Tops & Bottoms

[HarleyEarl]

News Lease guide forecasts high residual value for Pontiac Solstice ARLENA SAWYERS | Automotive News Posted Date: 12/16/05 The Pontiac Solstice will keep its value better than any other new 2006 domestic-brand vehicle, Automotive Lease Guide predicts. The guide, which sets residual value standards for the industry, predicts the Solstice will hold 54.0 percent of its sticker price after three years. The roadster has a base price of $19,995, including shipping. Among domestic vehicles, the Solstice is second only to the 2006 Dodge Viper. The guide projects the Viper to retain 60.0 percent of its sticker price after three years. A residual value of more than 50 percent is considered outstanding. The guide predicts that two other new 2006 cars - the Ford Fusion and Dodge Charger - both will hold 45.6 percent of their resale value after three years. A residual value is a projection of a vehicle's worth at the end of a lease, typically three years. It is expressed as a percentage of sticker price. Residual values help determine monthly payments for new-vehicle leases. Higher values allow lower payments. They also can improve perceptions of a vehicle or brand. Another closely watched vehicle, the redesigned 2006 Honda Civic, has a resale value of 53.0 percent after three years, the guide predicts. 'Curb appeal' Raj Sundaram, president of Automotive Lease Guide in Santa Barbara, Calif., calls the Solstice "well packaged and well priced." "It's got curb appeal," Sundaram told Automotive News. "The best thing is its reasonable volume target." General Motors spokesman Jim Hopson says Pontiac expects to sell about 16,000 Solstices in the 2006 model year. It has the capacity to take annual Solstice sales to about 20,000 units, Hopson adds. The guide is scheduled to release its annual residual value rankings by brand on Wednesday, Dec. 14. It predicts that 2006 vehicles from nonluxury brands will retain an average of 44.5 percent of sticker price after three years. That's 2.0 percentage points more than the guide's 2005 prediction. It's 2.5 points more than the 2004 prediction. Honda and Toyota retain their guide rankings as the top nonluxury brands. The guide projects Honda's residual value at 53.0 percent, unchanged from the 2005 prediction. Toyota's brand residual projection is 51.8 percent, one percentage point below its 2005 projection. As a brand, Pontiac is expected to hold 42.1 percent of its sticker price after three years, up from a projection of 36.9 percent for 2005 models. Hopson attributes that improvement in part to Pontiac's strategy of curbing fleet sales. Buick at bottom Buick is at the bottom of the brand rankings. Its projected residual value for its 2006 vehicles is 37.9 percent. Still, that's up from 35.5 percent for Buick's 2005 models. GM's Hopson says new vehicles such as the Lucerne sedan should enable Buick to boost its residual values further in the next 12 to 18 months. Automotive Lease Guide predicts that 2006 luxury-brand vehicles, on average, will retain 49.4 percent of their sticker price after three years. That is 0.5 percentage points below the guide's prediction for 2005 luxury brands and 0.4 points above the 2004 prediction. Among luxury brands, Land Rover shows considerable improvement. Its 2006 residual projection is 51.2 percent, up from a projection of 49.6 percent for its 2005 models. The Chrysler group would like a higher residual value for the Dodge Charger, spokesman Kevin McCormick says. But he notes that the value the guide assigns the Charger is higher than those given previous Dodge sedans. "We've made some dramatic improvements," McCormick says. "The whole LX platform has done a good job in the residual-value market."

[tmp]

Filthy minds think alike.....

[VenSeattle]

The Lease Guide's percentages are based on MSRP correct?

Well, it is good to know that GM's Employee Pricing didn't damage Buick's expected resale value any further. In fact, it went up!

I'm pretty sure much of the % depreciation was compensated for in the GMPS incentive.

(Yes, I look for silver linings (on occasion) :P)

[Newbiewar]

The Lease Guide's percentages are based on MSRP correct?

Well, it is good to know that GM's Employee Pricing didn't damage Buick's expected resale value any further. In fact, it went up!

I'm pretty sure much of the % depreciation was compensated for in the GMPS incentive.

(Yes, I look for silver linings (on occasion) :P)

[post="59690"]<{POST_SNAPBACK}>[/post]

they were attributing it to fleet sales...

[VenSeattle]

they were attributing it to fleet sales...

[post="59691"]<{POST_SNAPBACK}>[/post]

I don't understand. Can you elaborate please?

[regfootball]

why is the fusion so low? I leased my 500 with a 51% residual.

[haypops]

why is the fusion so low?  I leased my 500 with a 51% residual.

[post="59750"]<{POST_SNAPBACK}>[/post]

Perhaps Ford subsidized it.

[Cremazie]

This means that you could lease a Solstice for cheap!

[razoredge]

and the 3-4 year old Buicks will still be the best used car buy on the market.....as always ! :D

[Sixty8panther]

This means that you could lease a Solstice for cheap!

[post="59806"]<{POST_SNAPBACK}>[/post]

I'm not the type to lease, but even if I was when it comes to a Solstice I'd buy. I don't thidnk the Solstice is the type of car you get bored wiht quickly. :)

[The O.C.]

