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Electric cars and pick-up trucks top lists of fastest depreciating cars in the US

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Electric cars and pick-up trucks top lists of fastest depreciating cars in the US

Electric cars lead Forbes list of the cars and trucks that lose their value faster than average. Also ranking poorly are some big-ticket luxury cars, and, not surprisingly, older vehicles that are late in their product life cycle and about to be replaced.

On another list of predicted residual values for 2013 models produced by ALG Inc., the bottom three examples are the battery powered Nissan Leaf; the Lincoln MKS, a more upscale, expensive cousin to the Ford Taurus; and the Mercedes-Benz CL Class, a two-door version of the flagship S Class sedan, which is about to be replaced. All are predicted to retain about 36 percent of their original sticker price after 36 months, according to ALG.

“The cars that are on the bottom of the list tend to be electric vehicles,” said Eric Ibara, director of residual consulting for Kelley Blue Book, Irvine, Calif., which has published the Kelly Blue Book Official Residual Value Guide since 1982.

Electric vehicles like the battery-powered Nissan Leaf or the Chevy Volt plug-in hybrid have two strikes against them in terms of value retention. The first is mathematical. The residual value is an estimate of what the resale value at the end of a lease. Thirty-six month leases are the most common term, so 36-month residual values are the usual auto industry benchmark. An old rule of thumb is that most cars depreciate 40 % as soon as they’re purchased, or an average of 55 % after three years.

Residual values are expressed as a percentage of the original sticker price. If the sticker price is high – like it is for EVs and for really expensive luxury cars – that makes it tougher percentage-wise.

Second, analysts like Kelly Blue Book and ALG Inc. are skeptical about consumer demand for electric vehicles. The technology is still relatively new. Volumes are limited, so the unit cost is high. So-called “range anxiety” is an issue. The market for used EVs is even more problematic.

Nissan Leaf sales have nearly tripled in 2013 to around 18,000 after 10 months, but so far sales are slower than expected. A Nissan spokesman pointed out that used EVs are only just beginning to reach the market in any numbers. Just this month, Nissan North America added the Nissan Leaf to its Certified Pre-Owned program, and that should help used car sales. Nissan is seeing a “bounceback” in used-vehicle prices for the Nissan Leaf in recent months, the company said.

Via Forbes

by Aurel Niculescu (my Google+) - Thursday, November 28th, 2013 - filed under Industry, News. Image credit: .
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