Cars That Lose Value The Fastest

[BOY]

Cars That Lose Value The Fastest
Buyer beware: These vehicles retain less than 20% of their value after five years.
By Hannah Elliott, Forbes

High-end sports cars and SUVs like the Audi A5 or BMW X5 are fun to drive, but they don't make a lot of sense to buy from a value standpoint, right? Wrong. Actually, they are both segment leaders when it comes to resale value, each retaining roughly 40% of their original purchase price after five years of ownership.

The cars that do lose their value quickly are more humdrum (the Kia Sedona and Lincoln Town Car), or are made by a manufacturer in dire financial straits (the Chrysler Sebring and Dodge Grand Caravan). While the general wisdom is that new cars lose up to 20% of their value the moment they're driven off the lot, and about 65% after five years, the Sedona, Town Car, Sebring and Caravan each lost more than 67% of their value after just two years--and a whopping 82% after five years.

At a time like this, when total auto sales were down 23% last month vs. September 2008, experts say that consumers are looking to make a purchase that will last, if they buy anything at all. And in many cases, the cars with the worst resale value are the least expensive up front.

Behind the Numbers
To determine which cars lose their value the fastest, we used residual-value data from Kelley Blue Book. The Irvine, Calif.-based valuation company defines resale value as the projected market value of a vehicle at a specific time. It's often denoted as the percentage of a car's original value it will retain after five years, with an annual mileage of 15,000. For our purposes, we evaluated vehicles over a span of time, from 24 to 60 months, to get a more complete picture of how--and when--cars lose their value. (Residual value is virtually the same as resale value, although it's a term more often used in leasing agreements than new-car sales).

The largest cost of owning a car is that of depreciation, says Mike Quincy, an automotive specialist for Consumer Reports. Depreciation is affected by a number of factors, but the largest one is brand perception, he says. Therefore, it's no surprise that Kia had three vehicles on our list, while Chrysler had four. The former is still a "relatively recent" inductee to the U.S. market, Quincy says, which means consumers have yet to decide whether they can trust the brand. And the latter, Chrysler, has suffered from years of reliability and management problems, which inevitably affect the reputation of the company's products.

"The Sebring, the Durango--these are pretty lousy cars," Quincy says. "They've done pretty poorly in Consumer Reports tests. Plus, the Durango is a huge, three-row SUV, and the market for these trucks has just dropped through the floor. If you own a Durango right now, it's not worth squat."

History Repeating
A model like the $28,980 Durango or $21,245 Kia Sedona finding a spot on our list isn't just a onetime anomaly. Along with the $46,525 Lincoln Town Car, these three vehicles were on our worst-resale-value list last year, as well.

This year, the expected residual value for a Durango after five years is just 18% of its original price; for the Sedona, owners can expect to get back 15% of the initial MSRP. The Town Car's not much better. It retains 32% of its value after two years, 26% after three years, 22% after four years and 18% after five.

Part of the reason these vehicles, especially the trucks (Dodge Ram, Mitsubishi Raider) and SUVs (Saab 9-7X, Dodge Durango), make the list is simply because of their segment. Gas prices and the economy affect what people drive, and when gas prices rise, the value of a gas-guzzler goes down.

"If we're painting it with broad strokes, I'd say SUVs are going to depreciate at a little higher clip than probably sub-compacts or hybrids or standard sedans, especially as we're going into Obama's 35-mile-per-gallon standard in 2016," says James Bell, an automotive market analyst for Kelley Blue Book. "I think the American public better start to get ready to look at small cars not as a curiosity, but as a reality."

An Educated Choice
Bell knows firsthand how consumer perception and, ultimately, gas prices, affect the resale value of gas-sippers. In 2003, he bought a brand-new, $26,000 Toyota Prius, drove it for 42,000 miles, and sold it two years later at a loss of just $2,000. (That kind return on investment isn't normal, at least these days--Kelley Blue Book lists the 4-year resale value of the 2010 Toyota Prius at 55% of the original MSRP.)

Bell says the foresight to make a similarly wise purchase and subsequent trade can come largely from reading analysis by the likes of JD Power & Associates and Intellichoice.com. Most importantly, he says, make an unemotional decision before entering the showroom about what car you want and how long you expect to own it.

"It's well worthwhile to do that after you identify what kind of vehicle you like because of its looks or its fuel economy or its dealer network," Bell says. "Stop and look at it very rationally and economically, because that's where the real winners can be found."

