By on February 16, 2009

The Automotive Lease Guide is slashing projected residuals for 2009 GM and Chrysler vehicles, reports Automotive News [sub]. ALG says that their new 36-month projections reflect the brands’ “uncertainty,” heralding the arrival of yet another dire consequence of bankruptcy that the bailout was supposed to prevent. Oh well, what’s a few billion among friends? Now let’s take a look at the nitty-gritty.

For GM, residual projection cuts are focused on the dead brands walking: Saturn, Saab, Hummer and Pontiac. ALG projects that Hummer products will be worth 38.6 percent of their retail value in three years, down a staggering nine percent from their 2008 projection of 47.7 percent. Saturn and Saab residual projections are down about seven percent each to 41.3 percent and a dismal 36.1 percent respectively. Pontiac values are expected to drop nearly five percent to 39.1 percent of the retail value.

At Chrysler, everything is dead brand walking. Well-founded fears that Auburn Hills is weeks away from going Tango Uniform have savaged their projected resale values, say ALG. In 2008, Chrysler-branded vehicles were projected to be worth about 43 percent of their value in three years. 2009 Chryslers are looking at 36.4 percent residual value. Dodge projections dropped from 42.7 percent to 38.7 percent, while Jeep fell from 47.8 percent to 41.3 percent.

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27 Comments on “The Bailout Effect?...”


  • avatar

    Ford and GM I’m not worried about.

    My problem is Chrysler.

    I feel Ford and GM can compete with the ever increasing competition allowed to sell in America but chrysler has nothing to compete with. I think chrysler should be absorbed by GM/Ford.

    I just don’t see chrysler’s niche anymore with the exception that in building “cheap” cars, they managed to make them have large interiors which are appreciated by supersized Americans who’se only other choice might be to buy a more expensive SUV.

  • avatar
    jpcavanaugh

    Wow! Does this mean that next year, I should be able to get a 2005 300C for free?

  • avatar
    autoemployeefornow

    Sure look at all the dead brands that are worthless now: Auburn, Cord, Duesenburg, La Salle, Packard, Pierce-Arrow, Studebaker, etc, etc. Even that crappy 1970 PLYMOUTH Superbird that didn’t sell when new now gets six figures with/without a hemi. Looks like all defunct brands will NEVER be worth anything. Too bad.

  • avatar
    menno

    The local Chrysler/Dodge/Jeep dealer has also got a Saturn store, as well as Buick-Pontiac-GMC. Well, at least he hasn’t put ALL of his eggs into a basket with no bottom… he also has Hyundai at another store in town.

    Anywhooooooo…. since he has a Saturn store, he prices everything in the same manner as Saturn, and discounts all non-Saturn cars to a fixed price up front. Works well for him (and a lot of other dealers too).

    Recently his online price for Dodge Avenger is about $7000 off MSRP.

    Given that I know the four cylinder engines are virtually the same as the Hyundai Sonata (which I like), I was tempted for about 1/10th of a second… then thought “nah!” “That’d be like admiring a nice new gun then promptly shooting myself in both feet…”

  • avatar
    menno

    Well autoemployeefornow, I am unyoung enough that I don’t have 70 years left on planet earth to wait on the value of a well kept 2008 Dodge Charger to beat the depreciation then slow appreciation in value vs. the currency of the day (whatever that’ll be in 70 years).

  • avatar
    CSJohnston

    Well seeing that neither GM or Chrysler has in-house leasing for much of anything anymore, who cares what ALG says?

  • avatar
    no_slushbox

    autoemployeefornow:

    The reason that, a couple of years ago, many of those cars got such big numbers at auctions is that they are so rare.

    They are so rare because at one point they were so worthless that most of them were allowed to disintegrate.

    In the long term a good condition Chrysler 300C will be a classic, in the short term it may be a car without a warranty or readily available parts.

  • avatar
    bjcpdx

    autoemployeefornow:

    I’m glad I won’t be around to see the day when the Dodge Caliber becomes a collector’s item. But it will (provided there are any extant).

  • avatar
    toxicroach

    Not to mention that the only reason the value on old cars goes up is their increasing rarity.

    If every Jeep Patriot ever made got packed in Cosmoline awaiting the day of increased value, it’d never come. At least not in this geological epoch.

  • avatar
    ScottMcG

    That’s cool. I’ll be ready for another Saab convertible in a couple of years when the old one finally dies. I should be able to get a really nice one for $12k. And if you’re looking for a car to buy your kid for college, you’ll be able to pick up an off-lease GM sedan for a song.

    I don’t buy new cars anymore anyway, largely because of the depreciation. But if anybody else wants to take one for the team, feel free…

  • avatar
    crc

    In January, I was quoted a 36% residual on a lease for an ’09 Jeep Patriot. Much different than the 55% I got on my Jeep Cherokee in ’99.

  • avatar
    Conslaw

    Maybe a leasing guru can tell us whether the decrease in residual value gives current lessees an increased ability to negotiate a purchase at the end of the lease.

  • avatar
    menno

    Elderly friends at church leased a Jeep Compass a couple of years ago to replace their Olsmobile (under)Achieva and just the other day, when they turned it in, they found out there were no more leases to be had so bought a Jeep Patriot “because the Compass isn’t made this year.” (Well, technically, the dealer didn’t lie – they aren’t building any more at this time). Or maybe the dealer knew something that Chrysler isn’t sharing with the rest of us – that production will be “down” until the end of 2009 for most if not all vehicles.

