Canadian Black Book Residual Value Prices Predict Your Car’s Future Value
Romina Eaton’s 2015 Volkswagen Jetta performs well, but after paying off her last vehicle this year, she won’t regret trading it in for a new model.
“I’m looking for a vehicle that performs better in the winter, as I struggled to get to work last season,” Eaton said, adding she has to watch the results. “Price is always a factor, but the long-term total cost of ownership is paramount.”
The depreciation of the vehicle is now part of its decision-making process; knowing that cars that quickly lose their value can impact household budgets. The pain kicks in when buyers go to a dealership to buy a new car and learn how little their current vehicle is worth.
Many consumers are unaware that the biggest expense for a new car is depreciation, the invisible threat that erodes the value of their vehicle. Determining which models hold their value well is the specialty of Canadian Black Book (CBB), the country’s go-to provider of automotive data and analysis for 60 years.
To help steer car buyers towards the makes and models that hold their value well, CBB created its annual Best Retained Value awards 15 years ago. The company tracks the valuations of four-year-old used vehicles at wholesale auctions in Canada and compares those values to their original price.
Data from last fall revealed that 2017 model year vehicles were fetching an average of 64% of their original price at auction, down from 52% just two years ago – thanks to the COVID-19 pandemic. 19 which triggered disruptions in the supply chain, which in turn led to unprecedented demand for used vehicles as inventories of new vehicles dried up.
After honing its data collection to find which car brands best preserve their value – last year it was Honda for cars, GMC for trucks and Porsche for luxury models – CBB is now trying to predict residual values in four years.
“We have our leading analytical tools and know the Canadian automotive market best, so it was time to take the next logical step by establishing our first-ever Canadian Black Book Residual Value Awards,” said James Hancock, Director CBB OEMs. strategy and analysis.
To produce strong forecasts, Hancock said the process is 80% data-driven and 20% “art”. Typical data collected by the CBB includes wholesale auction prices, manufacturer information, auto loan data, as well as macroeconomic indicators such as consumer confidence, exchange rates and oil price forecasts. fuel, inflation and interest rates.
The artistic side of the equation involves more subjective qualities, such as vehicle design and innovations that CBB editors take the time to assess by “touch and feel,” Hancock said. The approach is especially useful for brand new models and nameplates that didn’t even exist a year ago.
“We look at consumer desires and whether new models measure up. We try to capture the unknowable,” Hancock said. The all-new Ioniq 5 electric vehicle presented by Hyundai is a good example.
“There is enough intelligence gathered about electric vehicles and what consumers want – a usable range of 350 to 500 kilometers on a full charge, for example – that we can produce a forecast,” he said. . As a result, the Ioniq 5 snagged first place in the sub-$45,000 EV SUV category, the first time Hyundai has won a CBB award.
The big brand winner for best residual values in cars is Toyota; in SUVs and trucks, it’s Cadillac; in the luxury segment it is Lexus; in a zero-emission vehicle, it’s Kia; and for the most improved it is Cadillac.
The Residual Value Trophies offer no less than four categories in the zero-emission vehicle segment. Kia Soul Electric Wins Best Electric Car Under $45,000; Volvo’s Polestar 2 wins the top $45,000 category, while the Ioniq 5 wins best electric SUV under $45,000 and the electric Volvo XC40 wins the highest price category.
While it’s never easy to predict anything – like the weather for the coming weekend – for auto shoppers like Romina Eaton who appreciate depreciation, it may very well be beneficial to pay attention to the latest crystal ball analyzes of the Canadian Black Book.