Why would used Corollas be more expensive than new on Carmax.com?

Question

I've looked at Corollas with similar trim, transmission, etc., and the new ones are often cheaper than the used ones. This seems counter-intuitive. Does anyone know why this is? (What I'm really asking, of course, is - what's the catch?)

Answer 1

Here's the gist of it in a nutshell. When Carmax acquires a vehicle, it must pay to recondition the vehicle. They change various things on the vehicle like belts, hoses, tires, brakes. All items which add to the cost. Because the Corollas are liked in the used car market, depcriation isn't much...so there's really no way that Carmax can make a profit on that vehicle.

So why do they carry them you may ask?

Well they hope that the Corolla will get you in the dealership, in the hopes that maybe you'll buy into another vehicle where they can make a larger profit.

And ironically, in the new vehicle sector, Toyota has publically admitted they don't make much of a profit on their Camry in dealerships, but they hope that a good buying experience will allow the customer to return a buy another Toyota vehicle with a profit margin.

Also, when buying a new vehicle, the manufacturer's (like GM, Ford, DCX) Might have incentives like 0% APR for 5 Years. Whereas you won't find that on Toyota's because there's more of a demand for them.

So on the used car market, you'll probably have a higher APR (I beleive 7-8% is the average now), where on new cars it's usually 0-3%. ...and Personally, anything over 3% and I rather look elsewhere....Too many good cars out there, than pay a manufacturer a 3-4% APR on a loan.

Now Carmax overall is a good place to purchase a used vehicle because of the car they take to recondition the vehicle. Granted, some makes are less reliable than others, so buyer beware...its' not Carmax's fault.

How I HAVE recommended people to use Carmax has been the following..."If the vehicle you are interested in, depreciates quite a bit for X X X reasons, then take a look at Carmax". I know someone who bought a Volvo S60, with just 3000miles for just $22K because on the used car market, the S60 depreciates quite a bit. Or another person who bought a loaded Lincoln LS V8 Ultimate with just 5K miles for $26K...Nothing wrong with it, other than Ford made a statement at that time they weren't going to continue building the vehicle, hence it WAS a $52K vehicle, they got for just $26K....


Hope this helps... :-).

Answer 2

Toyota Corolla Carmax

Answer 3

It's about profits for the dealership. Corrolas are easy to get financed through banks. Since they are about $15K that means the payments are around 300-350 for 60 months. Since most dealerships sell people on payment only, a lot of people don't even pay attention to the bottom line. A more inquisitive person like yourself can see that buying a used Corolla over a new one is a big mistake.

Answer 4

Someday I hope the guy who works at the 7-11 will turn around and look at me while he waits on me. He always does the whole transaction while looking out the window behind the register, kind of reaching around and back to punch the buttons. Maybe he's doing a vampire check, looking for reflections...or maybe I'm a little unappealing.

Answer 5

They hope that people won't check new car prices and will think they are getting a great deal.

Answer 6

toyos hold their value so well that sometimes the resale is actually higher than the original sale price.

Answer 7

It depends on many things

Answer 8

Was wondering this as well