Not a surprise, really, considering luxury cars start with high prices, and recent consumer preference for spending less on smaller vehicles due to gas prices.

Lasting Luxury

The NADA Official Used Car Guide data shows premium luxury coupes and sedans held four of the top 10 spots for vehicle depreciation for the year, with an average replacement rate of 43%.

The data studied three-year-old models in 2007. Of course today is a long way away from the automotive industry in 2007.

There are historical increases in gas prices, for one. Topping $4 per gallon was unheard of just a year ago. Now we’re already halfway to $5 per gallon.

Then there’s the sluggish economy, which can be linked at least in part to gas prices. Bottom line: people are spending less, especially on nonessential items like luxury cars.

But does it matter? Other reports state people are keeping their cars longer, choosing repairs over buying new or used cars.

Depreciation in cars is kind of like owning a house in terms of holding on to it longer. If you plan to live in a house the rest of your life, who cares about its current value on the market?

Likewise for those of us who drive cars until they can no longer roll.

Reputations Impact Annual Depreciation Rates

So what is annual depreciation in cars, and why do we care?

Depreciation is a reduction on something’s value, meaning, price you can sell it for later.

Residual value is the difference in the Manufacturer’s Suggested Retail Price (MSRP) and its price later.

This difference is usually expressed as a percentage, and most often it changes from year to year.

It is pretty well accepted that cars depreciate faster than any other purchase a person will make. The first-year depreciation on a new car can exceed 35%.

It’s hard to imagine your home value falling 35% in one year.

Usually car depreciation rates stabilize at 7 to 10% annually, after the first three years.

Much depends on make and models, and reputation. People still remember the old saying, “Found On Road Dead,” poking fun at what “Ford” stands for – and somewhere long ago there was a reason someone made it up.

In recent years new automakers to America, like Toyota and Honda have built a reputation for dependability and reliability, traits that bode well for maintaining value and limiting the hit in depreciation.

The Good, the Bad, and the Ugly in Depreciation Values

Topping the NADA report of top-10 depreciating three-year old vehicle models in calendar year 2007 was the Jaguar XJ8, with a 25% annual depreciation. The Mercedes-Benz CL-Class followed it, at 22%.

Why did their values drop so much in three years? NADA explained, “Luxury vehicle owners consistently demonstrate a strong preference for owning the latest new products in this segment.”

In other words, the wealthy like to have a new car every year, so there are too many used luxury cars out there to command top dollar. Supply is plentiful, demand low.

But third on the list is the Kia Rio; sixth was the Suzuki Verona; and eight was the Hyundai Accent. Hardly car choices for the rich.

Tiers of Depreciation

A report by Neil Terry in International Advances in Economic Research placed cars in tiers in terms of depreciation.

It compared 15 car brands for reliability, safety, initial price, and name brand, from 2000 to 2004.

Tier one was the best, with an average annual depreciation rate of 13.4 to 14.1% – belonging to Honda and Lexus.

Tier two was Volkswagen and Toyota, with average annual rates of 16.5 to 16.8%.

Tier three automobiles were Nissan, Mercedes, BMW, Hyundai, and Mercury, at 18.9 to 21.2%.

Mercedes and BMW in the same tier as Hyundai?

Tier four was Chevrolet, Chrysler, and Saturn, at 25.4 to 27.5%. The last tier listed included Dodge, Ford, and Buick, at 31.1 to 32.6%.

Surprised? The study lends some truth to a statement often heard about Japanese automobiles: they hold their value well.

The post What is Depreciation and Why Do I Care? appeared first on Cash for Cars Selling Tips.

Let’s face it, most of us would upgrade the vehicle if we could. Very few people drive their dream car, only the lucky ones really.

It makes sense that as we make our way down the path of life we will continue to upgrade the vehicle that carries us much of the time.

Consumer Reports uncovered some interesting facts that every car owner should be aware of.

You could save some serious cash

Keeping your car for 15 years or for 225,000 miles can save you over 30 grand. It turns out that most people trade in about every five years so these findings are based on upgrading to a new, identical model every five years.

Consumer Reports does an annual national auto survey of it’s readers to find out just how far some models can go. Some of it’s findings are interesting, like a 1990 Lexus LS400 logged in at 332,000 miles and a Ford Ranger that rolled over 488,000 miles.

These cars can go the distance people, keeping them a little longer doesn’t just save you money, it reduces your footprint on the earth.

Tips to help keep your car in tip top shape

In an attempt to save it’s readers money, Consumer Reports offered some helpful advice for keeping your vehicle in good running order so it can go the distance:

Which models should you buy then?

The magazine also goes on to give some information on some models that seem to have no problem with a little wear and tear and conversley the models who have a hard time making it off the showroom floor.

