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 guesses estimates of what different models might 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
Hm…cars without a massive amount of cash on the hood have higher residuals? Does this mean that devaluing your product before someone walks through the door is a bad thing? Somebody tell Detroit this breaking news!
Funny how VW’s are near last in reliability/quality but maintain their value so much better.
I question this list.
In Canada anyways, the Corvette doesn’t hold it’s value very well, at least not well enough to be at the top of the list. I’ve seen 3 year old cars offered for 50% of the original value. Also, how can they have a residual rating for 5 years for a car that just hit the showrooms???
Sure, Infiniti will have a residual in their leases, but it won’t be what the car is actually worth, it tends to be lower than real life.
On this side the border, the Mini Cooper S is residual King.
The S is worth between 80-85% after 4 years. The non-fast flavour is around 60-70% for the same time period. Of course Mini doesn’t put these residuals in their lease programs, otherwise people would be flocking to get $40,000 cars for $200/month!
I too am baffled at VW being on this list.
Mr jaje,
I’m not a big fan of VW, but I truly believe that the quality of VW cars are very good. I was in a VW Golf, the other day and the interior does have an “above average” quality feel to it.
As for reliability, well, I don’t dispute that!
Mind you 5 of the cars are Japanese, well, 4 and a half…..(see Renault-Nissan alliance)
Text from the ad for the car in the article picture:
C6 Corvette, minor body damage, save thousands off new, this is car is on fire!
Not quite on topic, but has anyone noticed that GM’s stock price has dropped $13.00 a share in the past six weeks , and Ford is spiraling down again. So much for the bounce from the new labor contracts.
These are different residual leaders as per ALG which tracks residual values for most manufacturers. https://www.alg.com/default.aspx?sid=29
It should be noted that residual value guidelines are exactly that “guidelines” and are not the actual values of the vehicles 3 years or later.
I too am baffled at VW being on this list.
I’m baffled at Honda not being on this list.
Quasi,
You hit the nail, buddy. Also, where is the Wrangler, Accord, or Camry?
I think these types of analyses are a great example of penny wise, pound foolish. Instead of taking guesses as to which vehicle will retain a few percentage points more of its intial purchase price years from now, why wouldn’t you go and buy a used vehicle? No new vehicle makes sense, not a Porsche, not a Corvette, none of them. There was this half-brained moron on The Suze Orman show saying that her husband wants to buy a new Porsche because “these cars don’t depreciate like that.” Hello?! Anybody home? Have you even looked at used car listings? Porsche 911’s depreciate dramatically in the first few years; the only difference is that older Porsches are still worth something, whereas a 10-year-old Chevy is worth less than the U.S. dollar. But it works for me, because that imbecile will pay for the Porsche, and I will drive it.
Were any trucks/SUVs included in the CNN survey? As Landcrusher mentioned, Jeep Wranglers have great resale values here in the NE (50+% over 5 years). All full-size pick-ups & big GM SUVs, Suburbans & Tahoes alike, also have traditionally held their values (whether they will continue to with $3+/gallon gas remains to be seen).
I was also surprised that Accords & Camrys didn’t show up. They hold so much of their value I don’t even consider them viable used car options (the discount versus new just doesn’t make sense to me).
How was the calculation done – was it MSRP to estimated retail value, or compared to estimated trade-in value?
I’m guessing it was MSRP to estimated retail value. Figure at least a couple of thousand less for trade-in value.
So, if a Civic retails for $20,000 new, and retails at five years old for $10,400, and you adjust for trade vs. retail, you are still losing well over $2,000 a year in depreciation.
hltguy,
To continue off topic, I think the GM stock fall is just a correction of the giant bump it got after the contact was completed…
Also, over the last nine months, Toyotas stock is down about $37. Honda down about $6 over a similar time period, and Nissan $4. I think an analysis of any automotive stock would need to take into account the relatively weak market for this industry.
the best part about wrangler depreciation is that (at least here where it snows and we’ve got mountains and such) unless you really, really break it, it’ll never drop below $5000. Even 30-year-old CJs are $3000.
Buy a used wrangler for $10K, and you’ll never lose more than $5K. pretty awesome.
Jeff in Canada:
The reason the Vette probably depreciates that much in Canada is because GM jacked up the price about 30-40% over the price of an equivalent Vette in the US.
Yes, even with the horrible dealer network and questionable electrical systems on Volkswagens, they do hold their value – especially diesels. I paid about $17000 for my Jetta TDI in 2003. According to kbb, I could still get about $12400 in a private sale, whereas a gas model with the same mileage is worth $8500.
@liechter:
“There was this half-brained moron on The Suze Orman show saying that her husband wants to buy a new Porsche because “these cars don’t depreciate like that.” Hello?! Anybody home?”
Exactly. Just one more thing: why is it that people only calculate depreciation in percentages, instead of in $/year? Even if a Porsche only loses 10% per year — that will still often be 10 grand per annum.
One of the best available new car cost of ownership tools I’ve found is the edmunds.com “True Cost to Own” data. It is expressed in dollars, not percent, and gives a breakdown of projected depreciation, insurance, maintenance, etc. costs by make, model and equipment package. They take into account the typical actual transaction price for the purchase, not MSRP.
No methodology is perfect, but Edmunds’ is the best and most transparent I’ve seen.
The list goes to show that most people don’t care how crappy their car actually is, as long as it’s pretty. Volkswagens look and feel like a high quality product, and so people buy them and think that they are valuable when, in reality, they will probably fall apart after a few years. Step into a 5 year old Malibu and tell me how much quality you sense.
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