The Truth About Cars » resale value The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sat, 12 Apr 2014 00:28:39 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » resale value Piston Slap: Your Body is A Temple? Mon, 07 Jan 2013 12:18:57 +0000

TTAC contributor David Holzman writes:


My brother Tom’s Prius has been suffering neglect: a scraped door here, a tear in the bumper there, and my heavens, enough dirt to coat all the government buildings in the Washington DC metro area, where Tom lives and works, and pretty soon a two year old Prius is looking like a common beater. He has no plans to fix all this ugliness, but if there’s a logical, cost-benefit case to be made, he will definitely be swayed, as will his wife.

Will this cosmetic disrepair affect this fine car’s longevity? Is there any other cost-benefit equation at work that might way on the side of some bodywork? Not to mention a trip to the car wash every now and then? Please give me your thoughts, and then let the multitudes on TTAC provide theirs!

All the best, –David

Sajeev answers:

Cosmetic imperfections are important when you sell a car…or look for a soul mate. If you are doing neither, looks aren’t important to many folks. And that’s cool. I wouldn’t be heartbroken if someone gave my 2011 Ranger a good smack in the front, so I can replace the quasi-tough guy front fascia with that of a 2000-ish Mercury Mountaineer. Then I’d have a Mercury Ranger, or Manger.

Well then! Back on topic: if you don’t care, and don’t care about resale/public perception, a dented door is no biggie. Neither is a plastic bumper in disrepair. Your brother’s current problems are too minor to really worry about. At least for now.

Yes, the door will get worse, rust and eventually get rust holes in multiple places in the door. But the rot stays inside the door and thanks to the beauty of online junkyard databases, it’s no biggie. A new (used) door is in order, 10+ years from now, and all the labor involved in switching window parts, etc. And since white is an easy color to find and easy to match, getting a replacement that needs zero body/paint work is very likely.

If the damage was in another place (quarter panels, floorboards, etc), my tune shall change. But, when you consider the opportunity cost of fixing up a Toyota Prius instead of tackling a home improvement project, college education, hot stock tip, etc instead of the dent repair…well, I’m not gonna judge your brother for caring about other things than his ride.

It’s a Prius, bought (presumably) with his money. Cosmetic issues are just that: cosmetic!

Bonus! A Piston Slap Nugget of Wisdom:

To some extent, pouring money into a heavily depreciating asset is kinda stupid. If he’s neglecting an antique (loosely defined) vehicle, oh my damn son, he’d deserve a right thrashing from you. But it’s hard to justify the drama for not adoring a late model Prius.

(photo courtesy: David Holzman) DSC_0004 Well there is that. Zemanta Related Posts Thumbnail

Send your queries to Spare no details and ask for a speedy resolution if you’re in a hurry.

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Blue Book: Toyota And Lexus Hold Their Value Best, But The Winner Is The Wrangler Sat, 19 Nov 2011 13:57:53 +0000

If you are one of those who are itching to buy a new car after years of economy-induced withdrawal, one of the many questions that may run through your mind is the exit strategy from that shiny new car. In other words: How well will the car hold its value? If you want the executive summary: Buy just about any Toyota, Lexus, or the 2012 Jeep Wrangler.

If you need more detail, hit the jump.

Residual value is an important data point in the business. Amongst many other things, the residual value influences your lease rate, and your trade-in, just in case you don’t want to hold on to that car for 10 years, which happens to be the average age of a car on U.S. roads.

To help you with this tough decision, Kelley Blue Book  published its 2012 Residual Analysis Report and handed out its Kelley Blue Book’s Best Resale Value Awards. The awards went to Toyota and Lexus. Says Kelley:

“The brand in which the entire lineup of 2012 model-year vehicles is expected to retain the greatest amount of its original value after five years is Toyota. The luxury brand with the same claim is Toyota’s more refined sibling, Lexus.  Both brands regain the titles they claimed from Kelley Blue Book back in 2010.”

“Despite Toyota’s success in the 2012 residual rankings, the company lost market share in the U.S. due to its supply shortage following the earthquake and tsunami in March 2011.  The challenge for Toyota next year will be to regain this share without depressing its residual values,” said Eric Ibara, director of residual consulting, Kelley Blue Book.  ”A number of actions that could quickly increase sales and market share also could jeopardize its residual value crown, including over incentivizing and increasing daily rental volume. Clearly, Toyota’s actions through the next year will be pivotal in shaping its future direction.”

This may all be fine and good, but which car holds its value the best? Kelley came up with this top ten list. It shows the predicted resale value as a percentage of the purchase price after 36 and 60 months.

