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    Which cars hold their value?

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    Our exclusive charts tell you which vehicles will make you happy come resale time—and which ones won't.

    If you count among your possessions a 1938 Bugatti Type 57 SC Atlantic Coupe, you can expect your car to appreciate in value. Otherwise, brace yourself for the inevitable slide, starting from the moment you drive your new car off the dealer's lot.

    Of course, some cars hold their value better than others—something you need to know when you're in the market for a new, used, or leased car.

    We talked to the experts to find out what things affect a car's anticipated future price (or residual value, in car talk). Then we asked them to provide us with lists of cars that do well at resale time—and those that don't.

    Quality is always in style

    First and foremost is the perception of quality. Brands like BMW, Mercedes-Benz, Lexus, Honda, and Toyota have reputations for producing high-quality, reliable vehicles—and that helps to keep their residual values high. But such reputations aren't conferred by the public overnight, says Jesse Toprak, director of pricing and market analysis at Edmunds.com, the online car buyers guide. They have to be earned over time.

    One brand that's taken that message to heart, says Toprak, is Hyundai. "Eight or nine years ago, most banks wouldn't even finance Hyundais because of their low resale values. Today, perception of their quality has improved considerably, and that has helped stabilize their value."

    Even hot new cars won't earn the public's respect for long if they don't have something going for them besides marketing hype. "Normally, manufacturers can pump up a car's perceived quality early on," says Art Spinella, an analyst with CNW Marketing Research, which tracks industry trends. "But after a couple of years, word of mouth trumps hype, and reality sets in."

    That's what happened to Volkswagens, says Spinella. (The Jetta GL TDI and the GTI, which have relatively high residual values, are two exceptions.) "Until three or four years ago, the perceived quality of Volkswagens was significantly higher than their actual quality," he says. "But then word spread that some of the cars had troubles, and sales and used-car values dropped."

    The scenario can also work in reverse. "The quality of General Motors products today is considerably better than what people think," says Spinella. But that gap between perception and reality is gradually narrowing, and, as it does, projections of what new GM cars will be worth three years from now are starting to firm up.

    White SUVs are in; green minivans are out

    Other things—besides brand identity and perception of quality—also help to determine your car's residual value. One is its "vehicle segment"—whether coupe, hatchback, convertible, sedan, wagon, SUV, van, minivan, or truck.

    Right now, soccer-mom minivans are doing less well in the market than SUVs, says Charles Vogelheim, executive editor of Kelley Blue Book ( www.kbb.com ), which tracks new and used car prices. And among SUVs, demand for full-size models like the Chevy Tahoe and the Ford Expedition has slowed, while demand for luxury SUVs from Lexus and BMW is growing, with predictable consequences. "If you want the Lexus SUV but can't afford a new one, you'll buy a used one, and that demand keeps residual values for those vehicles fairly high," Vogelheim says.

    The right color car also makes a difference. Right now, say experts, white and silver are the most universally acceptable colors. Green's big moment has largely passed—and so has red's, except if you happen to be driving a Porsche, Ferrari, or other variety of trooper eye-candy. Black does well on certain cars (a Mercedes SL 55 AMG, for example) and in certain markets—but not in the Sunbelt, where black's heat-absorbing properties work against it.

    As a general rule, say experts, appointments and optional equipment should be vehicle-appropriate. When they're not, residual value suffers, even among cars that typically retain their value over time. "If you have a stripped-down version of a luxury car, that's going to hurt you," says Jesse Toprak of Edmunds.com. "On the other hand, if you opt for expensive leather seats and an upgraded sound system for your economy car, you're probably not going to get your money back."

    Nor are you likely to do well if you overpersonalize your car—adding, for instance, aero packages, flashy wheels, and exotic interior wood veneers. All these ego-enhancing extras may make your heart race faster—but they could diminish your car's appeal in the wider marketplace.

    Other factors that undermine a particular car's residual value include:

    • High mileage.

    • Poor fuel economy at a time of rising gas prices (can you spell Hummer?).

    • Poor condition, which especially affects newer and more luxurious cars.

    • End of product cycle, which can make your 2004 Mustang seem ancient compared to the redesigned 2005 model.

    • Safety recalls.

    • Incomplete service records.

    • Seasonality (if you live in Boston, January is no time to sell your convertible).

    Rebates and other purchasing incentives can also hurt your car's residual value, since they sometimes tarnish brand reputation in the marketplace. ("If company X's cars are so good, why must they be discounted to sell?" some people ask.)

