Which cars hold their value--and which don't?

Cover Story / Part 1

Which cars hold their value­and which don't?

Check out the winners and losers before buying your nextautomobile. You might save more by picking one that depreciates slowly thanby haggling over the purchase price.

Drive your new car home from the dealer's lot, and it's already worthless than you paid for it. Maybe much less.

The good news is that the market for used cars has never been stronger."The average price for new vehicles has climbed, and many people canno longer afford them," says Csaba Csere, editor of Car and Drivermagazine. "And the reputation of used cars has improved. People areaware that there's a steady flow of 2- and 3-year-old cars in very goodcondition coming off leases."

While heightened demand has boosted resale prices, some cars retain moreof their value over several years than others. "You can count on aLexus, Mercedes, or Porsche to bring an excellent resale price," saysDavid E. Davis Jr., editor of Automobile Magazine. "They holdtheir value, and people will line up to buy them when you're ready to sell."Not so for the Lincoln Continental; it lost a greater percentage of itsoriginal price over the past four years than any other car we reviewed forthis article.

To help you find out how your next car might fare, we've calculated howmuch of the manufacturer-suggested retail price various 1999 models willcommand four years from now. Our projections are based on how well eachvehicle has retained value over the past four years.

If you bought a car with a great mechanical reputation, you're probablyin luck. "Used-car buyers worry about being hit with expensive repairs,so models known to cause little trouble command a better price," saysChristian Wardlaw, editor of Edmund's Used Cars Prices & Ratings.

An image of exclusivity can also boost resale value. That's one reasonthe Lexus LS 400 holds about 60 percent of its value after four years, Wardlawsays.

Unlike the Lexus LS 400, the Buick Riviera and Cadillac De Ville depreciaterelatively rapidly. "The cars are luxury marques, but they aren't perceivedto be exclusive," says Wardlaw. "Manufacturers sell them to nationalcar rental agencies, and buyers who can afford an expensive car don't alwayswant one that anyone can drive for $49 a day."

Over four years, both the Jaguar XJ8 and the Lincoln Continental sankin average resale value--to 54 and 39 percent of original cost, respectively--butJaguar's prospects may change. "Years ago, Jaguar's quality was veryspotty, and it's amazing how hard it is for these old tales to die,"says Davis. "But Jaguar's quality has vastly improved, and the ownersatisfaction story is much better. As buyers have good experiences withnew Jaguars, the car's resale value will increase."

A new Lincoln offering may have more resale desirability than the Continental,predicts Wardlaw. "The LS sports sedan doesn't have the old, stodgylook," he says. "It handles well, has rear drive, and a five-speedmanual transmission is available. It may emerge as Lincoln's shining star."

Color is a factor, too. "A trendy or unusual shade dates a car andturns off prospective buyers," says Wardlaw.

A complete redesign the year after you buy is another killer. "Itwill be obvious that your car's the old model," Csere explains. "Unlessyou purchased it at a terrific bargain price, you won't get back as muchas you'd hoped." To avoid getting stuck with an old model, check outmanufacturers' design plans in automobile magazines, pick up informationat auto shows, or visit car manufacturers' Web sites.

Here's how the value of various cars has held up over the past four years--andhow today's models are likely to do over the next four.

Boosting resale value after you buy

Already bought your new car? Consider these post-purchase factors thataffect depreciation.

First, a car with excess mileage for its age loses value. For example,according to Edmund's Used Cars Prices & Ratings, a 1995 LexusLS 400 is expected to have 47,700 to 51,700 miles. To calculate the impactof mileage, subtract 14 cents for each mile above that from a vehicle'sestimated trade-in value. Conversely, below-average mileage can be a plus.

Scrupulous maintenance can also give you an edge. "Luxury cars areexpensive to repair, so records showing that yours has been serviced bya competent mechanic can increase resale value," says Csaba Csere,editor of Car and Driver magazine.

Looks matter, too. Have your car cleaned regularly, and consider takingit to a detailer for a more thorough going-over before you sell.

Maybe you should buy a car that depreciates fast

What's bad news for new-car buyers can be a boon to used-car shoppers.Some of the models that lose value quickly make terrific used-car bargains.Be sure you pick one that declined in value because it's the last year beforea redesign, the color is out of fashion, or some other superficial reason--notbecause there's anything fundamentally wrong with the car.

One excellent used-car value among the vehicles featured in this articleis the Infiniti Q45. You can snap it up for less than half of original costafter four years, despite a fine mechanical reputation.

You can also grab the Buick Riviera, Cadillac Seville, and Lincoln Continentalfor reasonable prices. The cars' quick drop in value has more to do withbuyers' perceptions than with poor performance.

Check out a used car's original safety and performance assessment beforeyou buy. You can find that information at www.edmunds.com/usedor www.autoweb.com/awi-bin/review/default.awi.

Editor's note: Visit www.memag.comfor more inks to many manufacturers' Web sites.

Clean your car with a toothbrush? It could pay off

Taking your luxury vehicle through an automatic car wash is like drinkingfine cabernet from a paper cup, say auto detailers. Their fanatic ministrationscan restore your car to nearly showroom condition.

It may not be cost-effective in the long run; you'll probably spend moreon frequent detailing than you'll get back in increased resale value. "Sure,if you're going to sell your car, it will look better if it's clean thanif it's covered with coffee stains, but going overboard with cleaning isn'tgoing to increase its value enough to justify the effort, says Csaba Csere,editor of Car and Driver.

Still, if your car's appearance means a lot to you, it may be worthwhileto go to a detailer, anyway. And detailing right before you sell can payoff. "That can add significantly to trade-in value," says PaulAmos, editor of Professional Carwashing & Detailing magazine."Prospective buyers are likely to conclude that if you care enoughto have the car's exterior and interior kept up, you've maintained its mechanicalaspects, too."

A professional detailing job usually costs $120 to $150 but can run ashigh as $300. Detailers shampoo the upholstery, clean the leather, polishall interior vinyl and metal, apply cleansing compound and wax to the exterior,and clean the tires and hubcaps. They even resort to using a toothbrushand Q-tips to flush dirt out of interior crevices. Some detailers steam-cleanthe engine so it gleams, or remove your car seats to reach every speck ofdirt. Ask several detailers what their basic package contains.

Over time, such treatment can leave your car looking noticeably betterthan it would if you took it to a commercial car wash. "Hand-washingis better," says Terrence Mulligan, owner of Polished Perfection, adetailing company in Bergenfield, NJ. "Commercial car-wash water sometimescontains ammonia, so that it can be reused. The chemical may strip the waxoff your car.

"Commercial car washes don't apply cleansing compound before theygive you the optional wax spray," adds Mulligan. "The compoundsmoothes out minor scratches and cleans more thoroughly than washing.

"Fanatic owners bring in their cars every month," he notes,"but for most people, that's not necessary. Don't let your car go toolong, though; some stains set in, and scratches can get worse."

To find a good detailer, get recommendations from colleagues, or checkwith your car dealer. Ask the detailer for references.

Don't bother doing the work yourself. The job takes an expert two tofive hours. Without proper equipment and products, you'll take twice aslong.

By Leslie Kane, Senior Editor

Leslie Kane. Which cars hold their value--and which don't?.

Medical Economics

1999;16:108.