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New cars too expensive? Here are the most popular used cars from Consumer Reports

By Hudson Brooklyn
New cars too expensive? Here are the most popular used cars from Consumer Reports

At a time when average new car prices approaching $50,000 are prompting more buyers to consider the used car market, Consumer Reports is releasing brand reliability ratings and “top picks” of used models for the first time.

The nonprofit consumer advocacy group that provides information on used cars at ConsumerReports.org/usedcars released the used car studies Tuesday, which give Asian brands higher scores and more spots on the group's “Top Picks” list. Among the three Detroit automakers, only General Motors Co. made the top 10 in the reliability study and placed models on the list of best-picked used cars.

Buyers re-entering the car market after years away are often shocked when they see new car prices. This has led to 4 out of 10 consumers looking for a car in the past year considering only used cars, while 3 out of 10 only considering new cars, according to Consumer Reports.

The average list price for a new vehicle was $47,307 in July, and the average used car price was $25,415, according to Cox Automotive. With far fewer new car listings under $30,000 today, more customers are considering used cars. According to a 2023 study by automotive services provider Cox Automotive, 68 percent of car buyers consider both new and used cars when making a purchase. That's up from 55 percent two years ago.

“There's a huge opportunity here to help many more people find a reliable and safe car than before,” said Alex Knizek, deputy director of auto testing development at Consumer Reports. “You really shouldn't have to sacrifice these features in a car just because you want to save money on a used car.”

Where brands stand

For its first ranking of used car brands, Consumer Reports focused on vehicle reliability from 2014 to 2019, asking its members in surveys about problems they had experienced. For this study, the organization obtained data on more than 150,000 vehicles.

Toyota Motor Corp.'s Lexus and Toyota top the list of 26 brands, as previously reported in the nonprofit's annual new-car auto reliability study released in November 2023. Mazda Motor Corp.'s Mazda brand ranks third, followed by Honda Motor Co.'s Acura and Honda brands, GM's Buick, BMW AG's BMW brand, Subaru Corp.'s Subaru brand, Nissan Motor Co. Ltd.'s Nissan brand and Mercedes-Benz Group AG's Mercedes-Benz brand.

Brands at the bottom of the rankings included Tesla Inc. and Stellantis NV's Dodge and Chrysler in 24th, 25th and 26th place, respectively.

Stellantis' other brands also rank in the bottom half: Ram at No. 22 and Jeep at No. 23. GM's Cadillac is No. 11, Chevrolet at No. 18 and GMC at No. 21. Ford Motor Co.'s Lincoln is No. 13 and the Ford brand is No. 20.

“Brands like Lexus and Toyota have a history of conservative redesigns, making incremental improvements across their entire product line rather than introducing many entirely new systems,” said Steven Elek, program manager for auto data analytics at Consumer Reports, in a statement. “Our data consistently shows over time that new cars from these brands are reliable when they're new and that they remain reliable as they age.”

Consumer Reports has been naming the 10 best new cars for decades. These vehicles perform best in the organization's road tests and receive the highest ratings in member surveys.

The group applied similar selection methods to used car models to select the top 10 used cars for the first time. All vehicles are valued under $20,000, received a Consumer Reports Recommendation when new, received an above-average rating for reliability and come standard with electronic stability control.

The top 10 used car tips are:

  • Hybrid subcompact sedan under $20,000: Toyota Corolla Hybrid (2021)
  • Small SUV under $20,000: Kia Sportage 2021
  • Hybrid SUV under $20,000: 2018 Toyota RAV4 Hybrid
  • SUV with three rows of seats under $20,000: Mazda CX-9 (2020)
  • Luxury SUV under $20,000: Buick Envision (2020)
  • Pickup truck under $20,000: Toyota Tacoma 2015
  • Sports cars under $20,000: 2019 Mazda3
  • Small sedan under $15,000: Hyundai Elantra 2019
  • Small SUV under $15,000: Honda HR-V (2018)
  • Small sedan under $10,000: 2017 Chevrolet Cruze

Buy used or new

The pandemic sent new car prices soaring after factories closed for safety reasons, creating inventory that was then further strained by supply chain issues. Inventory has risen significantly, with 2.91 million vehicles available at the beginning of July, 52% more than July 2023. Increased vehicle availability is putting downward pressure on prices, according to Cox.

New car prices in July were 3.1% below the December 2022 peak of $49,929.

In fact, new vehicle affordability hit its highest point in three years in July as incentives increased and interest rates fell, driving the typical monthly payment down 1.5% from June to $753 per month, according to Cox. The average monthly payment peaked at $795 in December 2022. Cox also found that the median number of weeks of income needed to purchase a new vehicle fell to 37 weeks from 37.6 weeks in June (upward revised).

According to Cox, average incentives in July rose to 7% of the average transaction price – $3,383 – from 6.4% in June. July’s incentives were the most generous of the year

Affordability “still plays a role in people's decision whether they're willing to look at a used car or a new car,” says Erin Keating, senior analyst at Cox Automotive.

Used car prices have also risen sharply since the pandemic put pressure on inventory, and that pressure is still there. As of early August, the total supply of used cars on dealerships across the United States was 2.17 million, down 3% from a year ago, according to Cox.

“Because we had this shortage of production during the pandemic, we're not going to have as many zero- to three-year-old vehicles,” Keating said. “Anyone in the market for zero- to three-year-old vehicles is probably going to get a new vehicle.”

The average list price for used cars was $25,415, slightly higher than Cox's revised figure of $25,246 in early July and 5% below the year-ago figure. Average used car prices have fallen below the same level in 2021, but finding vehicles at lower prices, around $15,000, is difficult, Cox noted in a recent report.

And although used car prices have dropped, interest rates on used cars are higher than on new cars. According to Cox, the average interest rate on new cars at the end of the second week of August was 9.84 percent, while used cars were 13.91 percent.

“Don't just blindly assume that a lower price makes it cheaper up front,” says Ivan Drury, director of insights at Edmunds.com Inc. “These total costs can vary widely depending on the interest rate.”

Drury advises used car buyers to look at the equivalent new cars and learn about the cash and interest benefits offered.

“When you buy the appropriate used vehicle, make sure that incentive is reflected in the used car price,” he said. “The used cars that have the best value right now are also the new cars that have the best value, so make sure that discount is reflected.”

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