Subcompact Crossovers Are Depreciating Faster Than Any Other Segment
Remember how Beanie Babies were a national phenomenon in the mid-1990s? The country couldn’t seem to get enough of the little darlings and many ended up going for astronomical prices. But, like most stupid trends, their popularity was short lived. It wasn’t long before the once-collectible toys held the same value as a used pair of underwear.
Subcompact crossovers may be suffering a similar fate. With the CUV craze in full tilt, automakers have been capitalizing by providing budget-minded shoppers with small and affordable variants. However, the group currently faces the heaviest depreciation of any automotive segment.
Market analysts at Black Book cited subcompact crossovers as losing 1.18 percent of their original value this week. Full-sized cars took the second heaviest hit at 1.17 percent per week — followed by subcompact and sporting cars at 0.98 and 0.97 percent, respectively. While those differences don’t sound terribly dramatic, keep in mind these vehicles have differing MSRPs. That translates to the baby crossovers shedding $133 of their original value against full-sized cars only losing $116. Meanwhile, those subcompacts riding closer to the ground gave up $51 this week.
It’s not an isolated incident either. Going back to the middle of July in 2016, Black Book had all subcompact crossovers losing 0.79 percent per week. At that time they were only beaten by their luxury equivalent, which depreciated by 1.01 percent. There is plenty of flux from week-to-week but the littlest late-model crossovers are typically poor at maintaining their original value. The same cannot be said for their larger brethren.
“Cars continued to depreciate at a steady rate while most SUV segments did better in the second week of the year [than before],” explained Anil Goyal, executive vice president of the auto valuation firm’s operations. “Generally, activity was reported to be slow in the auto auctions.”
What’s to be gained from this information? Well, if you’re buying new, you might be better off purchasing an sedan (luxury or otherwise) if you want it to maintain its resale value. However, if you’re shopping for the truck or SUV, bigger is usually better when it comes to deprecation.
[Image: Honda]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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Maybe I'll finally be able to get a well equipped newer Encore for cheap as a city car to drive into NYC with.
Wait, is this saying luxury cars are depreciating slower than others?