I don't understand. Can you elaborate please?

[post="59698"]<{POST_SNAPBACK}>[/post]

The number of vehicles a manufacturer puts into rental fleets directly affects those models' resale value......mostly due to the dramatically lower prices that the manufacturer buys the vehicles back for at the end of the rental term....and the prices they sell them at the auction to dealers for.

[VenSeattle]

The number of vehicles a manufacturer puts into rental fleets directly affects those models' resale value......mostly due to the dramatically lower prices that the manufacturer buys the vehicles back for at the end of the rental term....and the prices they sell them at the auction to dealers for.

[post="59839"]<{POST_SNAPBACK}>[/post]

Yes, I understand that heavy fleet sales can impact market perception resulting in a lower market (resale) value. But that wasn't really what I was trying to understand. If I read ALG's website correctly, ALG has "a unique residual projection model for vehicles serviced in commercial and daily rental car fleets." It's called the "Fleet Residual Model."

So, fleet vehicle residual values are figured separately from retail/private leasing residuals.

There's an apparent discrepancy between residual value and market (resale) value. A vehicle coming out of fleet service will have a lower residual value than an identical vehicle belonging to a one time private owner. Unfortunately, that does not guarantee the private owner will be able to sell their vehicle at the retail residual.

Edmunds deals with market value "TMV" prices and apparently ALG uses that info to help find the "base/transaction price" in which to apply the residual percentage to on the private/retail side.

This goes back to my original post. It was in regards to those who bought a 2005 Buick during Employee Pricing over the summer. Apparently (through more research), ALG figures a retail vehicle's residual value based on something between MSRP and "TMV" transaction price. "TMV" did not take into account GM's Employee Pricing over the summer. People were buying GM vehicles below "TMV" prices. So a 2005 Buick owner will not necessarily suffer the entire extent of the expected depreciation mentioned in the article. Even now, Edmund’s “TMV” price doesn’t really take into account the extra incentive provided by GM’s Red Tag event.

I'll use a current example:

2005 Buick LaCrosse MSRP: $28,995.00 (no additional options selected)
Edmund's TMV price: $26,587.00 (no additional options selected)
GM's Red Tag event price: $23,819.62 (no additional options selected)

*2005 Buick 3-yr residual value based by ALG on "TMV": $9,438.39 (35.5% residual)
Depreciation: $17,148.61

*Actual buyer's residual value based on transaction price: Still $9,438.39 (but the residual percentage is 39.6%)
Depreciation: $14,381.23

So, in this case, GM compensates the buyer 4.1% of the expected depreciation for buying the LaCrosse during the Red Tag sale event. Considering the Employee Pricing was even more generous, those buyers faired better too.

Here we are entering 2006, and Buick's 2006 models have an expected residual value 2.4% higher than 2005. No one would have predicted that during the Employee Pricing event.

[Innotech]

Why do Buicks have such poor residuals? THey are among Gm's best quality, most rleiable cars. DOesnt make sense.

[razoredge]

I have never thought about or looked into this before, not being a new car buyer. This residual value is your trade in value ? Or outright resale value ? That is based on what used car (preowned) dealers have found they can typically resell the car for ? All I can say is wow ! So, if you buy a 30,000 car and drive it for 3 years at 50% residual it cost you 5000 + tax & interest per year just for the car ? Yikes, that definantly changes my mind on buying new anytime in the near future. I have typically spent 1000-1500 per year on cars, including purchase price and any bits and pieces that needed replaceing. Some like our 86 LeSabre only cost about 800 per year, including tires, but back in 96 at 70,000 miles that was a great buy for $2500. Detroit autoline had a program about car finance and they were saying recent times is the first time new car buyers have not carried any equity in their new cars. In other words at any time during the loan they owed more on the car than it was valued at. Needless to say things like sales tax, and rapidly inflating auto insurance are not even figured into the equation. We are a transportation based economy. $500 and beyond per month just to get to work, kinda makes it seem like our priorities are screwed up.

[bobo]

Why do Buicks have such poor residuals?  THey are among Gm's best quality, most rleiable cars.  DOesnt make sense.

[post="60019"]<{POST_SNAPBACK}>[/post]

Quality and reliable do not necessarily translate to highly desirable or in high demand.

There's a BPG dealer in the San Francisco Bay Area running ads for 2005 model year prior rental vehicles:

4 Malibus for $8,988
6 LeSabres for $12,988
8 TrailBlazers for $15,988
15 Devilles for $20,988

[haypops]

.

There's a BPG dealer in the San Francisco Bay Area running ads for 2005 model year prior rental vehicles:

4 Malibus for $8,988
6 LeSabres for $12,988
8 TrailBlazers for $15,988
15 Devilles for $20,988

[post="60089"]<{POST_SNAPBACK}>[/post]

Those are good prices! There is a smilar ad in todays Los Angeles Times and $8998 gets you a Cavelier and the 10 K for a malibu.