newjerseynewsroom.com

BY ROGER WITHERSPOON

NEWJERSEYNEWSROOM.COM

CAR REVIEW

When it comes to year-old cars, iconic, fuel efficient vehicles like the Toyota FJ Cruiser and the hot rod, Chevy Camaro are in high demand. Large luxury sedans like the Lincoln MKS are not – even if it is “smarter” as its ubiquitous ads claim.

Aside from transportation, cars are one of the largest investments a family or individual makes. From that perspective, the ability of a car to hold onto its value over time is often an important consideration. But there are a number of factors which influence the depreciation rate of a car, including the economy, style changes, poor performance, or just ego.

In a list compiled by Kelly Blue Book, The Cadillac STS and the Lincoln MKS fared poorly in terms of value retention after a year on the road. The STS, with a 2011 MSRP of $48,105, dropped to $25,325 in auction sales after a year, for a value retention rate of 52.6%; while the 2011 Lincoln MKS, dropped in value from $42,095 new to $24,650, just 58.6% of its original value.

At the top of the list, whose release coincides with the opening of the New York International Auto Show, currently at the Jacob Javits Center in Manhattan, are Toyota’s FJ Cruiser and Prius, and Chevrolet’s Equinox and Camaro.

The FJ Cruiser, a relatively inexpensive, off-road SUV and one of the few vehicles capable of following a Hummer through the woods, dropped just 4.7% of its value, from $27,690 new to $26,400 used. The Prius, which is perennially in demand, dropped 5.9% from $22,150 to $20,835. In Detroit the Equinox, an eye-catching, fuel efficient SUV, lost 7.2% from $24,655 down to $22,870 while its sporty Camaro Coupe lost just 7.3%, dropping from an MSRP of $24,730 to $22,935. Rounding out the top five in retention value was the Mini Cooper Hatchback, which dropped 8.9% from $20,100 to $18,535.

Last year, both the 2010 Chevy Camaro (http://bit.ly/mdRgHg ) and Toyota Prius were worth more after a year on the road than the new, 2011 versions (http://bit.ly/lvPFYR ) . But that was because auto production and sales had dropped considerably during the economic recession. Nationwide car sales were 16.1 million in 2007, and that dropped to just 9 million in 2009. As a result, there were fewer cars available and heightened demand for the low mileage cars on the secondary market. Last year, however, car sales bounced back significantly, reaching 12.8 million vehicles, thus giving used car buyers more vehicles to choose from and driving down prices.

“The market for the Camaro has softened a bit,” said Alec Gutierrez, senior market analyst for KBB. “Last year there was really strong demand for the Camaro Convertible, but demand now is not at the same level that it was then. 

“If you want a 2011 Camaro you will have to pay within $2,000 of the original sticker price, which is still very good. But last year you would have had to pay $22,000 to $3,000 over the original sticker price for a year old Camaro.”

The loss in retention value was less than that for the big luxury cars, but still significant for family sedans high up on the popularity chart, like the 2011 Toyota Camry, the nation’s best-selling sedan, and the 2011 Honda Accord LX. Both lost 30% of their original value, with the Camry dropping from $22,860 to $16,125, and the Accord dropping from $22,730 to $16,100.

“The Camry was just redesigned for 2012,” said Gutierrez, “which would detract from interest in the 2011 and 2010 models. They sold a boatload of Camry’s, selling 40,000 last month alone and in terms of used vehicle value, there are so many Camry’s out there that there is more than enough supply to meet the demand..

At the luxury end of the auto market, he continued, there is ego to contend with. “The STS has always been a poor performer,” said Gutierrez. “They aren’t that popular and are relatively expensive brand new, so we just don’t see a lot of interest in the STS or the Cadillac DTS. That’s why GM discontinued those models.

“The Cadillac CTS, on the other hand, sells relatively well and it is a lot more popular. It is far superior to the STS and that helps bring the value of the STS down. The Lincoln MKS’ problems are similar to that of the Cadillac STS. It is considered just a big, expensive Ford and this is true of many of the larger luxury vehicles, including the Mercedes Benz S-550. Most luxury vehicles drop in value pretty quickly because most of the luxury buyers want the latest and greatest model and are willing to pay for it. The typical used car buyer, on the other hand, is not willing to pay a premium for a newer car.”

Rounding out the bottom five in terms of retained value after a year were the Mitsubishi Galant ES Sedan, falling from an MSRP of $22,344 to a resale price of $12,400, just 55.5% of its value new; the Buick Lucerne CXL Sedan, dropping from $33,495 to $19,925, retaining 59.5%; and the Chevy Malibu LT, falling from $23,545 to $14,475 or 61.5%.

Roger Witherspoon writes Shifting Gears at www.RogerWitherspoon.com