Autoblog

Due to a miserable U.S. car market, Detroit automakers are losing billions from lower than expected residuals on leased vehicles. Since the residuals on Motown metal are traditionally below that of the Japanese competition, many industry insiders thought that Toyotas in this country world were immune to the trend. It appears that's not the case. Toyota announced it had to "set aside major reserves for its first quarter to cover losses from vehicle leases in the U.S."

The problem is predictably bad with trucks and SUVs, but other products aren't selling off lease as well as they have in the past. With residuals dropping, used cars are dirt cheap. That gives prospective buyers an affordable alternative to buying a new car. That's bad news for Toyota, but it may even be worse news for everyone else.

Toyota has been making money and gaining market share during these tough times, but even the automotive juggernaut is struggling in today's difficult economic conditions. Including Lexus, Toyota's Daily Sales Rate is down for seven straight months versus prior year numbers, with July missing the mark by 18.7%. This news proves that even Toyota has its share of problems, but what it really shows is that Chrysler may have been on to something when it stopped offering leases.

[Source: BloggingStocks]

We've all seen the ads in the newspaper or in commercials that say you can get a new car with zero money down and only $299 per month. Quick math tells you that even after taxes and destination, you're only paying about $4,400 the first year to own a brand new car. A recent study by consulting firm Runzheimer International shows that a new car will cost you considerably more in overall operating costs. At 15,000 miles per year, the cost of insurance, gasoline, fees, depreciation, and maintenance can drive the overall cost near $20,000 per year.

The 2008 Cadillac STS was tops in this year's test, costing buyers $19,537. The Lexus LS460 was close behind at $19,372. Big vehicles cost quite a bit also, with Ford's E-350 XL SuperDuty tallying a $16,543 bill followed by the Chevy Tahoe LS 4x4 at $15,789. There were some relatively low cost vehicles as well, with the first year costs of a Toyota Corolla CE coming in lowest in the test at $7,933 and a Ford Ranger XL pickup that hits $9,929. If these numbers seem high, it's because the highest liability in a new car balance sheet is depreciation, and new cars can lose thousands the day they're driven off the lot. Every mile on the odometer brings the resale value lower, and if your new car carried lots of incentives or it's a rental car favorite, its residual plummets even further.

[Source: The Car Connection]

Here's an odd one of dubious merit: Kelley Blue Book's marketing research division has partnered with Taco Bell under the guise of studying the effects of in-car eating on vehicle residuals. Yes, that probably bears re-reading.

The car valuation guide experts have teamed up with fast food's Gordita gurus on the thinnest wisp of a study-- to determine the depreciation costs that sloppy 'dashboard dining' has on a vehicle's resale value.

Their findings? According to a KBB official, "Our research highlights a huge misperception among consumers: that the interior condition of a car has less importance than the exterior in terms of residual value." Fair enough. But the fact that the press release then goes on to praise "Innovative companies like Taco Bell" for "...creating solutions for diners on the go with mess-free products like the Crunchwrap Supreme™" sort of takes the intellectual sheen off this one, doesn't it?

Besides, crediting Taco Bell with creating "mess-free products" is a remarkable example of selective retention. After all, there's nothing tidy about a Chalupa, kids. Not before, not during, and certainly not after.

(Thanks to Nick @ Slashfood for the tip)

[Source: KBB.com]