    After all, didn’t the dealers already have 6 months of inventory BEFORE they were strong-armed into buying more cars, with yet more cars sitting rusting, unordered, unwashed and unwanted, all over land surrounding once busy Chrysler factories in Canada, Illinois, Michigan, etc?

    Anyone want to buy a brand new old stock 1966 Studebaker Cruiser? (If only… I’d pay “list price” if I could find one…. $2682).

  • avatar
    Patrickj

    I’d be ecstatic if my nearly 3 year old Ford were worth 36% of what I paid for it.

  • avatar
    Robert Schwartz

    Buying these cars is an adventure in snorkeling. Any loan you take without a big down payment will be underwater for at least two and more likely three years. I am guessing that financing for these vehicles will be real scarce.

  • avatar
    Seth L

    Are brutally depreciating Hummers going to further reduce the price on used Jeeps? Or will Hummer’s taint make them undesirable for some time? See also LM002.

  • avatar

    eBay has about 30 2005 Camrys, most of which are hanging fire at ten or eleven grand.

    Considering that the original ask for a Camry LE V6 was about $23.5K and the XLE was $27K, that means that the residual value after 3ish years for these cars is between 36% and 42%, assuming anybody’s buying these cars at these prices.

    But wait! These are retail prices. Wholesale numbers will be $2-3K lower than this.

    With that said, I suspect that if you look at actual residual (percentage of real transaction price) that most things are staying about the same.

  • avatar
    Axel

    bjcpdx :I’m glad I won’t be around to see the day when the Dodge Caliber becomes a collector’s item. But it will (provided there are any extant).

    The odds of a Caliber becoming a collector’s item are about the same as those of an Omni: zilch.

    For a vehicle to be actually collectable, there has to be a group of people around who would want to pay for and own said vehicle.

  • avatar
    beller

    Jack said:

    “eBay has about 30 2005 Camrys, most of which are hanging fire at ten or eleven grand.

    Considering that the original ask for a Camry LE V6 was about $23.5K and the XLE was $27K, that means that the residual value after 3ish years for these cars is between 36% and 42%, assuming anybody’s buying these cars at these prices.

    But wait! These are retail prices. Wholesale numbers will be $2-3K lower than this.

    With that said, I suspect that if you look at actual residual (percentage of real transaction price) that most things are staying about the same.

  • avatar
    dzwax

    Those numbers are probably a little optimistic for the Chrysler and Dodge offerings. I have been driving through the local Dodge dealer and checking prices for a couple of weeks. A 2008 Avenger with a sticker price of 23,000 was $16,800 last week. It has a big sign in the windsheild anouncing a reduced price of $12,989. That’s pushing a %50 residual with 0 miles on it. What is this car going to be worth in 3 years when there are thousands of 2009’s that sell for %45 of retail in 2010?

  • avatar
    CarShark

    @Jack Baruth:

    These are “projected” resale values. If Toyotas are going for less than what was projected in the past, as you claim, then who’s to say the same thing won’t happen to GMs and Chryslers? In other words, is it really a stretch to see Pontiacs going for 30% after three years as opposed to 36%? You saw what happened to the G6 after the fleet sales dried up.

  • avatar
    63CorvairSpyder

    I had a leased 2005 Mercury Mountaineer, loaded. Turned it in in June 2008. The residual was $14,500. After spending some time with the sales manager chatting, his computer spit out the number $10,000, I could have bought the car for. I said no thanks, have a nice day….. And this was 8 months ago, before the shit really hit the fan.

  • avatar
    Seth L

    – Axel:

    Turbo Omni’s have a bit of a cult, and can be boosted fairly well.

    I’d say the Caliber is more on par with the Citation.

  • avatar
    CommanderFish

    Yeah I doubt any Patriots or Calibers are going to be collector items.

    The only recent Mopars that stand out as possible collector items to me are the Magnum SRT-8, Grand Cherokee SRT-8, and the Neon SRT-4.

    Maybe the high end Chargers and 300’s (Daytonas, SRT-8, Walter P. Chrysler), also.

    Or maybe a Durango/Aspen Hybrid :P

  • avatar
    bjcpdx

    axel:

    I picked Dodge Caliber out of my hat. Feel free to substitute any comparable POS. My point is that there will be someone out there someday who will consider it collectible for personal reasons. Maybe their father had one. Maybe they learned to drive in one. Remember, all kinds of ugly stuff from the 70s is already being collected (yuck).

    Duesenberg, Pierce-Arrow, Packard, etc. are collected because they are both fine and rare. Obviously the Caliber is not fine, but if any survive they will be rare.

  • avatar
    don1967

    Lease or buy a North American POS, and you will get SFA as resale value in 2-5 years from now. Keep it clean for 25 years, and you might earn 5-7% per year as a collector’s item… about the same as a shitty mutual fund minus storage costs.

    The only people who should be buying the Big 2.8 right now are those who plan to drive the crap out of them and live in the sticks where there are no mechanics under the age of 50 to keep them running.

  • avatar
    highrpm

    Excellent news for us used-car buyers! There are true bargains out there. Three-year-old Grand Cherokees for $9k. C6 Vettes for $25k.

    Near detroit, you can buy an ’06 Deville for $12k with 40k miles on it. If you’re into a car like that, the price is dirt cheap.

    What kind of 3-year-old Japanese car can you buy for $10-12k? You can barely touch a Civic for that.

    As long as you aren’t the sucker that’s buying one of these cars new…

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