Not such a surprise is the fact that Honda and Toyota’s top the list of long lasting vehicles, after all they are often the best vehicles to buy used and generally eat up the ‘best of lists’ of top automotive names.

Long-term love

Won’t make it far

Ok, ok, we think you should keep your car for as long as you can stand it, and when you are ready to sell it, let us buy it from you.

The post Save money, drive your car to death appeared first on Cash for Cars Selling Tips.

Realistically some automobile brands will stand up better than others to the test of time and continuous use.

In many respects the old adage ‘You get what you pay for’ will always hold true.

However, the exception makes the rule and if you consider the long standing reputation of the Jaguar brand and its many maintenance problems you realize that sometimes rules are broken.

Here we will review several of the brands that can offer you the highest resale value for your automobile.

Toyota

The Toyota brand has long stood for lasting quality, the Corolla being one of the highest resale value automobiles in the world for the last 4o years.

As with many of the Japanese and European cars Toyota will keep the same name for a model throughout the years of updates and style changes.

Not only does this eliminate confusion, it makes the models impossible to forget, no matter how many times you re-sell them.

In 2006 Toyota won the residual value awards (as presented by Automotive Lease Guide) for four different categories.

This proves that a high price tag doesn’t necessarily make a long lasting vehicle.

While the price tag on a brand new Toyota may be higher than some of the other Japanese brands, it will pay for itself by retaining its value for years to come.

Honda

The Honda brand is another high resale option. In 2006 Honda won the overall residual value award (as presented by Automotive Lease Guide) for the fourth year in a row.

That is something to stand up and take notice of all you perspective Honda owners.

The Accord and Civic being some of the more popular and affordable cars on the road today enforce the lasting nature of these tough little cars.

Again, it may come as a shock that some of the higher priced brands are not the forerunners when it comes to high resale value.

The Japanese brands have long been known for lasting quality, how many times have you heard the phrase ‘Honda’s last forever’?

BMW

In the luxury category BMW almost invariably wins the title of best luxury resale value.

The Kelley Blue Book announced that not only the 5 series BMW but the mini cooper also holds it’s value the best in the luxury category, adding the 5-series at the top of the top ten list for 2006 best resale value.

Forbes magazine gives that award to the Mini Cooper.

Either way it is BMW motor cars that some of the biggest names in the industry say to invest in if you want to buy a luxury vehicle that holds it value well.

Volkswagen

Another German option with high resale value is the Volkswagen.

Realistically speaking anyone who lives in a climate with mild winters has played slug bug, calling out when they see a VW Beetle on the road.

This game was invented using that car, simply because there are so many to be found on the road today. Considering most of the older models we see are over 30 years old, thats a significant testament to the life span of a Volkswagon.

Among the most popular models the Jetta and the Passat both hold their value relatively well and one or both of them have been high in the top ten of almost every resale value list I researched.

Bottom line

Bottom line, resale value indicates the effectiveness of a brand.

There are others that retain their value as well, however the above brands are the ones seen on almost every list I researched, making them the best of the best.

The post Branding and its effect on resale values appeared first on Cash for Cars Selling Tips.

When selecting which vehicle to purchase it is important to know which makes and models retain their value, and on the flip side when selling a car it is important to get the best possible price.

Infact used car depreciation rates is something worth researching before letting any large sum of money change hands for an automobile.

Residual worth is the projected value of a car over it’s lifetime. It is important to note that this is not an exact science and residual value is a moving target. Changes in the market can cause a vehicle to depreciate at a higher rate, a good example would be the ever rising gas prices and their affect on the SUV market. Also the condition of the vehicle is a big factor in used car depreciation rates, common sense indicates that a well kept car will hold its value far better.

We looked high and low to find a comprehensive list of cars that hold onto their value. Thanks to Forbes.com, CNN, and Kelley Blue Book for providing the public with their lists of vehicles with high residual values. It seems that most sources don’t agree as to which vehicle will hold it’s value the longest so we will list ten of the vehicles that were seen more often to have low used car depreciation rates.

1. Mini Cooper
2. Honda Accord
3. Toyota Avalon
4. Acura TSX
5. Porsche 911 Carrera
6. Toyota Tacoma
7. BMW 5 Series
8. Mercedes Benz SL Class
9. Volkswagen GTI
10. Lexus RS

The above list proves that you get what you pay for, and many times a higher initial purchase price means a higher residual value. This is not surprising, however it is important to remember that keeping any vehicle in good condition, both cosmetically and mechanically will help it to earn the highest resale price.

The post The importance of used car depreciation rates appeared first on Cash for Cars Selling Tips.