Kelley Blue Book expects the impact will be more severe for Saturn, whose residual average is down 5 percentage points to 28 percent. Saturn is currently projected slightly higher than Pontiac because its two remaining models, the Outlook and the Vue, compete in the more stable SUV category.
Kelley Blue Book performed an analysis on used-car values for Oldsmobile as a case study for the possible outcomes for both Pontiac and Saturn. This included the impact of mileage, condition, seasonality, market conditions, volume, demand, competition and a number of other factors. The shutdown of Saturn is similar to the shutdown of Oldsmobile, but the two scenarios are still quite different. Oldsmobile shut down over a period of more than three years and continued to introduce new products, including the Bravada, even after the closure announcement. With Saturn, production was halted almost immediately and the sell-down of inventory is expected to occur faster. Like Oldsmobile, the impact will differ by model, where more differentiated vehicles like the Sky can expect less of an impact. The impact of the shut-down for Saturn is expected to be less severe than it was for Oldsmobile.
Vehicles with Low Resale Value
Many of the vehicles considered to be fast depreciators include vehicles with long life-cycles, high production levels and models with heavy representation in the fleet market.
The 2010 vehicles with the lowest projected resale value after five years of ownership include: Hyundai Azera, Kia Amanti, Kia Optima, Kia Rio, Kia Rondo, Kia Sedona, Lincoln Town Car, Mercury Grand Marquis, Mitsubishi Endeavor and Mitsubishi Galant. Half of these 2010 model-year vehicles are projected to maintain less than 20 percent of their original MSRP after five years of ownership.
Vehicles that have not received a full redesign in more than five years are typically at risk of ending up at the lower end of the scale. Examples on this year’s list include both the Lincoln Town Car and the Mercury Grand Marquis, both of which last received new lines and looks more than a decade ago in 1998. Other vehicles with the same fate include Mitsubishi’s Galant and Endeavor, as well as Kia’s Amanti, all last redesigned in 2004.
“A major factor in a vehicle’s residual value is the number of vehicles sold into daily rental fleet service,” said Ibara. “This is an effective way to ‘move the metal,’ because thousands of vehicles can be sold in one phone call; however when these cars flood the market when they come out of service the prices for these vehicles can drop significantly.”
On average, 2010 60-month hybrid-car residuals dropped nearly 8 points to 31.2 percent, while hybrid trucks dropped less than two points to a residual average of 29.6 percent.
Year-over-year, dedicated hybrids as a sub-segment lost almost 10 points, from 51.0 percent last year to 41.6 percent in 2010. Just like in the compact segment, dropping demand for fuel-efficient vehicles and a forecast of stabilizing oil prices has weakened the outlook for hybrids in the future. Last year there was only one dedicated hybrid in the group, the Toyota Prius. This year, the Prius came with a welcomed redesign, improved fuel economy by three miles-per-gallon and included a price reduction of $1,000 from its predecessor. For 2010, there are three dedicated hybrid nameplates, the Toyota Prius, the Honda Insight and the Lexus HS. There also were 18 hybrid sisters (models that have both a pure gasoline-powered and hybrid-powered version) last year and more than 22 in 2010, also bringing a sense of crowding to this newer powertrain segment.
“Predicting values for powertrain technologies beyond conventional hybrids is very speculative at this moment,” said Ibara. “The reason for this is because the performance of the engine technology is untested, particularly with regard to consumer acceptance, cost of ownership, range and reliability.”
Pricing of these vehicles and the availability of government subsidies will be major consideration factors for consumers considering any new-vehicle technologies coming into the market. However, should one or several of these technologies take off within the next five years and become widely accepted, it could cause conventional hybrid values to plummet.
About Kelley Blue Book® Residual Values
Based on projections by Kelley Blue Book’s expert staff of market analysts encapsulated in the Kelley Blue Book Official Residual Value Guide, the prestigious Kelley Blue Book Best Resale Value Awards honor vehicles expected to maintain the greatest proportion of their retail prices 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 awards consideration, except in the High Performance and Luxury categories.
While the company’s Official Residual Value Guide has been published since 1981, Kelley Blue Book established its annual Best Resale Value Awards in 2003. Kelley Blue Book reports projections based on current vehicle data, sales data, market conditions for each vehicle, competition within vehicle segments, expectations of the future economy and the combined experience of Kelley Blue Book’s team of market and pricing analysts. Kelley Blue Book’s residual values are used by banks, financial institutions, governmental agencies and the automotive leasing industry.
For more information about Kelley Blue Book’s Best Resale Value Awards, please visit www.kbb.com/BRVA2010.
About Kelley Blue Book (www.kbb.com)
Since 1926, Kelley Blue Book, The Trusted Resource®, has provided vehicle buyers and sellers with the new and used vehicle information they need to accomplish their goals with confidence. The company’s top-rated Web site, www.kbb.com, provides the most up-to-date pricing and values, including the New Car Blue Book® Value, which reveals what people actually are paying for new cars. The company also reports vehicle pricing and values via products and services, including software products and the famous Blue Book® Official Guide. According to the C.A. Walker Research Solutions, Inc. – 2009 Spring Automotive Web Site Usefulness Study, kbb.com is the most useful automotive information Web site among new and used vehicle shoppers, and half of online vehicle shoppers visit kbb.com. Kelley Blue Book’s kbb.com also is a W3 Gold Award winner, sanctioned by the International Academy of Visual Arts. Kbb.com is a leading provider of new car prices, car reviewsnews, used car Blue Book Values, auto classifieds and car dealer locations. No other medium reaches more in-market vehicle shoppers than kbb.com. and