Nobody could have predicted how the COVID19 pandemic disrupted modern life everywhere, enhancing the value of your car. In terms of retained values, 2020 has been a wild ride upwards as per Canada’s auto valuation curators. Following huge record-breaking declines in the spring of 2019, followed by huge increases, to record-level retained its value across the board. This is not a trivial matter for those on a budget. Many Canadian citizens do not realize that the biggest new-car expense is depreciation, that silent destroyer of values of your vehicle, something like monetary rust when consumers visit dealers to buy a new model to discover that their present vehicle is worth nothing.
Depending on whether buying or selling, the economic turmoil created by the global pandemic, has had a cascading effect on the car industry as per the old economic edict for supply and demand. Auto sales plunged 75 % last April due to lockdown shock, discouraging many from trading in old cars for new. The travel industry collapsed simultaneously, forcing car-rental companies to retain aging fleets instead of spending on new vehicles, ensuring old models weren’t re-cycled in used-vehicle markets. With fewer auto repossessions giving cash-strapped families needed relief, along with less driving as office commuters now worked from home while wheels gathered rust. Why replace cars rarely driven anywhere?
Supply Chain Problems of Auto Giants
Further, auto manufacturers face trouble from supply chains; the recent shortage of microchips even curbed production of some models, while prompting some consumers to buy a late-model used vehicle. These factors have sparked a strong demand for used models when new supply is pinched, leading to very high used-vehicle retained values. The firm tracks valuations of four-year-old used vehicles at wholesale auctions in Canada, comparing values to original sticker prices. Traditionally, new vehicles lose 20% of retail price in the first ownership year and further 15% in the second and third years, thereby erasing 50% of value when warranty expires. The 2017 models at auction today fetch an average 61.5% of original prices, up from 52% in 2019. This upward leap is astonishing, and retained value offers shoppers an average $2,000 more for their trade-ins for 2021. With trucks and sport-utilities making up 80 % of new-vehicle sales, trucks and SUVs retain over 63.6% of value, compared to 53.1% for automobiles. Finer breaking down of categories reveals that compact pickups like Toyota Tacoma and Chevrolet Colorado hold values better than the Ford F-150, by 3.4 %. Premium luxury cars held 47.6% of retail price after 4 years, while sub-compact vehicles were only 51.1%. Canada’s love affair with small hatchbacks is now over. Toyota’s Tacoma set the record for the highest retained value automobile at an incredible 87.1% of retail price. The Porsche 911 and Jeep Wrangler came second in highest retained value at 82.3%.
Best Retained Value Awards (2017 category)
Toyota leads the way in the truck/SUV segment, with 6 category wins (two alone for Lexus), and total 19 mentions in various categories. Honda bagged the Overall Brand award for automobiles, standing 2nd with 5 category wins and 9 mentions, then comes Mercedes-Benz with 3 wins and 13 total mentions. Detroit lags behind.