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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.

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