Kelley Blue Book Value Leaders 2012

Rank Model 36 months 60 months
1 2012 Jeep Wrangler 68.0% 55.0%
2 2012 Toyota FJ Cruiser 67.0% 50.0%
3 2012 Toyota Tacoma 64.0% 49.0%
4 2012 Hyundai Tucson 64.3% 45.3%
5 2012 Audi Q7 63.3% 44.3%
6 2012 Infiniti FX 58.0% 44.0%
7 2012 Honda CR-V 60.3% 43.5%
8 2012 Lexus RX 64.0% 43.0%
9 2012 Nissan Frontier 56.2% 42.8%
10 2012 Chevrolet Camaro 57.0% 42.2%

This list could save you a lot of green, but greenies could possibly congregate for a Kelley Blue Book burning: 9 out of 10 on the list are trucks (or trucklets). The only non-truck on the list is the archetypical American muscle car, in place 10. Also, the list is mildly un-American.

(I of course am morosely interested in which cars are at the very bottom of the list.  Steve Lang, did you get your copy?)


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Not Again! Your SUV Just Dropped In Value Tue, 28 Dec 2010 11:08:32 +0000

It’s a rough world out there: First new cars and especially SUVs were pretty much unsalable. A few months ago, the recession drove used car prices sky-high. Then truck sales were back with a vengeance. Now that you finally have a new shiny SUV in the driveway (yeah!) you wake up and it has lost a huge chunk of its value, overnight. Says USA Today today: “The run-up in gas prices past $3 a gallon has been running down the value of used SUVs, causing prices to plummet below levels listed in well-known buying guides.”

Dealers find themselves drowning in SUVs again. “There are far more truck-based SUVs being traded in than customers to buy them,” says Mike Jackson, CEO of AutoNation.

Prices are falling so fast that the price guides can’t keep up: The average used SUV was selling for nearly 20 percent below the price listed last month in used car pricing publications such as Kelley Blue Book, CNW Marketing reports.

And there are much more cars that are not even on the market. According to USA Today, a lot of people “may be hanging on to their SUVs even after they buy new, more fuel-efficient vehicles, intending to sell them later when gas prices fall.

“A lot of folks are just abstaining from trading,” says Tom Kontos, executive vice president of Adesa Analytical Services. And they should. As long as the live in the Northeast, and as long as the roads aren’t cleared, they should be glad that they haven’t sold that SUV

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Ford’s Resale Values Up, Up, And Away Wed, 14 Apr 2010 11:13:38 +0000

TTAC readers must be a truly un-American bunch. Americans love a deal, or so the saying goes. TTAC readers hate deals, or so it seems. TTAC readers are up in arms whenever it rains generous discounts to prop up flagging car sales. “The resale value will suffer if they do that!” is the echo from our dear readers. If they would only drive Fords, they would change their minds.

“The resale value of newer Ford Motor Company vehicles rose 23 percent in the past year alone, the result of stronger demand for Ford’s new vehicle lineup and improved quality and durability ratings,” trumpets a press release of FoMoCo. As far as incentives go, someone has to help me out with full 2009 numbers. But if Ed Niedermeyer’s report on the first three quarters of 2009 is a guide, Ford wasn’t stingy when it came to incentives. As of October 1 2009,  Chrysler had spent an average of  $4,584, GM $3,796, and Ford coming in #3 position with $3,451 on the hood. All well above the industry average, which stood at $2,835 when the sample was taken.

So why the meteoric rise in Ford’s resale value?

On closer inspection, Ford’s increase is respectable, but not mind-boggling.Average resale values increased by 19 percent in 2009, according to National Automobile Dealers Association auction data. Ford is 4 percent ahead of the average.

Why? Ford says, it’s because their cars have improved in quality. According to their own data, “warranty repair rates on Ford vehicles have declined by an average of more than 40 percent globally in the past three years.” That, my friends, is huge. Warranty costs are the best metric for quality. Warranty costs can make an obscene dent into the bottom line of a car manufacturer, to the tune of figures which a signed Non Disclosure Agreement forbids me to release. All I can tell you is that if we would have reduced warranty costs by 40 percent, it would have been champagne and bonuses all around.

Ford says they have reduced their warranty repair costs by $1 billion in the past three years, and they hope to better that number as their new generation of vehicles hits the roads. If a 40 percent decrease only saved a billion worldwide, then Ford’s warranty costs already are low.

Resale values make the customer happy and increase sales through higher trade-ins. Savings in warranty costs go straight to the bottom line. Both are major drivers of customer satisfaction.

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