimes the exact same part. Any cost difference is due to the brand. So, a car owner might be better off actually purchasing the part himself, then having the mechanic replace it.
“With GM,” explains Ciulla, “you could have a 1995 Chevy Impala and a 1995 Cadillac El Dorado. The master cylinders are the same, but on the El Dorado, it’s about $80 or $90 more than the one for the Chevrolet. I used to work parts at GM Olds, and we had a book with the interchangeable parts. The same part would be used for Chevy Nova, Buick LeSabre and Delta 88, but the costs were different.”
James Walsh, editor of the book
Smart Wheels, Hot Deals: Buying, Leasing and Insuring the Best Car for the Least Money, sees the market for servicing luxury cars as opportunistic.
“There’s no mechanical reason why a Mercedes is harder to repair than a domestic budget car,” says Walsh. “Lots of luxury dealerships whittle away their margin on the sale and recoup it on the servicing. So it’s caveat emptor.
“If you buy a high-mileage luxury car and have it serviced at a dealership, it will be more expensive than at a nonluxury dealership. If you’re looking to buy a luxury car inexpensively, don’t be blind to those costs.”
And while there are certainly some legitimately higher costs in luxury cars, like parts from Germany, Walsh says some of the other reasons for the disparity are slowly disappearing, like more sophisticated electronics.
“You have to go back a few years for that to be really true,” says Walsh. “At this point, all cars have electronics, and even a relatively inexpensive import or domestic will have computer-monitored injection and all that.”
So, how does one avoid these exorbitant costs? Joe White, Detroit bureau chief for The Wall Street Journal, advises people to shop for used cars the same way they would for new cars.
“Get all the available information on that make and model, like quality and track record,” says White. “Look at NHTSA Web site for safety data. Go with brands that have a good track record and avoid the ones that don’t. Brands that do well on quality surveys and evaluations when they’re new typically do well when they’re used.”
“It’s more models than brands,” adds Walsh. “Where you get into trouble is with individual models that were not very well thought out or planned. It’s more model specific than brand specific. You generally want to avoid the lower-end models of the luxury lines.”
Once you’ve researched make and model, you need to be as vigilant about the specific car.
“First, find out why the car is at a dealership,” says Ciulla. “Is it because it’s a lease return? If so, it’s probably a good car. But if they hem and haw and don’t say that, if it’s a repurchased lemon, then you should be leery.”
Look under hood of leases
Many used luxury vehicles were previously leased, which could have positive or negative connotations.
“A luxury car is usually leased, then turned in after two years,” says Ciulla. “But on occasion, someone will get a car and have nothing but problems and give it up. I know one woman who bought a 1998 Lexus when it was three years old. There was no reason to expect problems — it only had 60,000 miles, which for a Lexus is nothing — but she had to put a whole new transmission in only three weeks after she bought it. And that runs in the neighborhood of $5,500 to $6,000, while in a used Nissan Sentra, mid-range, that would run $2,500 to $3,000.”
Walsh doesn’t trust leased cars.
“It’s always a risk to buy a car that’s been leased before,” says Walsh. “The problem with buying a pre-leased car is that people who buy leased cars don’t take good care of them, and the maintenance is pretty sketchy. You’re taking chances if you buy a used car outside the certified pre-owned programs. Outside of those programs, you’re getting cars that have been driven pretty hard in their first years.”
Ciulla says problems of this type may be avoided by taking the car to a mechanic prior to purchase and having it thoroughly examined.
After all, he says, “It’s not like a tranny works and then it doesn’t. Usually there’s a sign that it hasn’t been taken care of.”
You also might follow Walsh’s advice to purchase a used vehicle that has been certified by the manufacturer. Certification means that the car has passed a series of quality tests imposed by the manufacturer, and is therefore given additional warrantees.
This becomes a case of paying more money now to avoid paying it later, as most of the certified cars are under the 60,000-mile or five-year mark. Several experts said that if they were to buy a used luxury car today, certification would be paramount.
“The requirements manufacturers put on vehicles for certification are so stringent,” says Gubala. “I was a used car manager at Lexus, and we had to certify every vehicle under 60,000 with a clean mechanical history and physical damage history. Fender benders were OK, but frame damage, no.
“When you buy from a dealer of a brand and it’s certified, it comes with a 100,000 mile warranty. Those aren’t free, but it’s not nearly the same as doing a tranny on a 94 Benz.”
Tony Molla, vice president of communications for the National Institute for Automotive Service Excellence, suggests that you ask for vehicle maintenance records, especially if you’re buying from a private owner.
“I would expect a luxury car owner might have that — regular oil changes, what types of repair have been done,” says Molla. “If you see that the tranny has been replaced twice, you may want to ask about that.”
Unfortunately, not all sellers will be upfront about this sort of information, and it’s essential you do your homework. Many used cars are “salvage” cars. They have been severely damaged and then rebuilt.
“Make sure it hasn’t been ruled a total loss at some point,” says Molla. “Ask the dealer directly.”
“The classic Mercedes E that you see at the front of an (independent) used-car lot for $14,000 is usually a salvage car,” adds Walsh, “that might have had a bad wreck or flood damage. So take the VIN number down and check it for salvage history before you buy. AAA or Auto Club can often provide this service (as can
Carfax.com). The fee is nominal, and if it’s ever been salvaged, it’ll show up.”
In the end, the decision on whether to buy a used luxury car comes down, as it does with so much else, to making an informed decision.
“You have to be aware and informed,” says White. “You can get a used luxury car for $15,000 to $20,000, but then the question is, can you afford the upkeep? People who go in unaware of that issue are making a mistake.”