Wednesday, 28 June 2017

US ALG Residual Value Awards 2014

The residual value of a car is very important. It represents how much someone is prepared to pay for a second hand vehicle. The closer the price gets to its new price equals a higher residual value. If people don't want the car second hand, they sit in the lot and the price falls. Eventually someone feels the lower price reflects its worth and buys it. That then is reflected in the trade in price you will get. So for the new car buyer, higher used prices means a better trade in price.
Buying a pre-loved car is not the same as purchasing new. New buyers get full warranty cover, choice of features and the new car ownership experience. The next owner picks from what has been discarded, so chooses from what is available from that. So what brands and models did US used car buyers want?

Regular brand winner: The brand with the highest residual value for mainstream makes was Toyota. I pick it's bullet proof reliability record and feeling of assurance that brings would be the main reason. Of the 26 categories, Toyota win six of them. The models were the Prius V, Highlander, 4Runner, Tacoma, Tundra and Land Cruiser. SUVs and Trucks were the reason for the win.

The Toyota Tundra is as American as apple pie. 

Premium marque winner: The top premium brand was Land Rover. The vehicles are very desirable to own and people want them. LR is struggling to make enough of them, which always helps the used value. Oversupply flooding the market is a sure way to deflate what a used car can fetch. LR got one model in the 26, the Range Rover Sport. All the other vehicles must hold their price well also.

A very desirable vehicle that doesn't mind the rough stuff

Other notable successes: Honda and Subaru got three category winners each, while MINI, Porsche and Lexus got two a piece. A brand with limited models like MINI did extremely well.

I wish we had access in New Zealand to residual used prices and I have asked around, but to no avail. Depreciation of a new vehicle is a huge part of the cost of vehicle ownership. A model or brand that minimises that is well worth factoring into the decision on what to buy.

Picture source: NetCarShow

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