I receieved this question this morning via email from Sri Kishore, a Dave Knows Cars reader in Westchester, PA. I get similar questions fairly often and thought I’d share this one in the form of a blog post. It got pretty long, but I think there is some useful information. 

He’s many states away, he’s not even considering buying a car at Feldmann Imports Mercedes-Benz where I work in Bloomington, MN, so please know this is no sales job… it’s just me, Dave Tobin, car guy, writing what I believe.

The Email and Question:

Dear Mr. Tobin,

I came cross your blog several months and read it few times a month.  I am interested in purchasing a Mercedes [my first one], and could use some advice.  I test drove a 2010 E350  4matic +P01 package, and the dealer is willing to sell me a new one for $50,000. However, one of my friends is suggesting that I purchase a 2007 S550 4matic that has about 32,000 miles for about $45,000 (from a non Mercedes dealer; MB dealers are around $55,000) instead.  I have been in this country for only few years, and have only purchased Japanese cars.  I am little concerned about maintenance on S550 after the warranty expires in about a year.

Since you seem to know MB, any advice would be tremendously helpful.  I would trust your judgment and insight.

Thanks for your time in advance.

Look forward to hearing from you.

Sri Kishore
West Chester, PA

 Ahhhh, the age-old dilemma…. Do you buy the brand new mid range car or do you buy the originally more expensive model, the top of the line, as a used car for about the same money, or in this case, a little less?

It’s tough to say if there is a right or wrong answer to this basic question. I’ll attempt to answer it in general terms, but there are some details in Sri’s question that lead me to believe that one choice is much better than the other in his specific case.

The New Car: 2010 E350 4matic w/ P1 Package 

One of the benefits of the new car is just that, it’s brand new, with just delivery miles, no one has ever driven it before, you will be its only driver. That’s a plus I suppose, but it’s not that important in the grand scheme of things. More important than being the first owner of the car is the warranty. The warranty starts with you, so in this case you’ll have the full 4 year or 50,000 mile comprehensive Mercedes-Benz factory warranty.

In the case of the new E class sedan, you’ve got the newest and best technology available. I really believe that. The 2007 S class is a technological marvel in its own right, but a lot has changed in just several years. The new E has a hard drive based navigation system now, not the slower DVD based system in the S class. The Bluetooth System in the new E is integrated and ready to pair a phone to, it does not require the $500+ Mercedes-Benz Bluetooth module that a 2007 S class requires. Imagine back in 2007…

“Thank you sir for buying this $100,000 S class, I’m gonna need another five hundred bucks to make your phone work”

You can imagine how well that goes over when selling them as used cars today, always a thorn in my side.

The voice control system in the new E is also much improved, and it’s included in the P1 package on the new 2010 E class. A 6GB music register comes with the P1 package in the new E, it’s not available on the 2007 S. I could go on and on with more such examples, there are many. Hands down, the 2010 E is superior in terms of technology and gadgetry.

The new E is the most up to date car from a styling standpoint, it was just released less than a year ago, so it won’t undergo any body style changes or even facelifts for a couple of years. That might not be that important, but you will have the newest, latest and greatest Mercedes-Benz sedan on the road.

So, what are the drawbacks of the new 2010 E class in this case? You are the guy who will take the initial depreciation hit when you drive it off the lot. If you pay $50,000 for it on Saturday and try to trade it in on Monday with 100 miles on it you’ll probably get a trade in value of mid to high $40,000s. That’s just the way it is, but if you’re planning to keep the car for some years it’s not going to matter anyway. All modern cars depreciate, it’s just a fact of life.

Incidentally, the $50,000 number you mention as the potential sale price of E class you’re considering seems reasonable to me, without knowing all the details of the car in question, but that sounds like a good deal to me.

The Used Car: 2007 Mercedes-Benz S550 4matic

What are the benefits of an S class over an E class? I sometimes refer to the S class as “The choice of royalty and captains of industry worldwide.” It’s true… see how many heads of state or kings and queens get out of 7 Series BMWs, it doesn’t happen. These are big, luxurious, comfortable cars. If you transport passengers or business clients this might be a better option than an E class. The back seats are cavernous, and depending upon the options, fully adjustable, heated, cooled, the whole nine yards.