In some cases, he adds, buying the car that costs a little bit more than its competitor may pay off--if the first car has a higher resale value. "Just saving that extra $20 a month over the course of three years, you may not recoup that when you go to resell [the car]."

http://autos.yahoo.com/articles/auto...e-the-fastest/

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[BOY]

The List:

10. Dodge Durango
MSRP: $28,980
Value after 24 months: 33%
Value after 36 months: 26%
Value after 48 months: 22%
Value after 60 months: 18%

9. Lincoln Town Car
MSRP: $46,525
Value after 24 months: 32%
Value after 36 months: 26%
Value after 48 months: 22%
Value after 60 months: 18%

8. Mitsubishi Raider
MSRP: $21,135
Value after 24 months: 30%
Value after 36 months: 25%
Value after 48 months: 21%
Value after 60 months: 18%

7. Saab 9-7X
MSRP: $42,615
Value after 24 months: 33%
Value after 36 months: 27%
Value after 48 months: 21%
Value after 60 months: 17%

6. Dodge Ram 3500
MSRP: $30,385
Value after 24 months: 34%
Value after 36 months: 26%
Value after 48 months: 21%
Value after 60 months: 17%

5. Dodge Grand Caravan
MSRP: $23,545
Value after 24 months: 24%
Value after 36 months: 26%
Value after 48 months: 21%
Value after 60 months: 17%

4. Kia Spectra Sedan
MSRP: $13,550
Value after 24 months: 35%
Value after 36 months: 26%
Value after 48 months: 21%
Value after 60 months: 17%

3. Kia Optima Sedan
MSRP: $17,495
Value after 24 months: 32%
Value after 36 months: 25%
Value after 48 months: 21%
Value after 60 months: 17%

2. Kia Sedona
MSRP: $21,245
Value after 24 months: 33%
Value after 36 months: 24%
Value after 48 months: 19%
Value after 60 months: 15%

1. Chrysler Sebring Convertible
MSRP: $28,530
Value after 24 months: 27%
Value after 36 months: 22%
Value after 48 months: 18%
Value after 60 months: 15%

[skywaffles]

Audi A5 is a high end sports car?

[eachit]

This top ten list lists the cars that depreciate most percentage wise, but not the top ten that depreciate the most in dollars.

Take the owners of those cars on this list and see how much they "lost" due to depreciation in the last five years and the chances are that a BMW X5 owner who purchased their vehicle five years ago "lost" far more in terms of dollars. Sure the X5 may be worth 20-25% of the original MSRP, but the money lost is far greater than that of a KIA.

Not to mention the costs of repairs, insurance premiums, gas, maintenance, etc. is bound to be substantially higher.

Some other examples:

A 2006 BMW M6 should depreciate over $51K in value over five years.

(http://www.automotive.com/2006/12/bm...sts/index.html)

A 2005 Land Rover Range Rover owner is projected to lose over $43K in five years.

(http://www.automotive.com/2005/12/la...sts/index.html)

A 2007 Mercedes S Class.... over $43K in five years.

(http://www.automotive.com/2007/12/me...sts/index.html)

Personally, I'd rather have a $13K Kia worth two or three grand now after paying $13K for it five years ago than take the hit most buyers of luxury vehicles take. Yeah I know they can afford it. Maybe I'm in the minority for thinking they look kind of dumb for buying a car for $70K only to have it be worth $15K five years later. Maybe that's the whole idea.

Maybe if I were wealthy I'd have a different opinion.

(BTW, I hate every car on that list and am not defending any of those POSes in any way)

(Also BTW, I love high end BMWs and Mercedes but hate Range Rovers, except for the Defender 90 but it's gone anyway)

According to this list, you should be able to get:

10. 2006 Dodge Durango with 45K miles for $7534.80 (36 mo old, 15K mi per year and worth 26% of 28,980)

YET, If you go to KBB.com and just look at private party value on a base Durango meeting that criteria, KBB says the value is around $14,000.00 (depending on the zip code you enter). And that's the BASE model.

