How much has your car depreciated?

Herb Weisbaum • Profile • E-mail

There is a lot to think about when you are going to buy a car — safety, reliability, styling, and, of course, price. As you choose between models, you should also consider depreciation.

Most buyers will eventually sell their car or use it in a trade-in, so a model with good resale value is money in the bank. According to the editors of Kelley Blue Book, depreciation is often the greatest expense incurred in the first five years of ownership.

I had a chance to talk to Jack Nerad, executive editorial director and executive market analyst for Kelley Blue Book’s kbb.com, about depreciation and this year’s winners of the 2008 Kelley Blue Book Best Resale Value Awards.

Q: Why should we worry about depreciation?
A: Depreciation is very important to all of us who own cars because our cars are losing value as we speak. As they’re sitting in our garages, as they’re sitting in the parking lot outside our offices, they’re losing value.

But some lose that value much faster and more drastically than others do, and the difference can be thousands of dollars. It’s nothing you write a check for, and it’s not part of your monthly budget. You never see it until you sell the car. If you chose a car with poor resale value, it’s going to cost you thousands more.

Top 10 The Kelley Blue Book Best Resale Value Awards recognize automakers' achievements in producing vehicles that best retain their value. Vehicles are listed in alphabetical order by manufacturer: Chevrolet Corvette Honda Civic Infiniti G37 Mini Cooper Scion tC Scion xB Toyota Corolla Volkswagen Eos Volkswagen Jetta Volkswagen Rabbit Source: Kelley Blue Book

Remember, if you buy something in a wild color — a purple and orange that may be cool to you — you should know that it might not be cool to the next person who is going to buy that car.

Clearly, there are certain brands and specific models that do better than others when it comes to holding their resale value. Why is that?
There are brands that have a reputation for good resale value. There is a bit of self-fulfilling prophecy here in that brands that have a reputation for good resale value kind of have good resale value because people think they do. They expect to pay more for those vehicles so it’s kind of a circular thing.

And among those are the brands you would think of: BMW, Honda, Acura — and our big winner this year is Volkswagen. A lot of people, when they think of used cars or used cars they’ve owned themselves, they think of VW as a good, reliable, exciting-to-own used car.

What factors do you consider when picking a vehicle you expect to be a standout when it comes to resale value?
The winners of all the awards are based on projected value and a lot of that has to do with consumer perception. Consumer perception of value translates into how much people are willing to pay. That’s the key thing we see in terms of resale value.

A car might have really desirable styling. So you’ll see a car like the Mini Cooper, which has transformed the small car segment as being very, very desirable — just because they’re cool. And they’re also fun to drive.

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