Looking well ahead, Kelley Blue Book is predicting the top 10 ‘05 vehicles that will best hold their value over the next five years.
Kelley also forecasts which vehicles by category will hold value best, based on current data, market conditions for each vehicle and expectations of the future economy. Not considered: High-performance, low-volume or high-cost vehicles priced at more than $60,000.
The Top 10:
Acura TL
Mercedes Benz CLK 320 Cabriolet
BMW 5 Series
Mini Cooper
Infiniti G35 Coupe
Nissan 350 Z
Lexus GX 470
Porsche Cayenne
Mazda RX-8
Volvo XC90
Best by Category:
Sedan: Honda Civic
Luxury: BMW 5 Series
Coupe: Infiniti G35
Pickup: Toyota Tacoma PreRunner
Convertible: Nissan 350 Z Touring Roadster
SUV: Volvo XC90
Wagon: Volkswagen Jetta Wagon TDI
Minivan: Honda Odyssey
Hatchback: MINI Cooper
Overall, BMW is the brand Kelley says will best hold its value over the next five years.
Some '05 vehicles just missed the top 10 list, but still are expected to retain a high percentage of their value looking five years into the future, according to Kelley, a tracker of used-car values.
They include the Chevrolet Corvette, the Mazda 3 Hatchback and the Volkswagen GTI.
Some vehicles really missed the list. These generally have high production rates, are in low demand, often are in rental fleets, have a low perceived value, high maintenance costs, and may be of a design which ages badly.
They include the Chrysler Sebring, Jaguar X-Types, Mitsubishi Diamante, Mercury Sable, Suzuki Vitara and the Pontiac Aztek.
Of 10 vehicles likely to lose much of their values over the next five years, the survey found six were domestics: Chevrolet Blazer 2-door, Ford Ranger long bed, Mercury Sable, Buick Century, the Aztek and Sebring sedan. These vehicles will hold only 17% to 21% of their MSRP prices.
But that aspect of the study has its critics, such as Jeff Rachor, president of megadealer Sonic Automotive.
“The study did not reflect two factors that support domestic units,” he says. “These are improved quality of domestic vehicles now rolling off the assembly lines, and the growth in sales of certified pre-owned units.”
George Pipas, Ford's top sales analyst, says perceptions of inferior quality “can't be changed overnight,” as relates to image.
“You can make quality improvements, as Ford and the other domestics are doing. That doesn't mean perceptions are going to change. There are usually lags,” he says.
Certified used-car sales, which have grown steadily to a record rate of about 1.5 million units for this year, are one way of addressing the “gap” problem and shoring up residual values.
Domestic and foreign producers alike have stepped up their certified pre-owned programs, which increase values of off-lease and trade-in vehicles and drive owners back to franchised dealers for inspected units with factory warranties.
Another measure being taken to reduce the “back-end” deflation of new-vehicle values is the Big Three's reduction in rental fleet sales, especially the phase-out of the Ford Taurus sedan which had become a 60%-of-production fleet brand.
One issue in dispute is whether high incentives on new units automatically portend cheaper used cars.
Kelley Blue Book Executive Editor Charlie Vogelheim says, “New-vehicle prices actually have stabilized and gone down in relation to inflation. But used-car values have continued to reflect consumer perceptions that foreign brands are better buys.”
Sid DeBoer, chairman and CEO of the Lithia Motors dealership chain, declares that quality on '04 and '05 domestic vehicles is as good as the imports and, in some cases, even better.
“The Kelley survey refers to vehicles that will go off lease or be traded in by 2007, which will be drastically improved from the '00s and '01s we're taking in now,” he says.