An S class is a softer, smoother ride (and the E is pretty nice and smooth), I’d even go as far as to say more comfortable. It’s got a longer wheelbase, Airmatic suspension, and different seats, all add to the comfort factor. It’s also a more imposing car. They often turn heads when they pull up to restaurants and valets might clamor to get to you so they can park it.

The 5.5 liter V8 turns out 382 horsepower, you can cruise at 145 miles per hour for hours on end… but how often do you drive well over 100 mph for extended periods? Never.

Is any of this really important? Let’s face it, they’re the top of the line Mercedes-Benz model and people buy them for a combination of reasons that cannot even be defined. They are awesome cars. People buy them because they want to, and they can.

What might the drawbacks of an S class be when compared to a new E class? Your concern of maintenance costs once the warranty expires in about a year is a very valid concern. These are extremely complicated machines. Considerably more complicated than a new E class even.

A 2007 S class has more sensors, more cylinders, more wire strung throughout it, more motors controlling things, more adjustments, more, more, more of everything. My dad would refer to these things as more “stuff to break” and he would be right. It’s not to say that they’re bad cars, they’re very well engineered, but they have more ‘stuff’ in them, the more stuff you’ve got, the more chances you have for that stuff to need maintenance.

You mention that the $45,000 price of the S class your friend is recommending at the independent dealer is about $10,000 less than similar cars at area Mercedes-Benz dealerships. This is the dangerous part… the PRICE. It looks inviting, what a great deal, $10,000 less than what the dealers want for the “same” car. When it comes to pre owned, or used Mercedes-Benz, I truly believe you get what you pay for.

Our used car department is our service department’s BEST customer. When we buy an S class at a Mercedes-Benz Financial lease return auction it’s not unusual to put $3000 – $5000 into the car to bring it up to Certified Pre Owned specs, Tires, brakes, fluids, they usually need complete reconditioning to bring them up to acceptable MBCPO standards.

Then we buy the first additional year of extended Certified Pre Owned Mercedes-Benz Warranty and include it in the price of the car… that’s how you end up with a car $5,000 – $10,000 more expensive at a Mercedes-Benz dealer than at an independent that might not do such extensive reconditioning work. You pay more up front at the Mercedes-Benz dealer, but you know that a Mercedes-Benz technician did the work, it was done right, and that Mercedes-Benz stands behind it.

My Recommendation 

Provided the new E class is a large enough car for you and your family and you find the 268 horsepower 3.5 liter V6 engine adequate, I would choose the new car in this particular case, hands down.

In my opinion the V6 has plenty of power, the new E is a beautiful car, and you’ve got full new car warranty coverage for up to 4 years or 50,000 miles, even more if you buy the extended warranty, which I would recommend if you plan to keep the car past the standard factory warranty period. It’s an easy choice.

The only way I would buy a used 2007 (or any other year) S class would be as a Certified Pre Owned car, from a franchised Mercedes-Benz dealer, carrying the official Mercedes-Benz Certified Pre Owned Warranty.

If I was planning to keep the S class beyond the balance of the factory warranty and the additional one-year of Certified Pre Owned Warranty period included in the price of the car I would also buy the two more available years of Mercedes-Benz Certified Pre Owned Warranty the day I bought the car. This way I would have the maximum, SEVEN years (from its original in service date) or up to 100,000 miles worth of Mercedes-Benz warranty.

Paying $10,000 less for a used S class at an independent dealer than at a Mercedes-Benz dealer is tempting, but the out of warranty repair costs could easily add up to the price of a 1999 Toyota Camry very quickly if something went wrong with the car. If you really want an S class I’d suggest going to one of the dealers and try to negotiate a little, see if you can get the car for $50,000 as a Certified Pre Owned car, then, it might be something to consider… anything other than that and I’d run, run right over and get the new E class.