5. 2006 Dodge Grand Caravan with 45K miles for $6,121.70 (36 mo old, 15K mi per year and worth 26% of 23,545)

YET, If you go to KBB.com and look at the private party value on the absolute base model in good condition, KBB says the value is around $8,700.00 (again, depending on the zip code)

1. 2006 Chrysler Sebring Convertible with 45K miles for $ 6,276.60 (36 mo old, 15K mi per year and worth 22% of 28,530)

KBB.com says the base model convertible in good condition private party value is $6.730.00. So at least that one's close.

This article sucks and I have put WAY TOO MUCH thought and typing into this response.

[sxotty]

The other option is to drive vehicles into the ground then it doesn't matter how much they depreciate. Nor is a cost anymore. In fact it is a good thing b/c your insurance will decline faster.

[BOY]

Originally Posted by eachit

According to this list, you should be able to get:

10. 2006 Dodge Durango with 45K miles for $7534.80 (36 mo old, 15K mi per year and worth 26% of 28,980)

YET, If you go to KBB.com and just look at private party value on a base Durango meeting that criteria, KBB says the value is around $14,000.00 (depending on the zip code you enter). And that's the BASE model.

5. 2006 Dodge Grand Caravan with 45K miles for $6,121.70 (36 mo old, 15K mi per year and worth 26% of 23,545)

YET, If you go to KBB.com and look at the private party value on the absolute base model in good condition, KBB says the value is around $8,700.00 (again, depending on the zip code)

1. 2006 Chrysler Sebring Convertible with 45K miles for $ 6,276.60 (36 mo old, 15K mi per year and worth 22% of 28,530)

KBB.com says the base model convertible in good condition private party value is $6.730.00. So at least that one's close.

This article sucks and I have put WAY TOO MUCH thought and typing into this response.

The article quotes residual wholesale values (trade in) and MSRP which are nowhere near KBB private party values. Residuals are calculated by the Automotive Lease Guide (ALG) based on transaction prices the previous year. Kind of an unfair comparison b/c it doesn't highlight the depreciation due to incentives, rebates, etc; nor the original dealer profit. A more accurate comparison would be dealer invoice to residual value but that would've required the author to do more work.

Just remember boys and girls, a $10,000 rebate just killed your resale by about that same amount... not a good deal unless you plan on driving it into the ground.

[steve]

^
werd.

I'm selling my 03' Dakota (Durango without SUV bod) and I'm lucky to get $9k trade in value from the dealer. I have the truck listed privately while waiting for my new truck to arrive, and I can't get $12k out of the thing.

Consider that this was a $44k+ truck back in 03' and you know why I'm never buying a Dodge again. For the record, the new truck is a 2010 Tundra, which should retain a lot of it's value.

[BOY]

Originally Posted by hypa

^
werd.

I'm selling my 03' Dakota (Durango without SUV bod) and I'm lucky to get $9k trade in value from the dealer. I have the truck listed privately while waiting for my new truck to arrive, and I can't get $12k out of the thing.

Consider that this was a $44k+ truck back in 03' and you know why I'm never buying a Dodge again. For the record, the new truck is a 2010 Tundra, which should retain a lot of it's value.

When I worked @ Evans Toyota here in Fort Wayne we installed one of the first TRD superchargers in the country on an 08... Holy Sweet Mary Mother of God! The owner dropped about $85k on the thing total (Limited grade w/ nav, Crewmax, 2" lift, 22" wheels, S/C kit, hard wired radar/laser, headrest mount DVD's). Sure, the truck got about 8 MPG but 500+ hp/tq on the stock tranny and rear end - Wow!

[FaastLegacy]

Originally Posted by hypa

^
werd.

I'm selling my 03' Dakota (Durango without SUV bod) and I'm lucky to get $9k trade in value from the dealer. I have the truck listed privately while waiting for my new truck to arrive, and I can't get $12k out of the thing.

Consider that this was a $44k+ truck back in 03' and you know why I'm never buying a Dodge again. For the record, the new truck is a 2010 Tundra, which should retain a lot of it's value.

You paid $44k for a Dakota?

Is that even possible?

[Derbagger]

so, we have alist of cars that need to be bought at far under MSRP.

Oh, and KIAs all have poor resale values because one of their selling points is a non-transferable 10 year warranty. By definition, that'd drop the resale by $500-$1000 on it's own.

[1sicWRX]

Originally Posted by FaastLegacy

You paid $44k for a Dakota?

Is that even possible?

If he did, he got bent over... You can buy a brand new F-350 Super-Duty almost fully loaded with that kind of cash.

