JD Power Study Shows Acura Leads in Retained Value
Power Information Network recently discovered that owners are keeping their vehicles longer than in the past. The J.D. Power and Associates affiliate reported that the average trade-in vehicle age was 5.4 years old, up from 5 years old in the second quarter of 2004.
"This trend has occurred across all age groups," executives explained. "As the average length of ownership has increased, owners with outstanding loans have had a greater chance to pay off their loans, build equity and avoid an upside-down situation."
In fact, PIN found that upside-down trades have declined more than 8 percent over the previous three years, coming in at slightly less than 29 percent this spring.
Leasing and Luxury Nameplates
According to PIN statistics, leasing plays a major role in the luxury market.
"Close to one of every two luxury vehicles is leased, and for several brands this measure is more than 50 percent," officials said. "To be competitive in the luxury market, then nameplates will need to maximize residuals, which will reduce the customer's monthly lease payments and overall lease expenditure.
"Currently, Acura, Lexus and Hummer have the highest retained values among the 14 luxury brands. Ironically, these brands are less involved in the lease market than several of their direct competitors," executives added.
PIN shared its retained value data (based as of May):
Acura: 65.5 percent (three-year retained value)
Lexus: 64.4 percent
Hummer: 62 percent
Infiniti: 60.9 percent
BMW: 60.4 percent
Mercedes-Benz: 56.4 percent
Volvo: 56 percent
Porsche: 55.6 percent
Land Rover: 55.5 percent
Audi: 54.4 percent
Cadillac: 51.4 percent
Saab: 50.7 percent
Jaguar: 48.9 percent
Lincoln: 48.6 percent
Total Luxury: 58.1 percent
Moreover, PIN listed leasing figures as a percentage of sales:
Jaguar: 60.6 percent
BMW: 59.5 percent
Saab: 58.3 percent
Cadillac: 48 percent
Audi: 56.2 percent
Infiniti: 52.4 percent
Mercedes-Benz: 50 percent
Volvo: 49.2 percent
Land Rover: 46.7 percent
Total Luxury: 46.3 percent
Lincoln: 42.7 percent
Lexus: 35.3 percent
Acura: 33.1 percent
Hummer: 32.8 percent
Porsche: 31.9 percent
Customer Cash Rebates
In other research, PIN revealed that manufacturers are continuing to lessen customer cash rebates, including the cost of rebates and the frequency they are used.
"The average customer cash rebate thus far in the second quarter of this year has been just $2,100, which is $809 (28 percent) less than it was in the second quarter of 2004," officials reported.
"And less than half the retail new-vehicle transactions in the current quarter have included a rebate versus 62 percent three years ago," executives pointed out.
Reviewing the six major automakers that use customer cash rebates, PIN found that four used smaller rebates for the quarter than three years ago, including General Motors:
—GM rebates are down 41 percent.
—Ford rebates declined 27 percent.
—Hyundai and Kia rebates were dropped 25 percent.
—Nissan lessened its rebates 11 percent.
Meanwhile, PIN reported that a few automakers increased their rebates from 2004:
—Toyota's rebates are up 9 percent.
—Chrysler Group's rebates increased 10 percent.
"While one might expect the OEMs to have made greater use of interest subvention programs, as they shied away from rebates, this has not been the case," officials explained.
"The percentage of finance and lease transactions with a rate below 5 percent has dropped from almost 50 percent three years ago to just one-third currently (slightly up from a year ago)," executives noted.
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