Two cars leave the lot in the same year with similar pricing. Five years later, one is worth 50% of what the owner paid for it, while the other still boasts a value of 60% of its original sticker price. What happened?
It’s not by chance.
Many factors determine which vehicles hold their value and which ones tank at resale.
Reliability Reputation Drives Everything
The fastest way to ruin resale value is to have a reputation for not working. Research is easy to conduct, and once buyers see horror stories, forum complaints, and recall notices, it’s game over for good. Once a model has an “unreliable” tag, it follows it forever.
Toyota and Honda find themselves at the top of resale rankings for a reason. The history of reliable vehicles has led buyers to have confidence in them. For example, if buyers see a used Camry or Civic, they know that they won’t have to worry about buying someone else’s mechanical mistakes, as long as they did their due diligence. These cars start every morning, and they rarely need repairs beyond oil changes and brake replacements.
Conversely, models with transmission issues or electrical problems suffer. Although a car may drive nicely now, if its year indicates that problems occur at 80,000 kilometers and they’re well documented, buyers will either lowball them or walk away. Consumer Reports’ reliability scores and owner forum discussions help forge these reputations.
Brand Perception Creates Price Floors
A brand can hold more weight than others on the used market. For example, luxury brand names drive resale value down (ex, a three-year-old Mercedes runs closer to $30,000; even if its price drastically depreciated, it’s still a Mercedes with Mercedes repair fees). Thus, buyers either budget for expensive repairs or pass by.
On the other hand, brands known for economical ownership hold their values. Mazda, Subaru, and Kia have recently improved resale standings over years gone by because they produce reliable vehicles that don’t break the bank. Total cost of ownership matters as much as ticket price.
Similarly, buyer loyalty comes into play – when Subaru owners buy another Subaru, resale prices remain stable given demand.
Parts Availability and Repair Costs
The more specialized parts needed for a vehicle and limited service departments, the less resale value the car holds. European cars often fall victim. When a sensor fails, and it costs three times what it’d cost to replace in Japan, buyers aren’t impressed.
Popular models (think mid-size sedan) have replacement parts available everywhere. A Corolla has a dozen options for headlight assembly at various price points; less common models have dealer-only fees with only dealer prices.
Fuel Economy Matters More Than Ever
The price of gas may fluctuate, but the trend toward efficiency continues. Vehicles boasting great mpg experience steeper depreciation than ever before; poor mpg vehicles like hybrids got hurt early on due to battery concerns, but battery life was proven with newer generations.
Hybrids now hold their value exceptionally well. However, early hybrids lost traction as they had major issues when first out.
Market Demand Shifts With Trends
Buyer requirements change for resale value to follow suit. Where SUVs and crossovers dominate demand now, sedans – even perfectly fine sedans – find themselves challenged simply based on buyer proclivities.
While this creates risks (a sedan owner in an SUV purchasing-dominant climate will find their car worth less despite its low mileage and perfect value), it also creates opportunities (anyone who bought an SUV during peak demand time is now looking at “how to sell my car” along with thousands of others).
Family-friendly features are in demand; three-row seat configurations accompanied by good safety ratings with great mileage are always going to be a draw versus performance-focused two-seaters that only appeal to a niche market. Resale price mirrors this.
Color factors into the equation, too; neutral colors obtain more universal appeal with resale value than bright yellow or purple, which appeals only to a select niche group looking for fun.
Safety Features and Technology
Safety is no longer optional but rather expected. Cars that maintain advanced driver assistance systems, numerous airbags, and higher crash test safety ratings will hold their value because people care about safety over everything else.
However, technology bites big time when it ages poorly; cars have so much tech now that can be outdated that it’s not helpful. Infotainment systems decline – what was cool five years ago looks old – or cars reliant on tech go downhill fast when systems fail, and they can be expensive to repair.
Durability counts; physical controls for heating and air still work great in ten-year-old cars, but touch screens from 2015? Many of those look dated compared to what people want now.
Insurance Costs Affect Decisions
Models that cost more to insure will turn buyers off for resale. Performance-based trim levels that cater more toward young drivers, as well as vehicles with expensive repair costs, all come with high insurance premiums. Additionally, buyers factor in theft rates from insurance agencies, promoting those costs too.
This means a car that costs $20k but has an insurance cost of $3k per year isn’t as appealing as another car that’s $22k but only $1k insurance, plus reasonable premiums align better with buyers’ budgets.
Size and Practicality Balance
Cars designed for multiple purposes have higher resale value than singular-use designs. For example, a mid-size SUV is great for singles/couples/families alike. A two-seater only helps one type of lifestyle.
Cargo space, passenger capacity, and towing capacity – all lend themselves to versatility, which welcomes broader potential buyer pools, which helps resale value climb.
This excludes extremes – a massive truck that most won’t be able to utilize and expensive SUVs most will find impractical take a hit in real estate where size becomes an issue.
The Timing Factor
Timing is everything. When Ford released a new-generation design of the F150, existing F150s fell in value overnight – no one wants to pay strong money for a model that’s recently been replaced – it happens even to good cars.
Additionally, first-gen models often have reservations attached; buyer uncertainty means they want to wait for any bugs first run through first; second- and third-gen models hold their values better since the bugs are worked out, but they’re not outdated designs yet.
Making Smarter Decisions
Understanding these factors helps both buyers and sellers make smarter decisions – know that if one buys a car with these traits, then they will lose less money down the line when it’s time to sell or trade it back in. Similarly, recognizing negative trends will create realistic expectations when it’s time to sell a car that everyone else loves – if it fails all other suggestions, then it probably will also fail resale.
Vehicles with the best resale value contain reliability traits without expensive ownership prices coupled with broader appeal and consistent demand – these generally are not the flashiest choices, but they’re the best-for-resale smart choices.
