Subcompact Crossovers Are Depreciating Faster Than Any Other Segment

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

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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3 of 102 comments
  • Tekdemon Tekdemon on Jan 18, 2018

    Maybe I'll finally be able to get a well equipped newer Encore for cheap as a city car to drive into NYC with.

    • NormSV650 NormSV650 on Jan 19, 2018

      Used Encore's with 100,000 are $8,000, new are $15,000-17,000. Much better to get a new one on a 10,000 mile lease.

  • Tinn-Can Tinn-Can on Jan 18, 2018

    Wait, is this saying luxury cars are depreciating slower than others?

  • 1995 SC On the plus side, I found a sedan I want to buy
  • Teddyc73 As I asked earlier under another article, when did "segment" or "class" become "space"? Does using that term make one feel more sophisticated? If GM's products in other segments...I mean "space" is more profitable then sedans then why shouldn't they discontinue it.
  • Robert Absolutely!!! I hate SUV's , I like the better gas milage and better ride and better handling!! Can't take a SUV 55mph into a highway exit ramp! I can in my Malibu and there's more than enough room for 5 and trunk is plenty big enough for me!
  • Teddyc73 Since when did automakers or car companies become "OEM". Probably about the same time "segment" or "class" became "space". I wish there were more sedans. I would like an American sedan. However, as others have stated, if they don't sell in large enough quantities to be profitable the automakers...I mean, "OEMs" aren't going to build them. It's simple business.
  • Varezhka I have still yet to see a Malibu on the road that didn't have a rental sticker. So yeah, GM probably lost money on every one they sold but kept it to boost their CAFE numbers.I'm personally happy that I no longer have to dread being "upgraded" to a Maxima or a Malibu anymore. And thankfully Altima is also on its way out.