Rates Of Return: 2023 Vehicles With The Highest Resale Values
Predicting a given new vehicle’s eventual resale value down the road is a crapshoot in the best of times, but given the state of the used car market in recent years it’s become a far riskier bet.
That’s because the conventional wisdom that a car drops in value the moment it’s driven off a dealer’s lot and steadily continues to lose its worth literally to the moment it reaches the auto graveyard, has been, well, unconventional of late. Pandemic-related market forces and other factors combined to drive up pre-owned model prices up by a whopping 45% from June 2020 to June 2021. They rose to the point that some late model used cars in the greatest demand commanded nearly as much last year—in some cases more—than harder-to-find brand new versions.
While used vehicles prices have been following a downward trend since July, data culled from wholesale auctions hint that retail prices may yet again be on the rise, which makes the science of predicting a given model’s eventual trade-in value even more confounding.
Astute new-vehicle shoppers know that depreciation, or how much of a car or truck’s original value is lost over time, is an owner’s largest long-term expense. Having a higher resale value means having a larger down payment to help lower monthly payments on one’s next vehicle. It’s an especially important consideration for those shopping among costlier models, simply because there’s more money at stake to lose.
According to Kelley Blue Book, the average new vehicle will retain only about 45% of its original value after a typical five-year ownership period. That means a car priced at $45,000 today will only be worth around $20,250 after five years on the road, which represents $24,750 lost to depreciation. But still, some models can be expected to hold onto their original worth than others, and it pays to seek them out. Choosing a $45,000 car or truck that’s instead expected to return 60% of its original transaction price will bring an extra $6,750 at trade-in time.
Determining what a given model will be worth half a decade into the future depends on a variety of variables. These include supply and demand issues, and a how deep the discounts or generous the automakers’ incentives it takes to sell a given vehicle line. Regional preferences also affect a given model’s long-term value – four or all-wheel-drive models are in greater demand in snowy parts of the country, for example.
Despite the mixed messages coming from the marketplace, the valuation experts at Kelley Blue Book have again managed to compile their 21st annual Best Resale Value Awards. KBB predicts that Toyota vehicles will best preserve their original values among mainstream brands for 2023, while the same holds true in the luxury end of the market for the company’s Lexus division.
Overall, the models determined to hold onto their values the most tenaciously among all 2023 vehicles after five years handily beat the industry average. These include the Toyota Tundra (73.3%) and Tacoma (66.0%), Tesla Model X (66.0%), Ford Bronco (65.4%), and the Chevrolet Corvette (65.3%).
In addition, KBB cites models in 28 separate categories, including for the first time five separate categories for electric vehicles, in which Tesla and Ford led the pack with two awards each.
