JD Power NADA report
The old adage that your car starts depreciating as soon as you drive it off the car dealer’s hurts even more if you own an electric vehicle according to the National Automobile Dealers Association (NADA) Used Car Guide in it’s latest report, Plug-in Electric Vehicles: Market Analysis and Used Price Forecast.
There are many reasons people buy the car they do, resale value is one of them. You hear the term residual value but what does residual value mean?
When you buy a car you pay a certain amount of money for that car. When you sell the car you want to sell the car for the most you can get for it. The value of the car when you sell the car is the residual value, the net worth the car will bring after you are through with it.
Residual value is based on many things including how well you took care of the car and how many miles you put on the car. These components make up the part of the car value that you control, but there are values outside of your control that can have an impact on your residual value.
According to Larry Dixon, Senior Analyst for NADA, NADA categorizes electric vehicles (EV) and plug-in electric vehicles (PHEV) in the same group.
The nadafrontpage.com gave an example, “in the May 2012 edition of the NADA Official Used Car Guide, average trade-in values for the 2011 Chevrolet Volt and Nissan Leaf were $31,060 and $24,857, respectively. In May 2013, values for the Volt and Leaf had fallen by a combined average of nearly $10,000, to $21,235 and $14,792, respectively. As a percentage of MSRP, the Volt retained only 49% of it’s value and the Leaf retained 42%.”
By comparison, NADA continued, “average trade-in values for a 2011 Toyota Prius hybrid fell by $4,735, to $16,490 over the same period, while values for a 2011 Chevrolet Cruze with a four-cylinder gasoline engine dropped by $2,548, to $11,602, placing retained values at 63% and 62%, respectively.”
NADA explained, “Considering the limited range of plug-in electric vehicles — coupled with substantial incentives, tax credit’s and moderating gasoline prices — NADA estimates the annual rate of depreciation for used plug-in electric vehicles will improve little over the next two years, with annual losses going from 31.5% in 2012 to 29.7% in 2013 and 27.4% in 2014.”
NADA’s conclusion was, “In terms of U.S. dollars, a plug-in electric vehicle worth $20,000 in 2012 is predicted to lose $9,792 of its value by the end of 2014, while similarly priced gasoline and hybrid vehicles over the same period are expected to lose $5,573 and $6,455, respectively.”
Nissan’s Corporate Communications, Senior Manager, Brian Brockman, says Nissan is aware of the depreciation issue, “As on the new car side, there is an acceptance curve for manufacturers to work through on the used car side. Nissan is taking a proactive approach. We recently began to conduct educational sessions at local auctions, and we recently announced our state of health battery warranty to ensure consumer confidence in EVs over time. We are studying several other initiatives that we expect to stimulate interest in used Leafs in the near future, such as adding Leaf to our Certified Pre-Owned program. We fully expect the value of used EVs to increase as demand for the new one’s increases, particularly while supplies are lower than demand. As the global EV volume leader, this is something that Nissan takes very seriously.”
I asked NADA’s Dixon why the Nissan Leaf and the Chevy Volt were in the same category when the Nissan Leaf is a full-electric vehicle and the Chevy Volt is a technology that combines an electric motor with an internal-combustion engine that acts as a generator. Dixon said that there has not been enough distinction between the two technologies to distinguish them in the public eye.
Kelly Blue Book (KBB) produces a used car guide as well. KBB has awarded the Chevy Volt with the 2012 Electric car resale value award. KBB’s Senior Director of Insights, Karl Brauer explains the difficulty of the Volt, “The factor’s influencing the Chevrolet Volt’s residual value is as complex as it’s drivetrain technology. As an all-new type of vehicle, with s a unique approach to fuel efficiency, the Volt is winning over owners who enjoy its combination of electric-motivation without range anxiety. Howe’ver, non-owners remain skeptical of the Volt’s high purchase price for what appears to be a Chevy compact car with a plug. But if nearly everyone who buys or leases a Volt becomes a believer, then it’s benefits are clearly well executed and it has established a loyal following. That following will likely hang on to their Volts for many years, reducing the supply in the used market. That, in turn, will lead to higher prices for the few cars available, keeping the residual high.”
Bottom line: Range Anxiety is still a sticking issue for EVs and PHEVS are going to have to do a better job in marketing to distinguish themselves from fully electric vehicles.
2013 J.D. Power Initial Quality Study
Average problems per 100 vehicles by brand:
Porsche 80
GMC 90
Lexus 94
Infiniti 95
Chevrolet 97
Acura 102
Toyota 102
Honda 103
Jaguar 104
Hyundai 106
Kia 106
Mercedes-Benz 106
Audi 108
Cadillac 108
Buick 109
Chrysler 109
Lincoln 113
INDUSTRY AVERAGE 113
BMW 114
Volvo 114
Smart 115
Land Rover 116
Jeep 118
Volkswagen 120
Mazda 125
Subaru 128
Dodge 130
Ford 131
Ram 132
Mini 135
Nissan 142
Mitsubishi 148
Fiat 154
Scion 161
2013 J.D. Power Initial Quality Study
Top cars by segment:
2013 J.D. Power Initial Quality Study winners by fewest problems per 100 vehicles:
*City Car: Smart Fortwo, Chevrolet Spark
Subcompact car: Mazda2, Hyundai Accent, Honda Fit
Compact car: Honda Civic, Toyota Corolla, Honda Insight
Compact Sporty Car: Mazda MX-5 Miata, Volkswagen Eos, VW GTI
Compact Premium Car: Acura TL, Infiniti G, Cadillac CTS
Compact Premium Sporty Car: Porsche Boxster, Nissan Z, BMW Z4
Midsize car: Toyota Camry, Hyundai Sonata, Buick Regal
*Midsize Sporty Car: Chevrolet Camaro (tie), Ford Mustang (tie)
Midsize Premium Car: Hyundai Genesis sedan, Mercedes-Benz E-Class, Jaguar XF (tie), Lexus GS (tie)
*Midsize Premium Sporty Car: Porsche 911
Large Car: Chevrolet Impala, Hyundai Azera, Chrysler 300
Large Premium Car: Lexus LS, Audi A8, Porsche Panamera
2013 J.D. Power Initial Quality Study winners in the CUV and truck category:
Sub-compact CUV: Buick Encore (tie), Kia Sportage (tie), Nissan Juke
Compact CUV: Honda CR-V, Toyota FJ Cruiser, Chevrolet Equinox
Compact Premium CUV: Mercedes-Benz GLK, Audi Allroad, Acura RDX
Compact Multipurpose Vehicle: Kia Soul, Mazda5
Midsize CUV: Nissan Murano, Buick Enclave, Hyundai Santa Fe
Midsize Premium CUV: Infiniti FX, Lexus GX, Porsche Cayenne
*Minivan: Chrysler Town & Country, Honda Odyssey
*Large CUV: Chevrolet Tahoe, Toyota Sequoia
*Large Premium CUV: Cadillac Escalade, Mercedes-Benz GL Class
Large Light-Duty Pickup: Chevrolet Avalanche (tie), GMC Sierra (tie), Chevrolet Silverado
*Large Heavy-Duty Pickup: Chevrolet Silverado HD, GMC Sierra HD
* No other model in this segment performs above the segment average
