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What You Can Learn from 2011 Residual Values

Hard To Get Bargains from Top Residual Value Models

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What You Can Learn from 2011 Residual Values

2011 Volkswagen Golf TDI has a high residual value, which could make it less affordable as a used car.

Photo (c) Volkswagen

KBB.com recently released its awards list for the Top Residual Values for 2013 models but it's a look back at the 2011 Top Residual Value Models awards that is going to help current used car buyers.

The Kelley Blue Book (parent publication of KBB.com annual Best Resale Value Awards, which recognize current and forthcoming vehicles for their projected retained value five years from 2011. Since depreciation (or loss of value) is typically a car-buyer's primary expense during ownership, these awards, like all of kbb.com's new- and used-vehicle information, are designed to help consumers make more informed car-buying decisions.

As mentioned above, fast forwarding to the present also shows consumers what to expect when buying newer used cars. Values are going to be higher for the top brands on this list.

Kelley Blue Book's Best Resale Value Awards are based on projections from the Kelley Blue Book Official Residual Value Guide, determined by an expert staff of automotive analysts. These awards honor vehicles expected to maintain the greatest proportion of their original list price after five years of ownership. Low-volume vehicles and vehicles with a Manufacturer's Suggested Retail Price of more than $60,000 are excluded from award consideration, except in the luxury and high-performance categories.

2011 BEST RESALE VALUE: BRAND Subaru 2011 BEST RESALE VALUE: LUXURY BRAND BMW

2011 BEST RESALE VALUE: BY VEHICLE CATEGORY

  • SUBCOMPACT CAR: Honda Fit
  • COMPACT UTILITY VEHICLE: Honda CR-V
  • COMPACT CAR: MINI Cooper
  • MID-SIZE UTILITY VEHICLE: Toyota FJ Cruiser
  • MID-SIZE CAR: Honda Accord
  • FULL-SIZE UTILITY VEHICLE: GMC Acadia
  • FULL-SIZE CAR: Ford Taurus
  • LUXURY UTILITY VEHICLE: BMW X5
  • NEAR-LUXURY CAR: Lexus IS
  • HYBRID/ALT. ENERGY UTILITY VEHICLE: BMW X5 XDrive35d
  • LUXURY CAR: Audi A5
  • MID-SIZE PICKUP: Toyota Tacoma
  • SPORTS CAR: Subaru Impreza WRX
  • FULL-SIZE PICKUP: Ford F-Series Super Duty
  • HIGH-PERFORMANCE CAR: Ford Mustang GT
  • VAN: Toyota Sienna
  • HYBRID/ALT. ENERGY CAR: Volkswagen Golf TDI
  • WAGON: Subaru Outback

2011 BEST RESALE VALUE: TOP 10 MODELS

  • Audi A5
  • Lexus GX
  • BMW X5
  • Lexus RX
  • BMW X6
  • Subaru Outback
  • Honda CR-V
  • Toyota FJ Cruiser
  • Jeep Wrangler
  • Toyota Tacoma

(Residual values used for award calculations are based on the November/December 2010 Kelley Blue Book Residual Value Guide. Top 10 models appear in alphabetical order).

An average vehicle will only retain about 34 percent of its original value after a five-year ownership period, meaning that a $50,000 new car today will only be worth somewhere close to $17,000 after five years. Vehicles with average or below-average resale values are generally plentiful in the marketplace and easy to find.

But certain vehicles are projected to hold their value better than others. These are the ones that are going to currently be more expensive on the used car marketplace. While much of a vehicle's resale value is based on supply and demand, as well as current and projected future market conditions, vehicles that maintain their value best are never heavily discounted and tend to generate consumer enthusiasm.

Just because a car is expensive or from a luxury brand does not necessarily mean it will hold its value better than an inexpensive car down the road. In fact, because resale values are calculated as a percent of original list price, an expensive vehicle has to command a relatively high price later as a used car to maintain its residual value. For example, an $80,000 vehicle has to be worth $24,000 three years later to have a residual value of 30 percent. At this price point, not only will it compete with other used luxury vehicles but it also will compete with many new vehicles in the marketplace.

Meanwhile, a $12,000 vehicle only needs to be worth $3,600 three years later to have the same 30 percent residual value, and at that price point it will not compete at all with new vehicles.

While that focuses on new car residual values, I included it because it does have an important lesson for used car buyers. Sometimes you might be in the market for a luxury used car but you might be better off buying a new car instead. I know. It's considered heretical for me to recommend new vs. used but sometimes it' the better option.

In addition, most options and packages added to a vehicle do not necessarily increase its resale value. However, there are exceptions to the rule, such as a high-performance engine or a performance package in a sports car. (Smart used car buyers can sometimes get prices reduced by claiming not wanting high-end options. A seller will sometimes discount price to move a vehicle because they don't want to lose a sale over options.)

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