    "The more dealers rely on incentives to sell their new cars, the worse the residual values on their used ones," says Art Spinella of CNW Marketing Research. For this reason, some incentive-prone companies (Saab, for example) have been trying to narrow the gap between actual sales price and manufacturer's suggested retail price.

    Depreciation may be the biggest cost of owning most cars, but it isn't the only one. The cost of repairs, insurance, fuel, and taxes and fees also plays a significant role, says Edmunds' Jesse Toprak. To determine the full cost of owning a particular car, go to Edmunds.com and click on "New Cars," then on "True Cost to Own."

    The following charts—which were developed especially for Medical Economics by Kelley Blue Book—tell you which cars hold their values best, in a variety of price ranges and vehicle segments, and which lose value the fastest.

    Happy shopping.

     


    Kings of the road: Category leaders

     
    M.S.R.P.
    Percent of market value after 3 years
    Projected value of 2004 car in 2007
    Luxury: Mercedes-Benz SL55 AMG
    $121,450
    77%
    $93,517
    Sedan: Subaru Impreza WRX Sti
    31,545
    75
    23,659
    Hatchback: MINI Cooper
    18,299
    74
    13,541
    Sporty: Nissan 350Z Roadster
    35,360
    67
    23,691
    Convertible: Mercedes-Benz CLK320 Cabriolet
    52,120
    67
    34,920
    Coupe: Infiniti G35 Sport Coupe
    33,095
    65
    21,512
    SUV: BMW X5 4.4i SAV
    52,195
    63
    32,883
    Pick-up: Toyota Tacoma PreRunner 4D
    19,030
    60
    11,418
    Wagon: VW Jetta GLS TDI Wagon
    22,055
    60
    13,233
    Van/minivan: Honda Odyssey LX
    24,980
    59
    14,738
    Source for all tables: Kelley Blue Book

     


    Cars that hold their value: The top 20

    M.S.R.P. Percent of market value retained after 3 years Projected value of 2004 car in 2007
    MINI Cooper S
    $19,999
    80%
    $15,999
    Mercedes SL 55 AMG
    121,450
    77
    93,517
    Subaru Impreza WRX STi
    31,545
    75
    23,659
    MINI Cooper
    18,299
    74
    13,541
    Mitsubishi Lancer Evolution
    N.A.
    73
    N.A.
    VW New Beetle GLS Convertible 2D
    23,215
    71
    16,483
    Chevrolet SSR
    41,995
    69
    28,977
    Porsche 911 Turbo Cabriolet
    128,965
    68
    87,696
    Nissan 350Z Roadster
    35,360
    67
    23,691
    Mercedes-Benz CLK320 Cabriolet
    52,120
    67
    34,920
    Mercedes-Benz S55 AMG Sedan
    111,870
    66
    73,834
    Dodge Ram SRT-10
    45,795
    66
    30,225
    VW New Beetle GL Convertible 2D
    21,475
    66
    14,174
    BMW M3 Convertible
    56,595
    66
    36,787
    Mazda RX-8
    25,700
    65
    16,705
    Infiniti G35 Sport Coupe
    33,095
    65
    21,512
    BMW X5 3.0i SAV
    40,995
    64
    26,237
    VW GTI Turbo Hatchback
    19,825
    64
    12,688
    Porsche 911 Carrera Cabriolet
    72,435
    64
    46,358
    BMW X5 4.4i SAV
    52,195
    63
    32,883

       


    Cars that lose their value: The 20 worst

    M.S.R.P. Percent of market value retained after 3 years Projected value of 2004 car in 2007
    Isuzu Axiom XS (2WD)
    $31,149
    27%
    $8,410
    Pontiac Aztek
    21,595
    28
    6,047
    Isuzu Rodeo
    23,479
    28
    6,574
    Suzuki Grand Vitara
    16,799
    29
    4,872
    GMC Safari Minivan (rear-wheel drive)
    22,965
    29
    6,660
    Chevrolet Astro Cargo Minivan
    22,965
    29
    6,660
    Mitsubishi Diamante VR-X Sedan
    27,414
    29
    7,950
    Dodge Neon SE
    14,745
    29
    4,276
    Suzuki XL-7 EX (2D)
    25,399
    30
    7,620
    Chevrolet Blazer 2D
    25,395
    30
    7,619
    Mitsubishi Diamante ES Sedan
    25,594
    31
    7,934
    Chevrolet Cavalier Coupe
    15,810
    31
    4,901
    Oldsmobile Alero GX Coupe
    18,825
    31
    5,836
    Chevrolet Venture Minivan 4D
    21,995
    31
    6,818
    Kia Rio
    11,030
    31
    3,419
    Ford Ranger XL Long Bed (regular cab)
    15,135
    31
    4,692
    Ford Taurus LX Sedan
    20,720
    32
    6,630
    Hyundai Accent Hatchback
    11,289
    32
    3,612
    Kia Rio Cinco Hatchback
    12,655
    32
    4,050
    Mercury Sable GS Sedan
    21,595
    32
    6,910

