When it comes to a vehicle’s retained value from new to used, volume is important — but selling more of a vehicle doesn’t necessarily imply its value will stay. Even if the product is spectacular, perceived quality and new quantity sold do not go hand in hand.
This is one lesson that Subaru and Lexus have apparently learned, as both were today named by Kelley Blue Book for the latter’s 2016 Best Resale Value Award winners for best brand and best luxury brand, respectively.
AuSM chatted with Eric Ibara, KBB’s director of residual values, to see why.
“I guess the simple answer would be that they make great vehicles that people want. There are a lot of brands that make great cars,” Ibara said. “I think what we’ve learned is that making great cars is not sufficient. You also need to manage the way in which vehicles are marketed and sold. And what these brands do very well, I think, is they match their production with the market demands.
“They don’t overproduce the vehicles, and they’re also marketing the vehicles in a way that enhances the value of the vehicles. So they’re not discounting their vehicles to get more volume.”
|Chevrolet Camaro||Subaru Forester|
|Chevrolet Colorado||Subaru WRX|
|GMC Canyon||Toyota 4Runner|
|GMC Sierra||Toyota Tacoma|
|Jeep Wrangler||Toyota Tundra|
And if you take a look at the top-10 list of vehicles from the 2016 model year that KBB expects to retain the highest percentage of their sticker values, you probably won’t be surprised that eight out of the 10 are trucks or utility vehicles. What may surprise you, however, is that five of the vehicles expected to depreciate the least are from domestic automakers.
With four of those five being manufactured by General Motors, we asked Ibara if he was surprised.
“I think that people could be surprised by that. You don’t normally think of domestic brands when you think of vehicles that retain their value,” he said. “But I think that ever since GM went through bankruptcy they really have changed the way in which they approach the market. I sense, and I see, that they’re doing a better job of matching production to demand. They’re not overproducing vehicles and they’ve cut back on the volume of vehicles that they send into daily rental.
“I think these are all good signs but I guess, first and foremost, they’re making vehicles that are very appealing when you see the vehicles that have come to market over the last few years, like the Tahoe and like the Canyon and Colorado,” he continued. “You can see that the vehicles are much improved over what they’ve offered in the past.”
Those with a keen eye that follow KBB’s resale values will notice a first-time inclusion on the list: Tesla.
Ibara says that used-car transaction data for Tesla, up until recent times, was a bit hard to come by. But now that the situation has been rectified, as Ibara put it, KBB is noticing that Tesla’s Model S isn’t seeing as hard a hit in the used market as the rest of the electric vehicle segment is currently experiencing.
“The electric vehicle segment is very interesting,” Ibara said. “We are seeing EVs depreciate much faster than their gasoline-engine counterparts, where one exists. We think it’s a function of the federal tax credit that all these vehicles qualify for and we also think that the early adopters who are buying the electric vehicles want a new car. We don’t see a lot of early adopters gravitating toward used electric vehicles and as a result their depreciation is very steep, for the most part. The Model S is an exception to this rule.”
So what’s a “safe” segment to invest in, as a used-vehicle dealer? KBB expects for trucks and sport utility vehicles to remain popular for years to come — a trend that Ibara says started before oil prices dropped the favorable level they are today.
“We think it’s a trend that will be around for a while,” he said. “Oil is trading around $35 a barrel right now, and there’s really no sign that it’s going to end that streak any time soon. We’re thinking that consumers will continue to prefer sport utility vehicles and that will make them more desirable five years down the road.”
Here's the full list of KBB's 2016 Best Resale Value Awards by vehicle category:
|SUBCOMPACT CAR: Honda Fit||PLUG-IN VEHICLE: Tesla Model S|
|COMPACT CAR: Subaru Impreza||COMPACT SUV/CROSSOVER: Jeep Wrangler|
|SPORTY COMPACT CAR: Subaru WRX||MID-SIZE SUV/CROSSOVER: Toyota 4Runner|
|MID-SIZE CAR: Subaru Legacy||FULL-SIZE SUV/CROSSOVER: Chevrolet Tahoe|
|FULL-SIZE CAR: Toyota Avalon||LUXURY COMPACT SUV/CROSSOVER: Porsche Macan|
|ENTRY-LEVEL LUXURY CAR: Lexus RC||LUXURY MID-SIZE SUV/CROSSOVER: Lexus GX 460|
|LUXURY CAR: Lexus GS||LUXURY FULL-SIZE SUV/CROSSOVER: Lexus LX 570|
|HIGH-END LUXURY CAR: Porsche Panamera||HYBRID SUV/CROSSOVER: Lexus RX 450h|
|SPORTS CAR: Chevrolet Camaro LT||MID-SIZE PICKUP TRUCK: Toyota Tacoma|
|HIGH PERFORMANCE CAR: Chevrolet Camaro SS||FULL-SIZE PICKUP TRUCK: Toyota Tundra|
|HYBRID/ALTERNATIVE ENERGY CAR: Lexus ES 300h||MINIVAN/VAN: Toyota Sienna|