The vehicles that lose their value fastest

By Dan Lienert

updated 3:33 p.m. ET March 20, 2007

The biggest cost of car ownership isn't gas, repairs or even adding that amazing sound system. Nope, it's depreciation, or the car's decrease in value over time.

The autos that depreciate most are frequently high-volume, older vehicles. The winners? Those that are well-designed, well-engineered and are usually in limited supply and high demand, according to Kelley Blue Book, an authority on residual value.

Consider three Ford Motor models: the Ford E-Series van and the Ford Crown Victoria and Mercury Grand Marquis sedans — three of the eight new-model cars with the worst predicted depreciation.

These vehicles are all high-volume. Last year, Ford sold 55,000 Grand Marquis models in the U.S., 63,000 Crown Victorias and 180,000 E-Series vans — a model used primarily for commercial purposes. In comparison, an example of a low-volume car is Ford's $150,000 GT supercar, of which the company sold 2,000 models in 2006.

The Crown Vic, Grand Marquis and E-Series are also getting old. Ford hasn't overhauled the E-Series in 14 years — double the time an average car sees between redesigns. Consumer Reports begins its current online review of the Crown Victoria by stating, "The Crown Victoria/Mercury Grand Marquis twins are both dated, with stiff rides and noisy engines."

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But these Ford models are also primarily bought in large fleets, by such outfits as police departments and taxi cab companies. (Dodge's Caravan, another car that depreciates heavily, is also popular with fleets and small businesses.)

"The Crown Vic and E-Series are mostly fleet vehicles," wrote Ford spokesman Jim Cain in a recent e-mail message, "so by the time they are resold, they are very well used."

The businesses that buy these cars, he said, "tend to have severe duty cycles — high annual mileage, long years in service. So the resale values ... don't really factor into the purchase equation for most. Also, many customers purchase conversion vans or otherwise customize their vehicles [for example, the E-Series van is flexible and configurable for different kinds of uses], which throws off the resale equation."

Our list of the eight current-model cars with the worst residual values consists of autos that have the lowest possible ratings for predicted depreciation from Consumer Reports and Automotive Lease Guide, an authority on residual value. CR's lowest predicted reliability rating is a designation of "much worse than average." ALG's depreciation ratings are based on a five-star system, in which a one-star rating is the lowest. After compiling the list, we contacted Kelley Blue Book to see precise projected residual values for each car.

For each car, we have listed its predicted residual value after two, three and five years of ownership.

The first two figures will be most important to people who lease their cars, as the average leased car gets returned after two or three years. For people who buy, the five-year figure is the one to study, as the average buyer sells a vehicle after five years.

The difference between a high and low residual value is significant.

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