Volkswagen, Honda have best resale value

updated 1:12 p.m. ET Nov. 14, 2007

Car buyers looking for models with the best resale value would be wise to pick a Volkswagen or a Honda, according to a survey by Kelley Blue Book.

Volkswagen is the brand with the best residual value, while Honda has four vehicles that are tops in various categories, including the Honda Civic for best sedan and the Acura MDX for best sport utility vehicle, Kelley Blue Book said in the survey released Wednesday at the Los Angeles Auto Show. The organization has been publishing its residual value guide since 1981.

Domestic automakers have been lagging in recent years, but their resale values are improving as they move away from low-margin sales to rental fleets, Kelley Blue Book said. Fleet sales flood the market and damage brand reputation.

Jack Nerad, executive market analyst for Irvine, Calif.-based Kelley Blue Book, said General Motors Corp., Ford Motor Co. and Chrysler LLC understand the issue and are cutting sales to fleets. Ford's top sales analyst, George Pipas, said recently that the company is on track to meet its goal of a 30 percent reduction in sales to rental fleets this year, or 135,000 vehicles.

Nerad said matching vehicle production to demand also will help. GM and Chrysler recently announced that they are eliminating shifts and laying off workers at U.S. plants in order to stop overproduction.

Toyota Motor Corp.'s Scion brand showed improvement this year, Kelley Blue Book said. Toyota's Scion xB was named the best wagon, while its Scion tC was the best hatchback. The Toyota Tundra also was best pickup, but the Toyota Prius didn't get the top pick for hybrids. That honor went to the hybrid version of the Honda Civic.

Kelley Blue Book forecasts which vehicles are expected to retain the greatest proportion of their original value after five years. The organization considers market conditions, competition, future economic conditions and other factors.

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