[White_Rex]

Pretty sure he lives in Canada, so 44k is not a terrible deal. A fully loaded F350 these days in Canada (well last time I checked) was near 65-70k.

[FaastLegacy]

Originally Posted by White_Rex

Pretty sure he lives in Canada, so 44k is not a terrible deal. A fully loaded F350 these days in Canada (well last time I checked) was near 65-70k.

Ahh, I missed the Canadian part. That would explain it.

[DHGurs]

Originally Posted by Derbagger

so, we have alist of cars that need to be bought at far under MSRP.

Oh, and KIAs all have poor resale values because one of their selling points is a non-transferable 10 year warranty. By definition, that'd drop the resale by $500-$1000 on it's own.

I find it odd that there is so much KIA in this list and no Hyundai
They are the same car, same price, same rebates, same warranty etc. It has never made sense to me that a used Hyundai Sonata should be worth more than a Kia Optima.

[akoshy]

When I bought my 09 Tribeca, I traded in my 08 Honda Fit.

I bought my 08 Honda Fit for a little over $14K, drove it for 17,000 miles and over a year and traded it in for a flat $12,000. I am guessing if it were a private party sale, I would have gotten a bit more, even though I wouldn't have gained the tax advantage from the trade-in.

I then turned around and bought an 09 Honda Fit to replace it.

[4wdwrx]

Originally Posted by skywatcher

Audi A5 is a high end sports car?

Ya why not?

[Skunkers]

Originally Posted by 4wdwrx

Ya why not?

For one, it's an entry-level luxury coupe, not high-end. For two, it's a GT car, not a sports car. And for three, even with the 3.2L it's power to weight ratio is worse than a V6 Accord Coupe's, and that's without factoring all-wheel drivetrain loss.

[flexer]

Originally Posted by Skunkers

For one, it's an entry-level luxury coupe, not high-end. For two, it's a GT car, not a sports car. And for three, even with the 3.2L it's power to weight ratio is worse than a V6 Accord Coupe's, and that's without factoring all-wheel drivetrain loss.

i think you`re just arguing about the definition of a sports car... most people, not enthusiasts consider the a5 a sports car, and i`m quite confident this article was targeted at most people rather than enthusiasts....

[4wdwrx]

+1000

People think a sports car have to be in the levels of a Ferrari.

A5 is indeed a sports coupe. A GT car would be in a higher level. I believe Audi use a GT version of RS4 in DTM.

[Stanley]

The A5 has been for sale for 5 years?

[Masterauto]

On the bright side these cars make the best bargains to buy used especially if you keep a car 5+ yrs. I don't like Chrysler but the 100k mi warr. is (or was) transferable.

[Skylab]

Mini Cooper must be 1st on the list of cars that retain their value.

[affinity1]

Is it not true that the AMG and M lines lose value fairly rapidly?

[Chromer]

Originally Posted by affinity1

Is it not true that the AMG and M lines lose value fairly rapidly?

They lose several Kia's a year, yeah...

Outside factors impact depreciation too: A year ago when manufacturers were giving $15k off a new truck and gas was $4 a gallon you couldn't give away a used pickup truck. At the same time people were selling used Priuses for more than a new one.

[Skunkers]

Originally Posted by flexer

i think you`re just arguing about the definition of a sports car... most people, not enthusiasts consider the a5 a sports car, and i`m quite confident this article was targeted at most people rather than enthusiasts....

Someone asked why the A5 isn't a "high-end sports car" and I answered them. "A lot of people" may consider the Accord Coupe to be a sports car, but it's not. Moreover I was also pointing out that it's also not "high-end". Continued...

Originally Posted by 4wdwrx

People think a sports car have to be in the levels of a Ferrari.

No, but a Ferrari is a "high-end" sports car. But a lowly Miata is one of the purest sports cars sold today.

Originally Posted by 4wdwrx

A5 is indeed a sports coupe. A GT car would be in a higher level. I believe Audi use a GT version of RS4 in DTM.

No idea WTH you are talking about here. A GT is typically defined as a 2+2 sporty coupe but with some handling compromised for the sake of comfort. Hence, "grand tourer" because it's made with traveling cross-country in mind, it's not a dedicated sports car. G37, Genesis Coupe, Mustang (note the GT in the name of several models), etc. are examples of GT coupes and that's also exactly what an A5 is. The TT (quattro) and R8 are Audi's actual sports cars.