New vehicles are holding their value better than ever, says Canadian Black Book. The average value of a four-year-old vehicle in Canada is now 57 per cent of its cost when new, and the highest values of all are held by Toyota and Lexus.
The previous best average value across the board was 53 per cent in 2018, and 52 per cent last year.
“Used-car values in Canada have been going up for almost 10 years now. It’s been a steady climb since the financial crisis was over,” says Brian Murphy, vice-president of research and analytics for Canadian Black Book. “But a lot of it is because vehicles are in demand. If they weren’t in demand, prices would be much lower.”
The actual prices Canadians are paying now are generally higher, since the cost of new vehicles is higher on average than previous years. These more costly prices are making used vehicles more attractive for more drivers.
“We read these articles about higher levels of consumer indebtedness, and certainly if you buy a four-year-old car, you’ll only be paying 57 per cent of what you’d pay if you’d bought it new,” says Murphy. “That’s big savings on a big-ticket item.”
Canadian Black Book is an automotive analytics company that maintains a data base of the prices of vehicles sold in Canada of all ages. Each year, it announces the models that have best held their value over the previous four years. In 2020, the highest residual value was held by the Toyota Tacoma pickup truck, with an average value of 77 per cent of its price when new in 2016.
This is the 11th straight year the Tacoma has won its class for Best Small Pickup Truck. “That vehicle just has a reputation for quality, reliability and durability,” says Murphy. “It’s almost indestructible. It’s a smaller truck, it’s more efficient than larger trucks, and there’s not a lot of them around.” There must be at least 100 annual sales of a model recorded in the CBB database for it to qualify for consideration.
The Mercedes-Benz GLE had the second highest residual value at 75 per cent, followed by the always popular Jeep Wrangler at 73 per cent. In 2018, the Wrangler set a record of holding 91 per cent of its original value. “The starting price (of the Wrangler) has gone up over the last few years, so it’s changed the math a little bit there,” says Murphy.
This is only the second year that Canadian Black Book has looked at the prices of all-electric battery-powered vehicles (BEVs). Last year, the average retained value of all BEVs was just 40 per cent, but that’s now increased to 45 per cent thanks to a greater selection of vehicles and overall consumer confidence. The 2016 Ford Focus Electric held its value best, with a residual of 51 per cent.
That is a higher average residual than the least popular classes of vehicles: the full-sized car, luxury car, and entry-level car segments.
“People are abandoning cars, moving to SUVs and crossovers and all their iterations, and that affects values in the used market,” says Murphy. “But in the last year, compact and sub-compact cars did okay. Maybe consumers are getting concerned about gas prices again.”
Canadian Black Book does not name and shame the vehicles with the lowest residual values, though there is typically a difference of more than 15 per cent in each segment. Consumers can go to the company’s website to value their own vehicles, as well as research the estimated values for specific new vehicles four years from now.
“When you’re considering buying a new car, think about depreciation,” says Murphy. “A lot of people think that gas and insurance and repairs are the No. 1 cost of car ownership, but it’s not – it’s depreciation.
“If you buy a car that depreciates more slowly, when you go to trade it in in three-to-five years, it could be an extra three, four, five thousand dollars in your pocket, because you’ll get more for your trade. Sometimes, that means maybe paying a little bit more up front, but down the road it can make a huge difference.”
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