- The Washington Times - Wednesday, January 17, 2007

Prepare yourself for some bad news: The average new car retains only about 35 percent of its original value after five years. That means the car you buy new this year for $20,000 may be worth only $7,000 when you try to sell it in five years. But with some thoughtful planning, you may be able to minimize your losses.

“In the first five years of ownership, typically the biggest expense is depreciation,” said Jack R. Nerad, executive editorial director and executive market analyst with Kelley Blue Book’s kbb.com. “Yet a lot of people aren’t paying any attention to resale value. So it’s a service to consumers to point out that resale value means a lot.”

A Honda Accord, for example, that sells new for $21,520 will retain 44 percent of its value and will be worth $9,468 after five years. A comparable Kia Optima that sells new for $18,250 will retain only 24 percent and will be worth $4,380, Mr. Nerad said.

Kelly Blue Book’s kbb.com annual Best Resale Value Awards highlight the 2007 models that are expected to retain the greatest proportion of their original retail prices after five years of ownership, according to Kelley Blue Book’s market and pricing analysts.

The company established the Best Resale Value Awards in 2003 to help consumers make more informed choices by factoring resale value into their car-buying decisions.

Honda and Acura tied for the Best Brand Award for resale value. The average resale value for the vehicles across each of these brands hits an industry high of just under 56 percent of their original prices after five years. Following these brands are Volkswagen, BMW and Land Rover.

Volkswagen and Land Rover have not done well in quality and reliability studies, so why should their resale value be so high? A lot of it is based on perception as well as matching supply to demand, Mr. Nerad said.

“There is a Volkswagen constituency out there for whom there really is no substitute for a Volkswagen,” Mr. Nerad said. “I need a Volkswagen, I want a Volkswagen, I’m going to have a Volkswagen.”

In Land Rover’s case, because their annual sales aren’t very high, it takes just enough people enthusiastic about the brand to absorb the used vehicles to keep their values up, according to Mr. Nerad.

One of the reasons domestic brands don’t do as well is that production levels are so high there are more vehicles than buyers for them when they are sold used, Mr. Nerad said.

This year, minivans were among vehicles with the lowest resale value. This group includes the Chevrolet Uplander, Dodge Caravan, Ford Freestar, Kia Sedona and Mercury Monterey.

But this year domestic brands did better than in the past. Among the domestic brands, three from General Motors top the list — Saturn, Cadillac and Pontiac.

There are certain features and options used-car buyers will find desirable three to five years in the future and, therefore, will help a new vehicle to retain more of its value, according to the editors at kbb.com.

First, they recommend choosing an exterior color of black, white or silver.

Next, select equipment that many buyers want, including anti-lock brakes, alloy wheels, CD player/changer, parking sensors, navigation system and leather seats.

For more information, visit www.kbb.com/resaleaward.

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