Leasing is returning to Canada is ways we haven't seen since the financial crisis and that means many new-car consumers are looking with urgency at resale values.
After all, if you lease, you are essentially renting a car. The rental payment is based on how much value that new ride will lose in the future. In other words, your payment is based in large part on what that vehicle will be worth two, three, four years down the road. Resale values matter, obviously.
"When deciding on a new car or truck, consumers often search for a model offering the best loan rate or the richest incentives that lower the sticker price," says Kathy Ward, CEO of Canadian Black Book. "But not taking vehicle depreciation into consideration – the single greatest cost of vehicle ownership – can lead to a costly surprise at trade-in time."
Canadian Black Book has just released its annual 2012 Best Retained Value Awards, an annual roster of passenger cars and light trucks that have led the market in holding their value. And like rival ALG, which has also just released its 2012 Canadian Residual Value Awards, the winners in retained value are Japanese cars and trucks.
In the CBB world, Toyota, Lexus, Subaru and Honda combined to place first in 11 of 17 CBB vehicle classes, while European auto makers took home four. Chrysler took home three and there was one tie. Ward says the CBB awards help shoppers scope out vehicle that deliver excellent value for money – because these vehicles retain value the best. For consumers, CBB has an excellent consumer website that allows visitors to research present values for used vehicle as well as obtain the projected future value of a new vehicle today (canadianblackbook.com).
This year's CBB story is once again largely about Toyota and its Lexus luxury brand. Toyota earned five first-place finishes, four second-place and one third-place. Lexus took two firsts and one second. Meanwhile, the Subaru Outback has either won or tied for first in the mid-size car category for three years running.
Japanese auto makers performed equally well in ALG's latest awards. Subaru received the Mainstream Brand award for the third consecutive year and Japanese models won 14 of the 19 individual vehicle segments. Subarus as a group are projected to retain 40.8 per cent of their value after four years, far ahead of the mainstream average of 33.7 per cent. On the luxury side, Nissan's luxury brand, Infiniti, won the ALG brand awards by being projected to retain 45.2 per cent of their value after three years.
CBB and ALG approach the resale story in different ways. The Black Book people based their awards strictly on past performance in the marketplace, relying heavily on auction data and other similar indicates. ALG uses auction data also, but also relies heavily on a number of other factors to predict where values are going in the future.
"Residual value is a complete indicator of value, taking into account quality, durability and brand desirability," said Geoff Helby, regional director of ALG Canada. A key element that helps ALG make its value predictions revolves around the perceived quality of vehicles and brands, as determined by consumers. ALG also takes into account macroeconomic indicators such as housing prices and employment levels.
Both CBB and ALG agree that Subaru is a market leader when it comes to resale values. In the ALG world, Subaru took home not just the Mainstream Brand award, but also awards in the Mid-size Utility (Outback), Sporty Car (WRX/WRX STI) and Compact Car (Impreza) categories. Both the Impreza and WRX STI have received their category award four consecutive years.
"There's no doubt that, once considered a 'cult' brand, Subaru is proving it deserves mainstream recognition," said Helby. "Subaru has maintained consistently low fleet sales while minimizing incentives. Combined with increasing awareness, Subaru's products provide compelling value for consumers."
On the luxury side, ALG named the Infiniti QX56 and EX35 award winners in their respective segments. First-time award recipients in the luxury category include the Mercedes-Benz CLS-Class (Luxury Car), Audi A3 TDI (Luxury Alt-Fuel), and the EX35 (Luxury Compact Utility). The BMW 1-Series has swept the Near Luxury category since the Canada awards were introduced four years ago.
"Infiniti delivers a combination of unique design and strong execution to deliver consumer value," said Helby. "The brand provides the luxury its customers expect with a certain ruggedness consumers desire. Their reputation among the luxury vehicle makers in Canada continues to drive performance."
Toyota's performance in the CBB honours might be a surprise to some, given Toyota's sales were down substantially in 2011 and the company has been busy rebuilding brand strength in the wake of a number of recall issues. But auto analyst Dennis DesRosiers had another take.
"It's interesting that while new-vehicle sales figures may show Toyota lagging behind North American models, the retained value awards tell another story," said DesRosiers. "The Toyota Tundra and Tacoma models, for example, have won Best Retained Value in the Full-size Pickup and Small Pickup categories for three consecutive years although we typically think of North America as the top builder of trucks."
Overall, though, this year's awards from both ALG and CBB show a remarkable consistency over time. If you plan to lease, it seems, what's past is prologue.
Fourth annual ALG Canadian Residual Value Awards
Luxury Winner: Infiniti
Projected value after four years: 45.2%
Mainstream Winner: Subaru
Projected value after three years: 40.8%
Top Luxury Brands
Top Mainstream Brands
- Subcompact car – Mazda2
- Compact car – Subaru Impreza
- Mid-size car – Toyota Camry
- Full-size car – Nisan Maxima
- Sporty car – Subaru WRX/WRX STi
- Alternative fuel – Volkswagen Golf TDI
- MPV – Honda Odyssey
- Compact Utility – Honda CR-V
- Mid-size Utility – Subaru Outback
- Full-size Utility – Mazda CX-9
- Mid-size Pickup – Toyota Tacoma
- Full-size pickup – Toyota Tundra
- Near-luxury Car – BMW 1-Series
- Luxury Car – Mercedes-Benz CLS-Class
- Luxury Sports Car – Nissan GT-R
- Luxury Alternate Fuel – Audi A3 TDI
- Luxury Compact Utility – Infiniti EX35
- Luxury Mid-size Utility – Land Rover Range Rover Sport
- Luxury Full-size Utility – Infiniti QX56