Subaru and Lexus win as Japanese brands dominate automotive retained values
By Jack Martin
November 16, 2011
It's a well known fact that simply driving a new car away from the dealership is one of the most horrifically expensive things you'll ever do. ALG measures automotive residual values in the American marketplace - that is, the value of a car when you sell it, three years after purchase.
Depreciation of the value of a car is often the largest part of the cost of ownership, and hence a good performance in ALG's Annual Residual Value Awards is a strong indication of how much that brand will cost to drive, and for the average man in the street, the current retained-value king is Subaru.
Fuji Heavy Industries Subaru brand has now won the award three years running, with Lexus regaining top spot amongst luxury brands. The report suggests that German and American manufacturers are a long way behind Japanese (11 of the 21 awards) manufacturers in this critical but often overlooked aspect of real car ownership costs.
Indeed, the deeper you look into the latest ALG figures, the more Japanese brands appear to have created an unassailable lead in vehicle ownership costs.
ALG's Residual Value Awards honor the vehicles in each segment that are predicted to retain the highest percentage of their MSRP after a three‐year period.
In ranking the overall Mainstream Brand Residual Values for 2012 models, Japanese brands account for five of the top six brands and only one German brand (Volkswagen) is above the industry average.
Two Subaru models also won individual segment awards: the Legacy (Midsize Car) and the Outback (Midsize Utility Vehicle).
MAINSTREAM BRAND RESIDUAL VALUE PERFORMANCE
- 1 Subaru
- 2 Honda
- 3 Hyundai
- 4 Mazda
- 5 Toyota
- 6 Nissan
- 7 Kia
- 8 Volkswagen
All other brands were below the industry average.
In the Luxury segment, Toyota-owned Lexus has regained top spot for the first time since 2007, closely followed by Honda-owned Acura and Nissan-owned Infiniti. Mercedes Benz and Audi are the only other luxury brands above the industry average and the once dominant BMW is now below the industry average. Just six years ago, the German BMW brand was the consistent winner of the ALG Luxury Residual Value Rankings, racking up a string of five Luxury awards in a row.
Retained value in the luxury segment is very important because prices are much higher than mainstream models, and hence the cost of ownership of a luxury vehicle is largely dependent on how much the vehicle drops in value during the first three years. The Lexus CT 200h hybrid also won the Luxury Hybrid/Alternative Powertrain segment, and with the market trending towards fuel efficiency and lower emissions, Lexus is likely strengthen its brand and be less likely to relinquish its position over the coming years. The CT 200h has the lowest fuel consumption of any luxury vehicle in the survey period.
LUXURY CLASS RESIDUAL VALUE PERFORMANCE
- 1 Lexus
- 2 Acura
- 3 Infiniti
- 4 Mercedes Benz
- 5 Audi
All other luxury brands were below the luxury industry average.
This year's awards are based on 2012 model year vehicles, and winners were chosen after assessing historical retained value performance and industry trends. Many factors a car's ability to retain its value over a three year period, with cars which are often subject to discounting and buying incentives performing poorly, a higher percentage of fleet sales tending to depress used values, and perceived quality being the key factors.
Interestingly, Audi won the most segment awards of any brand with three gongs for the A6 (Luxury Car), S5 (Luxury Sports Car) and Q7 (Luxury Full Size Utility Vehicle).
As gas costs diminish with the advent of low consumption and electric vehicles, retained values will become critically important in assessing the cost of ownership for small and alternative powertrain vehicles, and Volkswagen's Golf TDI won the Hybrid/Alternative Powertrain segment for the second year in a row. Honda's Fit won the "Entry Compact Car" segment and Hyundai's Elantra took out the "Compact" class.
- Sub Compact - Honda Fit
- Compact - Hyundai Elantra
- Midsize - Subaru Legacy
- Fullsize - Nissan Maxima
- Sportscar - Mazda MazdaSpeed3
- Alt-Fuel - Volkswagen Golf TDI
- MPV - Honda Odyssey
- Compact Utility - Jeep Wrangler
- Midsize Utility - Subaru Outback
- Fullsize Utility - GMC Acadia
- Midsize Pickup - Toyota Tacoma
- Fullsize Pickup - Toyota Tundra
- Near Luxury - Mercedes-Benz C Class
- Luxury - Audi A6
- Luxury Sportscar - Audi S5
- Luxury Alt-Fuel - Lexus CT 200h
- Luxury Compact Utility - Land Rover Range Rover Evoque
- Luxury Midsize Utility - Land Rover Range Rover Sport
- Luxury Fullsize Utility - Audi Q7