How to Lose Your Shirt on a New Car… Slower
November 16th, 2007 2:23 PM Share
Hot on the heels of Steven Lang's editorial explaining the financial pitfalls of car depreciation, moments away from Justin Berkowitz review of the Infiniti G37, we're delighted to present CNNMoney's "Top 10 Best Resale Value Cars." The automotive analysts looked at Kelly Blue Book's [s]guesses[/s] estimates of what different models [s]might[/s] will be worth in five years. They then rated the cars based on their relative retained value. Not surprisingly, the list is import intensive. Surprisingly, three of the winners are Volkswagens. Here's the complete list in alphabetical order, with each model's predicted five-year retained value:
Chevy Corvette – 50 percent
Honda Civic Sedan – 52 percent
Infiniti G37 – 52 percent
MINI Cooper – 52 percent
Scion tC – 52 percent
Scion xB – 52 percent
Toyota Corolla – 52 percent
Volkswagen Eos – 52 percent
Volkswagen Jetta – 51 percent
Volkswagen Rabbit – 51 percent
Published November 16th, 2007 2:23 PM
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Residual Value is more a matter of perception than demand, quality, reliability, etc. VW owners tend to be a rather faithful lot, even though they know intuitively how poorly built and unreliable many of there cars have been (not to mention how costly out of warranty repairs can be). VW is spilling blood in Europe, where the Japanese are spanking them in all of the segments traditionally owned by VW. The Mazda3 is huge in Europe, for example, as many would-be and former Jetta owners choose a better car for less money. Two cars on this list that I really dont get are the Corolla and Civic. Yes they run forever, but there are also hordes of them on the used market (many with excess of 100K miles). Unless you move up to the sport models, they are also relatively non-descript and passionless. If buying a new car was strictly a matter of economics and utility, then you certainly can't go wrong with these cars. Stay away from VW though; this company is the sick dog of Europe, from everything I have read.
i'm sure there are some accountants who choose their cars based on their residual value at some arbitrary point in time. but for many, certainly for most of us, we choose the car we want. and the residuals are mostly BS anyway, the condition of the car is a far more important determinant of its value. new vs. used is another discussion that was addressed in a prior editorial. for me, i'm willing to take the hit and buy new. hi perf cars can be driven hard, and even though that cream puff may only have 20k miles, they could have been very hard miles, and i don't care who does the inspection, some of that wear/tear on internal engine parts is not going to be detected. i buy them new, enjoy the hell out of them, keep them in excellent condition, and sell them when i'm bored. i sure as hell don't choose a car because it has a 52% residual compared to the one i like with a 47% residual.
Two cars on this list that I really dont get are the Corolla and Civic. Yes they run forever, but there are also hordes of them on the used market (many with excess of 100K miles). Unless you move up to the sport models, they are also relatively non-descript and passionless. Carnut, a lot of people like my best friend, want a reliable car over just about everything. These cars may not have a lot of soul, but they get the pt to pt job done at a low cost per mile. My friend who does auctions says the Corollas are in very high demand.
I have been actively researching used car/truck prices in BC,Canada for about 4 months now. After comparing Black book pricing, kelly blue book, sugested retail pricing and all other guides I can muster. I have come to a conclusion, I believe that car prices in BC, especialy the Interior of BC are at least $7000.00 over priced. I am being nice with this figure as it seems they are closer to $10,000.00 over priced in some cases. How is anyone expected to even start making a deal on a vehilce when they are so over piced? I am not even comfortable making an offer as it would have to be at least $10,000.00 below any of the asking prices. I am serious about purchasing a newer used truck but won't for at least another year or two as I believe these prices have to come down. They are not sustainable. It is no wonder so many car dealers have so many unsold cars and manufacurers are having financial dificulty. Dealers no longer seem satisfied to sell cars at market value or subscribe to the belief of charging what the market will bear, they seem to only interested in gouging the gerneral public for what ever profits they can muster. Earl