• Mar 6, 2008
Spend more for the cutting edge of luxury and style, and you could wind up taking a larger whack than most when it's time to trade in that sled. The National Automobile Dealers Association (NADA) is reporting that premium luxury vehicles actually have the highest annual depreciation rate. The reason for the stone-dropping value is that luxury car buyers tend to want the latest and greatest. The preference for the next big thing leads to owners turning in their current cars faster than people who will drive a Taurus until its wheels fall off. Manufacturers also keep rolling out new versions of their top-tier cars to keep these customers coming back for more, which also takes a bite out of resale value since the next iteration is often right around the corner. Those cars that don't get refreshed as quickly end up with heavier incentives to maintain their sales volume in between refreshenings. In the end, it's a win-win for everybody. Automakers continue to move iron, early adopters beta test the products for the rest of us, and if you're willing to be a little bit behind the curve, you can pick up a three-year-old car for a small potatoes and still feel like you're living large.
Topping the list of annual value-losers is Jaguar's XJ8, which drops 25 percent in just a year. Mercedes-Benz, Audi, Lexus and Volvo also make appearances in NADA's top ten list of dubious distinction. The luxury cars are kept company by such ignominious vehicles as the Suzuki Verona, Hyundai Accent and Kia Rio. Judging from those rankings, it looks like the top and bottom extremes lose their value the fastest. If you're in the market for a Joneses-pleasing marque, this is good news.

[Source: NADA via Winding Road, Photo by Sean Gallup/Getty]

PRESS RELEASE

Premium Luxury Vehicles Show Highest Annual Depreciation Rate According to NADA Market Report

Replacement levels and customer preference for latest models drive depreciation

McLEAN, Va. (March 3, 2008)NADA Used Car Guide (NADA), the industry standard in used-vehicle valuation and information, reports the premium luxury vehicle segment experienced the highest annual depreciation rate among three-year-old models in 2007, due in large part to consumer preference for the latest new models and high replacement levels.

NADA Official Used Car Guide data, developed by NADA's editorial team and released today, shows premium luxury coupes and sedans held four of the top-10 spots for vehicle depreciation for the year, with a replacement rate of 43 percent on average.

"Luxury vehicle owners consistently demonstrate a strong preference for owning the latest new products in this segment," said Terrence W. Wynne, director of editorial and data services for NADA Used Car Guide. "The changing customer preferences and high manufacturer replacement rate effectively accelerates depreciation of these vehicles, deflating the resale performance of previous models and those competitive models late in their life cycle," he added.

According to the NADA report, the top-10 depreciating three-year old vehicle models in calendar year 2007 were:

Make Model Annual Depreciation
Jaguar XJ8 25%
Mercedes-Benz CL-Class 22%
Kia Rio 22%
Audi A8 21%
Lexus LS 21%
Suzuki Verona 21%
Volvo C70 20%
Hyundai Accent 20%
Audi A4 20%
Audi A6 20%

Wynne noted that the replacement rate directly impacts incentive spending in the luxury segment and compounds the pressure already present on the used-car market based on consumer change in design preference. He said that unreplaced models tend to have the heaviest incentives.



I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 25 Comments
      • 6 Years Ago
      Wait... so what we're hearing is the cars with the highest markups, most profit, are the ones with the greatest potential distance to fall? sweet jesus, I'm glad we have these PhDs calculating such complicated realities.

      ... has NADA reported on the color of the sky yet?
      • 6 Years Ago
      always wanted a Jag XJ saloon, guess buying used will be the quick and easy way to get me into one!
      • 6 Years Ago
      And this is great for people who buy these things used for roughly the price of a so-perceived "lesser" model (e.g., a one- or two-year old A4 for the price of a new or one-year old upper-line Jetta or Passat).

      • 6 Years Ago
      This is the exact reason why i picked up a XJR on the thrift (relatively speaking). Its my Sunday car and i absolutely love it.
        • 6 Years Ago
        Here, here. I did the same. I look at this list and see cars I would buy when they are a few years old.

        Chris.
      • 6 Years Ago
      Luxury brands cost more to maintain. They may be used car bargains, but you won't be able to afford a transmission repair.

      That's why new BMWs come with pre-paid maintenance.
      • 6 Years Ago
      Dan! You forgot to close your Italic!
      • 6 Years Ago
      As much as these luxury cars depreciate, somehow they still remain too expensive for most people. Guess that's part of what makes them luxury cars...

      Oh, and can someone get that tag working please?
      • 6 Years Ago
      Gah! Open italics AND misspelled acronym (NASA should be NADA)! No worries, I'm sure it'll be corrected soon...

      Back on topic, though, does it really matter if luxury cars have the largest depreciation? Isn't the consumer base of luxury cars, by definition, the best equipped to deal with a loss of money?
        • 6 Years Ago
        Kia Rio owners are LOOOOOAAADED.

        :)
        • 6 Years Ago
        As evidenced here, it's not just the high end market, but the very low end as well. After all, a $2,000 depriciation would sound decent on a Camry or Accord, but for a $10k car, it's a 20% hit.
      • 6 Years Ago
      Hey, how about a

      And I just bought a new '08 VW Rabbit last night - to hell with the Audi, my car rules :)
        • 6 Years Ago
        ^The blank up there is a < /i >
      • 6 Years Ago
      It should be mentioned given this conversation about the reliability of higher-end cars: Certified Pre-Owned is always an option.

      For example, I bought my 9-3--an '03 Arc, purchased in late 2006 with 42k--for about 45% of its initial sale price, and it's warranted to 100k or three years.

      Which is nice, since it's been in the shop at least once a month since I've had it ...

      • 6 Years Ago
      Hmmm.... Audi A4 was recently listed on ALG Automotive Lease Guide as "the best" residual (resale) value over a 24-36 month period. This is part of the reason why you can lease an A4 for such a low monthly payment. A4's especially with manual command all the dough. A6's and A8's are weak on the used market. And as far as R8's they are selling on eBay for $20k over sticker. That is pretty good resale. Right?

      http://spystyle.com

      • 6 Years Ago
      Overpriced cars that are expensive to fix depreciate quickly, big shock! Just goes to prove that luxury cars aren't all they're cracked up to be.
    • Load More Comments