Advertising a new car can cost tens of millions of dollars, and not every car in today’s marketplace gets this boost. Some get a quick steroidal injection of mainstream publicity when they are first sold, while others become increasingly unpopular as they age due to a lack of advertising and other forms of media payola. Often times these competitors get lost in a sea of better known names with bigger dollars to spend. Take for instance one of today’s least known vehicles that has been around for over 15 years, the Mitsubishi Outlander.
When it hits the discount bin that is the used car market, the Outlander becomes a dynamo of value.
As a new vehicle purchase, the Outlander has a tough time competing with dozens of other SUVs and crossovers for sale. Mitsubishi has a small marketing budget is small and, let’s be honest, the Outlander is fairly plain and devoid of flash. It is, however, built well, loaded with modern features, and reliable. When it hits the discount bin that is the used car market, the Outlander becomes a dynamo of value, which, when combined with its terrible resale value, makes it the best SUV you can buy for under $10,000.
Let’s look at the Outlander’s reliability as a used vehicle. Out of 26 mid-sized SUVs, the Outlander ranks fourth best (see above bar graph), behind three Toyota models no less, in the Long-Term Quality Index (LTQI). The LTQI is a study I co-developed and features over two million vehicles that have been inspected by professional mechanics. (LTQI data can be found here).
Now let’s take a deeper dive into the resale value, which can make a reliable but unpopular model like the Outlander an outstanding buy in the used car market.
The Manheim Market Report is a pricing model that has over four million vehicles in its database. It shows that the average 2015 Mitsubishi Outlander SE has a wholesale purchase cost of just $8,175 at dealer-only auto auctions throughout the country. That means the average dealer who buys one of these models before selling it to you will typically pay this much, which is less than a third of what an Outlander cost when it’s brand new. That’s a breathtaking cliff dive of depreciation for a four-year-old SUV.
In fact, the Outlander’s wholesale cost is so low that it’s nearly $3,000 less expensive for dealers to buy than a 2015 Nissan Pathfinder – a far more popular SUV that has a sky high defect rate of over 25%, according to the LTQI. That’s more than twice the defect rate of the Outlander.
The Nissan Pathfinder is suffering from a well-documented onslaught of problems related to its transmission. The graph you see above, which includes data from over 10,500 Pathfinders, shows that the 2013 through 2015 models have defect rates that are consistently over 20%, which is more than twice the industry average.
Yet, if we compare apples to apples and match the mileage and condition of both models, we find that the average Nissan Pathfinder still sells to dealers at wholesale for $2,800 more than the Outlander. The real difference isn’t reliability. More than one out of four 2015 Nissan Pathfinders in our study has a major powertrain issue compared with fewer than one out of ten 2015 Mitsubishi Outlanders. That’s a vast difference that doesn't explain why Pathfinders are worth more on the used market than Outlanders.
The real difference is advertising. Quality has a tendency to out itself over time, and it has nothing to do with popularity or advertising budgets. That’s a fashion game filled with deceptive messaging designed to appeal to our emotions. Unpopular models that are well engineered, like the Outlander, will routinely slip through the cracks of a marketplace that is far more interested in promoting image over substance.
You’ll be driving home in your Outlander for less than a Nissan Pathfinder bought at wholesale before the dealer even marks it up.
So what will you pay for a well-equipped Mitsubishi Outlander? Dealers need to make money, so they’ll add to that average wholesale price of $8,175, resulting in retail prices of around $10,000 for something like a 2015 Mitsubishi Outlander SE with 75,000 to 100,000 miles in most markets. That means you’ll be driving home in your Outlander for less than a Nissan Pathfinder bought at wholesale before the dealer even marks it up. However, some of the costlier markets, such as most of California and the New York Metropolitan area, will make you pay about 15% to 20% more than a dealer’s wholesale price. Expensive real estate markets and expensive car markets usually go hand in hand.
If you want to see how your particular daily driver is performing when it comes to long-term reliability, click here. The LTQI has over two million vehicles that have been inspected and appraised by ASE-certified mechanics. If you would like a deeper dive into a specific type of model, let us know in the comments. Used cars have a lot of unknowns and we want to hear what you have to say.
Steven Lang is the co-developer of the Long-Term Quality Index. The LTQI is the largest study ever performed on the long-term reliability of used cars, which currently has professional mechanics nationwide appraising and inspecting used cars at all stages of their lives. This six-year-old study currently has well over two million vehicles. This data will be available for free, forever. Mr. Lang has also been an auto auctioneer, car dealer, award-winning journalist and part-owner of an auto auction over the last 20 years.