       


    Cars under $50,000 that hold their value best

    M.S.R.P. Percent of market value retained after 3 years Projected value of 2004 car in 2007
    MINI Cooper S
    $19,999
    80%
    $15,999
    MINI Cooper
    18,299
    74
    13,541
    VW New Beetle GLS Convertible
    23,215
    71
    16,483
    VW New Beetle GLS Turbo Convertible
    23,395
    70
    17,777
    Chevrolet SSR
    41,995
    69
    28,977
    Nissan 350Z Roadster
    35,360
    67
    23,691
    Dodge Ram SRT-10
    45,795
    66
    30,225
    VW New Beetle GL Convertible
    21,475
    66
    14,174
    Infiniti G35 Coupe
    33,095
    65
    21,512
    BMW X5 3.0i SAV
    40,995
    64
    26,237
    Volvo XC90 T6 AWD
    41,650
    64
    26,656
    VW GTI Turbo Hatchback
    19,825
    64
    12,688
    Acura MDX Touring
    39,545
    62
    24,518
    Infiniti M45
    44,840
    61
    27,352
    Audi A4 Cabriolet (3.0)
    42,490
    61
    25,919
    Ford Harley Davidson Super Duty F-250
    39,890
    60
    23,934
    VW Passat GLX Sedan
    31,430
    60
    18,858
    BMW 3Series
    39,0001
    60
    23,400
    Toyota Tacoma PreRunner 4D
    19,030
    60
    11,418
    Audi allroad quattro 4.2
    47,640
    59
    28,108
    Average value1

     


    Cars under $30,000 that hold their value best

    M.S.R.P. Percent of market value retained after 3 years Projected value of 2004 car in 2007
    MINI Cooper S
    $19,999
    80%
    $15,999
    MINI Cooper
    18,299
    74
    13,541
    Mitsubishi Lancer Evolution
    N.A.
    73
    N.A.
    VW New Beetle GLS Convertible
    23,215
    71
    16,483
    VW New Beetle GLS Turbo Convertible
    25,395
    70
    17,777
    VW New Beetle GL Convertible
    21,475
    66
    14,174
    Mazda RX-8
    25,700
    65
    16,705
    VW GTI Turbo Hatchback
    19,825
    64
    12,688
    Acura RSX Type-S
    23,865
    61
    14,558
    Nissan 350Z Coupe
    26,910
    61
    16,415
    VW Jetta GLS TDI Wagon
    20,245
    60
    12,147
    Toyota Tacoma PreRunner 4D
    19,030
    60
    11,418
    Honda Odyssey LX
    24,980
    59
    14,738
    Acura RSX sport coupe
    21,470
    59
    12,667
    VW Jetta GL Sedan
    18,005
    58
    10,443
    Honda Accord LX Coupe
    20,690
    58
    12,000
    Honda Civic EX Sedan
    17,750
    57
    10,118
    Honda Accord LX Sedan
    20,590
    57
    11,736
    VW New Beetle Turbo S
    24,425
    57
    13,922
    VW Jetta GL Wagon
    19,005
    57
    10,833

     

    Leasing? Pay attention to residual value

    When you lease, the higher your car's residual value, the proportionately lower your monthly payments. That's because the biggest bite of your total lease goes to paying for depreciation—the difference between what your car is worth today (the capitalized cost, in leasing lingo) and what it's expected to be worth at the end of the lease (the residual value). So if you lease a car that retains its value, a smaller percentage of your monthly payments will be used to pay for depreciation (See "A car-leasing primer," Oct. 10, 2003).

    But what if you plan to buy your car after its lease expires? In that case, a car with a high residual value may not be to your advantage, especially if it's a luxury car with a significant sticker price. "Although you'll pay relatively less during the term of the lease, you'll have to pay more in the end to buy the car," says Jesse Toprak of Edmunds.com. That may not be reason enough to avoid leasing cars with high residual values, but if you do plan to buy at lease end, remember this simple rule: What you save along the way, you'll have to make up at the end.

     



    Wayne Guglielmo. Which cars hold their value? Medical Economics Jun. 18, 2004;81:26.
    Wayne J. Guglielmo
    For 12 years, Wayne has written on health policy and related issues for Medical Economics. He also writes the magazine's ...